IT consolidation

HP has eliminated hundreds of data centers and thousands

of servers and applications. In all, the company has consoli-

dated 300 data centers into 83 sites. It has reduced excess

capacity, eliminated high-cost locations, increased systems

manageability and dramatically lowered overall cost of

operations.

To further reduce costs, HP launched an effort to maximize

server utilization by streamlining operations in its consoli-

dated data centers. This focus has helped HP reduce its

server expenditures by 93 percent and shift resources

from IT maintenance to innovation.

HP has made similar gains in its efforts to reduce the

number of applications it uses. At one time, HP had more

than 7,000 different software applications running internally.

Through IT application consolidation, HP has reduced that

number to 4,000, and is on a path to further reduce that to

just 1,500 applications.

HR automation

HP has standardized its entire Human Resources function

worldwide around a single, secure por tal. While making

it easier for HP’s 150,000 employees across 150 countries

to access information, this por tal has saved the company

$50 million with a six-month ROI.

In addition, HP consolidated HR functions on a single global

platform of PeopleSoft—the largest instance of PeopleSoft

in the world. This enabled the company’s HR function to

manage and integrate overall resources while enabling IT

consolidation. The resulting solution allowed for dynamic

automation of resources, which reduced cost, improved

performance and increased agility to meet future demands.

Supply chain innovation

HP’s diverse product offerings require one of the most

complex supply chains in the world. The company

has the world’s ninth largest non-military supply chain.

For most operations of this size, change doesn’t come

easy. HP’s ability to reinvent its supply chain using the

principles of Adaptive Enterprise, and deliver such

dramatic results, is notewor thy.

HP has followed the principles of an Adaptive Enterprise

to build a $1 billion-per-year cost saving machine.

HP achieved these results by simplifying its IT

infrastructure, streamlining its supply chain, cutting

expenses—and capitalizing on change.

How HP built a $1 billion-per-year

cost-saving machine

The HP Adaptive Enterprise journey

An Adaptive Enterprise payoff

• $1 billion savings per year in operations and IT costs

• 24% reduction in overall IT costs

• 72% reduction in the number of data centers (300 to 83)

• 43% reduction in the number of applications

• 93% server cost reduction

• $600 million in supply chain savings

• 24% operating profit increase

HP streamlined its procurement processes, retiring 84

procurement transaction systems and generating $600

million in savings over three years. Still, with dozens of

different supply chains in place, this area of the business

was ripe for consolidation—on a large scale. Following best

practices, HP consolidated more than 50 product -based

supply chains into just 5 customer-based supply chains.

The HP supply chain now spans from “no touch” products

that are delivered directly from the supplier to the customer

up to “high touch” offerings that involve complex configura-

tions and after-sales services. In addition, the company has

greatly reduced the time required to integrate new partners

into its supply chain—cutting a six-month process down to

as little as two weeks.

Elsewhere in the supply chain, HP has implemented RFID

tagging to strengthen asset tracking. RFID tagging gives

visibility to cases and pallets throughout the supply chain,

improving accuracy in forecasting arrival times for products

bound for customers, par tners and resellers. RFID also allows

customers to track inventory once it is in their own supply

chains or retail locations.

Synchronizing business and IT

In its continuing efforts to drive change at the business

process level, HP recently combined its Global Operations

and IT functions into a single organization: GO+IT. This

unified organization works to keep IT and business needs

in close alignment, to simplify and streamline how HP oper-

ates on a daily basis, and to make it easier for customers to

interact with HP. The goal is to enable HP to respond faster

to customer needs and shifts in the marketplace.

Gilles Bouchard, who heads up the GO+IT organization,

expects these effor ts to yield ongoing gains in efficiency.

“Implementing Adaptive Enterprise solutions at HP has paid

off, driving one-time and ongoing savings to our bot tom

line and freeing up money to invest in innovation,” said

Bouchard, CIO and Executive Vice President of Global

Operations, HP. “Prior to 2002, just 28 percent of our

IT budget was spent on innovation. Today we’ve increased

that to 34 percent, and we’re on track to increase that to

50 percent in the coming years, so that fully half of our

IT spend will be dedicated to delivering innovative new

business capabilities. That’s a key part of what the

Adaptive Enterprise is all about.”

Putting Adaptive Enterprise to work

The principles that HP followed in these efforts are now

embodied in best practices for an Adaptive Enterprise—

HP’s vision of an organization in which business and IT

are synchronized to capitalize on change. These design

principles are the keys to creating a tight link between your

IT infrastructure and your business.

Simplification

You simplify complex IT environments through the consoli-

dation of applications and infrastructures, the automation

and orchestration of processes, and the virtualization of

resources.

Standardization

You reduce costs and simplify the management of change

by standardizing business processes, architectures and

platforms based on industry standards.

Modularity

You improve resource sharing and cost effectiveness by

modularizing monolithic structures into reusable assets

that can be easily redeployed based on changing

business needs.

Integration

You achieve a competitive advantage and improve

agility by dynamically linking business processes and

heterogeneous IT resources.

These principles can help your organization achieve its

own Adaptive Enterprise payoff.

“HP has developed a proven, evolutionary approach that

allows enterprises to build an IT environment that is more

responsive to the changing needs of the business,” says

Nora Denzel, Vice President Adaptive Enterprise, HP.

“We call this approach the Adaptive Enterprise. This is the

methodology we’re using internally, and it has paid off

significantly both in savings to our bottom line and in the

ability to increase our investment in innovation.”

To learn more

To learn more about HP’s Adaptive Enterprise journey or

to discuss how HP can help put its best practices to work

for you, contact your HP sales representative or visit

www.hp.com/go/adaptive.

4AA0-0232ENW, 04/2005

For more information visit: www.hp.com/go/adaptive

© 2005 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change

without notice. The only warranties for HP products and services are set forth in the express warranty statements

accompanying such products and services. Nothing herein should be construed as constituting an additional

warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

“ Implementing Adaptive Enterprise

solutions at HP has paid off, driv-

ing one-time and ongoing savings

to our bottom line and freeing

up money to invest in innovation.

That’s a key part of what the

Adaptive Enterprise is all about.”

– Gilles Bouchard, CIO and

Executive Vice President of

Global Operations, HP