Exclusive The global IT team at Hewlett Packard Enterprise that company execs previously praised for managing the smooth break-up of the organization is finally being rewarded – the entire department is being, er, outsourced.
The destination for these techies is the CSC and HPE Enterprise Services borg – the businesses are coming together in an $8.5bn union due to be sealed next March, creating a new $20bn plus turnover company. For the purposes of the transaction, HPE created a wholly owned vehicle, Everett SpinCo Inc.
The main $8.5bn value of the deal is made up of $4.5bn in stock exchange – resulting in HPE shareholders owning 50 per cent of the new company – a $1.5bn cash dividend, and $2.5bn in debt and other liabilities; the $2.5bn is made up of $1.9bn of HPE debt and $0.6bn of net pension liabilities.
In a memo to all staff at HPE – seen by The Register – Scott Spradley, CIO and Mike Nefkens, exec veep for the outgoing ES division said the internal IT team had over the past 24 months “risen to some seemingly impossible challenges.”
“Separating HPE and HPI (PCs and printers), exiting HPI-hosted TSAs (technical service agreements) within a year, managing two multi-billion dollar divestitures while, in parallel, performing an end-to-end transformation of the software business and application landscape.”
Under the separation of HP, the IT team reallocated 2,800 applications, some 75,000 application interfaces, and divided the global data centers – although here the heavy lifting had already been done in prior years, consolidating 85 bit barns to six worldwide.
The memo added:
“Separating HPE and HPI required us to stand up two IT organizations from one already lean organization. Simultaneously, we moved the IT Infrastructure & Operations (ITIO) team into Enterprise Services (ES).”
The exec duo said Enterprise Services’ IT outsourcing team had “met or exceeded all the Service Level Agreements.”
Under the Everett transaction, ITIO will transfer with ES to the merged HPE and CSC businesses and will provide IT services to their combined customers.
“To ensure that all three companies are successful going forward, HPE intends to partner with ES/CSC to receive IT services through an IT Services Agreement that includes IT infrastructure and application development/support. This will result in a majority of our IT family moving to ES/CSC, which will become a leading provider of independent IT services in the world,” Spradley and Nefkens stated in the memo.
The HPE contract is in addition to outsourced service provision for HP Inc, and Micro Focus, which by next summer will be the new home of HPE’s Software business.
Spradley and Nefkens pointed out that consultation on the movement of the global IT team will be required by works councils and other employee representatives, where applicable, and final decisions are pending this.
HPE did not reveal the value of the contract or any other financial metrics of the outsourcing arrangement. We asked the company for a statement and will update when we hear from the firm. ®