R&D spending takes back seat in HP's IT revamp

As the company nears completion of a major three-year IT transformation, a senior vice president explains why the slowdown in research and development was a necessary consequence.

Despite the fact Hewlett-Packard's recent IT consolidation slowed down research and development for almost three years, the bitter pill needed to be taken, according to a senior vice president.

The company is just finishing a major IT transformation, including consolidating its data centers into just a handful based in the United States, as well as standardizing its data so queries made from anywhere in the world return the same answer.

The transformation has taken three years--necessitated by the complex nature of the firm's IT after the company's Compaq acquisition, according to HP senior vice president and general manager Business Critical Systems Martin Fink.

The situation was exacerbated because Compaq itself was not streamlined following its own acquisitions of Tandem and Digital, he said.

During the transformation, research and development plans had to be put on the back burner, according to Fink. "Every dollar that gets allocated to the IT P&L [profit and loss] is a dollar I can't spend on R&D," he said.

As a result, some scheduled projects were affected. "It delayed some things we wanted to do sooner," he said.

However, the transformation was necessary, according to Fink: "Our IT was in such a state that any project we would like to do would have taken much longer," he said.

The next IT revamp should be a while in the future, Fink said, as the infrastructure is estimated to last until HP becomes a US$200 billion company--roughly double its current worth.