HP picks leaders for new divisions

Hewlett-Packard Co. (HP) named key leaders in its latest organizational restructure Wednesday, the day after it announced plans to consolidate its services and enterprise computing groups.

About a year and a half after acquiring Compaq Computer Corp., the Palo Alto, California, company is consolidating its divisions into three main groups that will report profit and loss numbers to investors. The Enterprise Solutions Group (ESG), which makes and sells HP's servers and storage devices, is merging with HP Services to create the Technology Solutions Group (TSG), said Chairman and Chief Executive Officer Carly Fiorina during Tuesday's analyst meeting in New York.

Former HP Services head Ann Livermore will lead TSG, Fiorina said Wednesday in an e-mail to employees. Livermore is a veteran HP executive who has occupied a number of roles with the company prior to its acquisition of Compaq, said Gordon Haff, an analyst with Illuminata Inc. in Nashua, New Hampshire.

The decision to combine services and enterprise products under one umbrella is a departure from the way other companies handle that organization, Haff said. IBM Corp.'s Global Services division has enjoyed success because of the separation between the services team and the product teams, which gives customers the impression that the IBM services team is not always under the gun to recommend IBM products to customers, he said.

Of course, every vendor's services team prefers to sell its own in-house products over those of a competitor, and HP Services will likely recommend outside products if the customer's business is important enough to the bottom line, Haff said. But by putting the two divisions under a single reporting structure, HP Services would appear to have much less freedom to recommend non-HP products to clients, he said.

Peter Blackmore, who was in charge of ESG, will lead a newly created division called the Customer Solutions Group (CSG). CSG is the company's enterprise sales force, and will be responsible for selling both products and services to enterprise customers. Blackmore will continue to oversee HP Financial Services.

Leading a sales team is probably more of a natural fit for Blackmore, who came to HP along with Compaq where he was vice president of sales and services, Haff said.

ESG has been struggling since the Compaq acquisition, but posted a profit in the most recent quarter. In May, HP reorganized ESG to bring all of its server and storage products under Blackmore's leadership in order to present a united front to potential customers, Blackmore said at the time.

HP also altered the role of Personal Systems Group (PSG) head Duane Zitzner Wednesday. He will now have responsibility for the small and medium-size business sales group and a consolidated channels organization as head of PSG and HP's direct sales organization.

Zitzner's new role shows that HP recognizes that the emphasis in the PC business has fallen on the distribution model, rather than the actual product itself, Haff said.

"Dell (Inc.) doesn't win because they have great PCs. They do well because the entire company is tightly wound together in terms of inexpensively getting PCs into the hands of customers," Haff said.

The three divisions that will now report quarterly profit and loss figures are TSG, PSG, and the Imaging and Printing Group led by Vyomesh Joshi.

In related news, HP named Marcela Perez De Alonzo executive vice president of human resources and workforce development, replacing the retiring Susan Borwick. Arun Chandra was also named to lead the program management office.

Last week, HP announced plans to consolidate its Global Operations and Information Technology divisions into one group led by Gilles Bouchard. Bouchard replaces Global Operations head Jeff Clarke, who resigned in November, and Chief Information Officer Bob Napier, who died in October.

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