HP: British businesses in flight to quality IT suppliers

There is a flight to quality IT suppliers by British businesses, according to Steve Gill, HP's UK managing director.

Businesses are minimising risk and moving work to suppliers with and assured future and which could deliver the services they needed to help them stave off the effects of the recession, he said.

Businesses were looking for "breakthroughs" in operational efficiency, according to Gill, and were prepared to invest in technology that they felt would deliver a fast return on investment.

HP's UK customers were investing to improve their overall view of operations, as well as automating server management, increasing server utilisation, using software as a service, improving data management, and working to deliver new business services more quickly.

The company, including new acquisition EDS, is seeing a growth in services that improve integration of products from different vendors and deliver better results of SAP and Oracle ERP deployments, as well as interest in business process outsourcing, and customer relationship management projects.

Businesses had not forgotten the importance of a good IT strategy, even when cutting costs, HP said. "There is a lot of desire to innovate when people come out of the recession."

According to Gill, customers only wanted to work with suppliers that they felt confident would not collapse during the recession.

Gill said he had had extensive conversations with customers on tackling the recession, and assuring them of HP's stability. "People want to know, will you still be there in five years?" he said. "There's a flight to quality; people want a relationship they can count on."

"It's not surprising customers are coming to organisations they feel have a 95 percent probability of being around in five years," he added.

HP is taking major steps to cut its costs, last week announcing plans for a controversial five percent pay cut across its 300,000 strong global workforce. HP insists the move involves voluntary pay cuts, but British union Unite reacted with anger, saying employees "will be astonished that a company that is increasing revenue and still making substantial profits is seeking a pay cut from its UK workforce".

In the first quarter, HP reported global revenue growth of one percent year-on-year to £20bn, with profits of £1.3bn. HP's UK revenues are approximately £6 billion, Gill said, with the UK being HP's largest subsidiary outside the US.

Meanwhile, it is cutting 3,300 UK staff after acquiring EDS last August.

The job cuts and pay reductions were part of an overall cost cutting plan, Gill said, which also involved reducing expenditure on travel and benefits, and removing unwanted office space following the EDS acquisition.

"The outlook [into the future of IT spending] is uncertain," he said. "We've taken a number of steps to get our own cost base to the right place, some involve more discretion, some affect the workforce and some affect pay."

Gill vowed there would not be cuts among those designing HP products and services. "We won't cut back on R&D. Technology is an important route out of the difficult climate."

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