As HP's transformation effort demonstrates, consolidating local and regional data centers can bring substantial benefits. These include lower costs and higher availability; simpler, more cost-effective operations; and automation of routine management functions" (Hewlett- Packard Website. 2011). Cost savings is ultimately balanced against cost incurrence and HP seems to have found the right mix.
Initiatives and Sales
The streamlining of operations, consolidation of real estate holdings, and workforce restructuring are primarily cost initiatives designed to effect and control expenses. That said top line revenue growth depends on increasing productivity from technological innovation and employee efficacy in implementation. Organic sales growth does depend on a committed workforce who has the tools and support requisite for success. A potential obturation to sales growth may involve the significant decrease in employees: 9,000 as the result of the 2006 restructurings, and 25,000 resulting from the EDS restructuring (Hewlett- Packard 2009 and 2010 Annual Report). Certainly, as revenues become sustainable out of the global economic downturn there will be rehires and workforce expansion however, the timing of these actions must be coordinated with an overall HP global growth plan.
Risks and Financial Effects
As the HP Annual Reports indicate
"there are significant risks associated with our workforce restructuring programs, including potential delays in the implementation of those programs in highly regulated locations outside of the United States, particularly in Europe and Asia, decreases in employee morale, and the failure to meet operational targets due to the loss of...
The "Driving Operational Efficiency" directives at HP are designed to streamline and augment the Value Chain as developed by Michael Porter. Through the consolidation of real estate positions, analysis of all sectors and departments to unlock productivity and reduce costs, and the restructuring of the workforce; HP is intent on developing a competitive advantage in their industry through upgrades and developments of: inbound logistics, operations, outbound logistics, marketing and sales, and service. (QuickMBA. N.D.)
References
Hewlett- Packard Website. (N.D.). Driving Data Center Transformation. Hewlett-Packard Company. Retrieved January 26, 2011 from http://h20219.www2.hp.com/services/us/en/messaging/feature-svc-datacenter-transform.html
Hewlett-Packard 2009 Annual Report. (2009). Hewlett-Packard Company.
Hewlett-Packard 2010 Annual Report. (2010). Hewlett-Packard Company.
QuickMBA. (N.D.). Strategic Management: Value Chain. Retrieved January 26, 2011 from http://www.quickmba.com/strategy/value-chain/
