EDS Deal: Good or Bad Move for HP's Ann Livermore

Written by Arik Hesseldahl

One of the questions making the rounds today in the wake of Hewlett-Packard’s deal to acquire tech services firm EDS was what this all means for Ann Livermore, the popular HP executive vice president who runs the $38 billion technology solutions group. One part of the deal announced today involves a big restructuring of HP’s services group. By one estimate, about $5 billion worth of revenue will be leaving Livermore’s portfolio, and landing under Ron Rittenmeyer, EDS’s current CEO who will head up a new business unit that HP CEO Mark Hurd described as “EDS, an HP Company.” Rittenmeyer will report directly to Hurd.

Usually when an executive loses $5 billion worth of their responsibility, that¹s viewed as negative career news. Moreover, from the outside it also looks like the more interesting portion of HP’s services business — the faster growing outsourcing operation — is headed over to EDS, while the less glamorous portion of services, such as maintenance operation and break-and-fix, are staying behind.

So from that aspect a fair question appeared today: What does this restructuring say about Ann Livermore¹s future at HP? A long-time HP employee who joined in 1982, Livermore — profiled by Peter Burrows in the magazine in 2006 — has been considered a contender for the CEO slot more than once, and even lobbied for the job in 1999 before it went to Carly Fiorina.

As she tells it, she¹s staying right where she is. When my colleague Steve Hamm asked her about it earlier today, Livermore described the HP acquisition as “one of the most important strategic moves that HP has ever made.”

She also said she was directly involved in the decision to relocate some of the services business to EDS. As it stands, Livermore says she’ll retain technology services and support, some of consulting and integration services, and data center operations.

Analysts and insiders concurred that the change shouldn¹t be interpreted as a bad thing for Livermore. According to analysts and former HP insiders, there’s no indication that Livermore is in any way out of favor with Hurd.

Rather it’s an attempt to put certain business units in the right hands, as this probably won¹t be the last time moves like this are made. “They are rationalizing where things should go,” says analyst Shannon Cross of Cross Research. “There will probably be some shifting around of assets above and beyond what they announced today.”

So while for now Livermore’s responsibilities appear smaller today, as the integration of EDS progresses at HP, other responsibilities may end up under her jurisdiction.

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