HP closes EDS deal, preserves leadership team

No top-level management shuffle as HP folds much of its legacy services capability into the EDS management framework

Hewlett-Packard said Tuesday that it has completed its $13.9 billion purchase of massive systems integrator Electronic Data Systems, and it also revealed that EDS' top-level management structure would remain largely unchanged.

HP had already made it clear that EDS president and CEO Ron Rittenmeyer, would continue in a leadership role. On Tuesday, it confirmed that Rittenmeyer's direct reports would include key executives from EDS continuing in their roles as vice presidents overseeing various regions of the world as well as functions such as global sales, transformation, outsourcing, and marketing.

[ Read the related stories What does the HP-EDS deal really mean? and HP-EDS deal spurs range of customer reactions. ]

HP's senior vice president of HP Outsourcing Services, Andy Mattes, will now report to Rittenmeyer in the role of senior vice president of applications services. Executives in other roles, such as finance, IT, human resources and legal, will report to HP executives.

The lack of a top-level management shuffle or purge did not surprise one industry observer.

"No real surprises here so far," said Forrester Research analyst Paul Roehrig, via e-mail. "It's very much in line with the original strategy to fold much of the legacy HP services capability into the EDS management framework."

EDS will handle outsourcing services previously provided by HP's Technology Solutions Group, which will focus instead on designing, installing and maintaining systems for customers, HP said.

HP plans to reveal more about its plans for EDS on Sept. 15, when CEO Mark Hurd appears at a meeting Webcast for securities analysts.

The massive deal -- which sets up a pitched battle between HP and IBM for dominance in the services arena -- created a combined services business with nearly $40 billion in annual revenue and more than 200,000 employees as of the end of fiscal 2007, according to HP.

Copyright © 2008 IDG Communications, Inc.