By this time next year, HP expects to have cleaved itself into two huge, publicly traded companies. On Tuesday, HP CEO Meg Whitman talked about how she and her team plan to do that while keeping customers calm, happy and willing to sign big contracts.
“This is a big and complicated separation,” Whitman told analysts on the company’s quarterly conference on Tuesday. “It is the biggest separation that’s ever been done and it’s not a typical spin-off, where you’ve got one big company spinning off a little part of the company. These are two Fortune 50 companies that both have about $US57 billion of revenue.”
So she formed a new “separation” group.
“We have some of our most talented executives running the separation and that is what they are doing full time. At its peak, that will probably be between 400 and 500 people,” Whitman said. “The rest of HP, all 275,000 of the rest, will be in fact, focused on running the business. I have a lot of confidence we’ll be able to deliver [a good] FY15, which is critical.”
What will those 400 to 500 people be doing? She explained:
There is one central “corporate separation management office,” she said. They are creating three years of historic financial records for each of the different businesses.
They are also doing a “very detailed analysis of tax and legal separation. We have over 786 legal entities at this company.”
This group will be analysing all 786 to see where they belong or if they should be kept as they are at all.
There is also a “separation management office” for both of the new companies: HP Enterprise and HP Inc.
“Their job is to make sure we have the right strategy with the right cost structure as we head into being two separate companies,” she explained.
And there’s a group of people working on the separation of HP’s information technology: servers, networks, data centres, software licenses and the like.
The good news here is that HP is going to reboot its IT infrastructure from scratch.
“That is an opportunity to create an IT infrastructure for each company that isn’t based on our legacy system or isn’t based on a manufacturing system, which for so many years it has been,” Whitman said.
Building IT from scratch for two huge companies is going to be expensive and HP hasn’t said how much it plans to spend on this separation. But if your goal is to create two huge new tech companies, it only makes sense that they eat their own dog food and use all the latest, greatest tech.
All of this has already begun. “We have deadlines every month. Things that have to be decided, operations that have to be changed,” she said.
Whitman said that she’ll be providing investors with progress reports every quarter.