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Look For Data Center Consolidation From HP-EDS

Hewlett-Packard CEO Mark Hurd says the company will "run the same playbook" with EDS that it's using to make HP more profitable. OK, time to torture the sports metaphor: look for Hurd to call Data Center Consolidation left and right, with CIO Randy Mott as the lineman knocking over anyone who gets in the way.

HP plans to acquire EDS for about $13.9 billion, leading to speculation on how HP will lift EDS' sub-par profit margins. In a conference call, Hurd said, "None of the synergies we're driving here is any different than we're doing at HP."

Data center consolidation has been one big part of Mott's mission to run a more efficient IT shop at HP. He has been taking HP's 86 worldwide data centers down to six, including at least one in Texas, EDS' home state. Data center consolidation means dicey internal politics. Everyone's in favor of consolidation, but no one wants to give up their data center. Mott has plowed past these politics before.

Expect broad IT consolidation -- from servers to applications to IT sites -- to happen quickly once the deal closes. EDS isn't new to the notion of trying to run more efficient data centers, of course; Hurd noted in his conference call that EDS is the largest customer for data center automation software company Opsware, which HP bought. But Hurd also made clear in his conference call that "leveraging" scale is a major part of this deal, and he has backed Mott's efforts to dramatically centralize HP's IT, with a goal of cutting IT costs from 4% of revenue to 2%. Mott, one of the best in the CIO business, isn't a fan of tinkering around the edges of IT change. From John Soat's coverage of a speech by Mott earlier this year:

... technology managers must realize that a radical IT transformation is the only way to achieve significant and lasting results. Trying to pick and choose among various and equally pressing IT priorities -- server consolidation, application portfolio management, rationalizing IT resources -- is a recipe for failure. "Choosing is losing," [Mott] said. "You're going to guarantee you'll never get finished. The incremental fashion just doesn't work."

There's a thoughtful exchange between Om Malik and Nicholas Carr on whether this deal is a bet on tomorrow's cloud computing infrastructure (Malik) or today's client-server architecture (Carr). I see it as mostly the latter. Yes, bigger and better data centers could help in a cloud computing future. But this looks like a very practical chance to grab outsourcing capacity today -- and run it better.

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