GM, HP Ink Software, Service Deal ‘Second to None’ Globally

General Motors in the next few months will deploy the largest batch of software and support services Hewlett-Packard has anywhere in the world, as the auto maker works to accelerate and upgrade its information-technology operations.

GM reveals earlier today that it has purchased the software and services from HP as part of a previously disclosed plan to move applications development, support and high-performance operations computing capabilities in-house after outsourcing the work to HP for many years.

The contract will result in 3,000 current HP employees joining GM.

The auto maker characterizes the complementary moves as “cost-neutral” and says they will save money in the long run. Neither GM nor HP discloses the value of the multi-year contracts.

“We’re transforming our IT operating model to improve performance, reduce the cost of outgoing IT operations and increase the level of innovation we deliver to the business,” GM Chief Information Officer Randy Mott says in a conference call with journalists to discuss the news.

“As part of this, we are moving from a highly outsourced to a largely insourced business model and changing the mix so more employees are focused on innovation rather than operations.”

Last month, as part of the transformation, GM announced it would open new IT innovation centers in Austin, TX, and Warren, MI. Two more planned locations have yet to be announced.

Mott says he expects to deploy the HP contracts within six months, although the timeline could vary by global region. The HP employees will begin their transition to GM’s payroll immediately. Many have ties to the auto maker dating back more than a decade to when GM still operated its own IT unit, called Electronic Data Systems (EDS), before spinning it off and seeing it purchased later by HP.

GM’s IT transformation will consolidate 23 data centers to two, reduce 40% of its applications to common processes and automate some tasks currently being performed manually.

“A number of those levers reduce the cost, and as we get more efficient and more productive in running the operation we will be able to invest that into things that we can then apply to business capabilities,” Mott says.

GM’s decision to move its IT function in-house earlier this year as part of its restructuring surprised the corporate world and was seen as a potential blow to HP because it represents one of the largest software and support-service contracts in the business.

“From an HP software point of view, this will be the largest deployment of our full product portfolio in the world, second to none at this stage,” says George Kadifa, executive vice president-HP Software.

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