Whither HP Enterprise Services in the UK?

The $1bn investment will be made over the next 24 months and 6,000 new jobs will be created in sales and delivery during a similar period. VP for UK and Ireland, Craig Wilson, who heads up one of the biggest services regions for HP, believes that the UK has the optimal business mix, which the rest of the company aspires to, in that it derives approximately 50% of its revenues from services. He says that the UK business is looking healthy and solid but that it still has some process re-engineering ahead of it to take out costs. He does not think that a sizeable proportion of the new jobs HP creates in services will come to the UK. Many new jobs, especially in the delivery function, will go offshore.

In the UK over 25% of revenues come from public sector contracts and HP took the opportunity of its mid-year European analyst conference to showcase its DII (Future) contract with the UK Ministry of Defence which is creating one shared information infrastructure for the MOD.  According to HP the project is on track to enable the realisation of £1.5bn of efficiency savings across the Defence Change Programme over the 10-year DII contract. This has partly been achieved by HP’s approach to partnering as prime contractor within the ATLAS consortium of five suppliers. A key aspect of the project’s success lies with its optimisation programme, which is based on ITIL 3.0 to create an ATLAS approach to moving to one internal services delivery organisation for the MOD. 

Looking ahead at the changing UK public sector landscape, Huw Owen VP Defence and Security UK and Ireland, said that he is making the DII framework approach part of his business growth plan for HP. In the civil sectors of government, HP is planning to expand its footprint in local government, health, education and police, largely through shared service/BPO contracts which would also draw lessons from DII, to, for example, get the government’s Desktop 21 initiative up and running as a procurement framework.

Clearly the future of HP Enterprise Services lies with its potential as an IT infrastructure market gorilla (hence the planned $1bn investment in data centre consolidation and upgrade). And even though the ATLAS consortium delivers infrastructure, applications and BPO (payroll) via the DII contract to the MOD, HP ES is clearly focused on infrastructure service provision. Given this, one of the most interesting sessions of the day was the breakout on utility services.

The wording was deliberate, as HP ES currently really only supports private clouds, and the ability to flex (that challenging elasticity of usage) is contractually constrained to 20% of CPU and requires 2 – 5 days notice. However, it is also true that the type of SLA you get from HP ES is end-to-end and, for example, for an SAP implementation includes everything up to BASIS level. Clearly, the model is, intentionally, not currently directly comparable to an Amazon EC2 offering.

HP ES now has about 300 customers for its Utility Services and of the the 240 outsourcing deals signed in Europe in FY H1, around 10% have a Utility Services component. In the second half of the year we can expect announcements from HP regarding more state of the art data centres in European locations, as well as news for HP resellers regarding their ability to sell such utility services (see: http://www.k2advisory.com/non-blog/amazon-hp-and-data-centre-hosting-channel for our suggestion for this requirement for the channel following the opening of the company’s Wynyard data centre).  

This type of utility services approach makes cultural sense to HP – it is close to its hardware heart – and, in terms of cross-sell, it is in fact the HP hardware sales force that is currently proving to be the secret weapon for HP ES in growing market share for utility services. In a nutshell, if you run HP kit, chances are you will soon also be buying HP services.

So, in answer to the question: whither HP ES in the UK? It looks set to become a leaner, meaner IT infrastructure giant, clearly focused on defending and maintaining its share of government spending.