I missed a rather crucial announcement that HP CEO Leo Apotheker made on the concall when reporting Q2 results earlier this week (see No more ‘miracle margins’ at HP Services). He’s taking HP’s Enterprise Services out from under Enterprise Business head, Ann Livermore’s wing and is now searching for an EVP to run it. Livermore will continue to mind the shop till then. Technology Services (break/fix) will move to the ESSN (enterprise servers, storage & networking) group.
I remember having a conversation with Livermore a few years back, not long after HP put services into her domain alongside enterprise hardware. I said this was a bonkers idea and laid a bet (a good lunch) that HP would break services out again within 18 months. Well, I was totally wrong on the timing. I guess we go Dutch?
By the way, HP CFO Cathie Lesjac gave an interesting insight into the way that HP accounts for large-scale IT outsourcing (ITO) deals: “… as we start up new ITO deals, we do defer some of the revenue and costs associated with the data centre transformations. But ultimately, there is a mismatch between the revenue and the cost in the early phases of the project, and so the margins are significantly depressed in these early phases.” This is not unusual practice in the industry, but it’s good to hear it so clearly spelled out.