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May 06, 2003 12:02 PM US Eastern Timezone

HP Finalizes $3 Billion Outsourcing Agreement to Manage Procter & Gamble's IT Infrastructure

SAN JOSE, Calif.--(BUSINESS WIRE)--May 6, 2003--
One of More Than 200 Managed Services Contracts Signed Since Merger


On the heels of finalizing its largest services contract with Procter & Gamble (P&G), HP (NYSE:HPQ) today announced it has signed more than 200 managed services contracts in the past 12 months.

HP and P&G have reached final agreement on a $3 billion, 10-year managed services contract. Under the terms of the agreement, HP Services will manage P&G's IT infrastructure, data center operations, desktop and end-user support, network management and applications development and maintenance for P&G's global operations in 160 countries.

As part of this agreement, P&G will benefit from some of HP's industry-leading technology solutions, including the adaptive infrastructure capabilities provided by the HP Utility Data Center (UDC) and Adaptive Network Architecture. With UDC, P&G will be able to rapidly deploy and manage servers in its IT environment, providing greater flexibility to quickly respond to changes in its business and IT environments. The HP Adaptive Network Architecture services will provide a policy-based architecture to allow P&G to easily and rapidly add and reconfigure networks from its corporate backbone.

"HP's adaptive enterprise solutions will give P&G the ability to more quickly and easily deploy IT resources and services to meet the needs of our global businesses," said Filippo Passerini, global business services officer, Procter & Gamble. "HP solutions combined with HP's innovation and commitment to service excellence will provide the flexible infrastructure we need to continue to innovate and grow our business."

"HP Services will give P&G the flexibility to respond rapidly to changing business needs such as rapid changes to business processes, speedy entry into new markets and strengthened ability to execute acquisitions quickly," said Ann Livermore, executive vice president, HP Services. "P&G also is expected to save money by maximizing the return on its IT investments, through consolidation and virtualization of IT assets, thus enabling utility-based pricing models."

Approximately 2,000 P&G employees from 48 countries will transition to HP Services, mostly from P&G's Global Business Services unit.

The P&G agreement will commence on Aug. 1, 2003, subject to appropriate government and regulatory approvals.

With the signing of this agreement HP Services continues to build its momentum in managed services where it has signed more than 200 deals since the Compaq merger, including the pending finalization of recently announced mega-deal wins at Ericsson and Bank of Ireland.

Highlights of some recent announcements include:

-- Ericsson's selection of HP to provide IT service for Ericsson's operations worldwide.

-- Bank of Ireland choosing HP Services as its preferred supplier of information technology infrastructure services. The bank intends to award HP a seven-year IT outsourcing contract worth about $600 million.

-- Telecom Italia awarded HP a five-year strategic outsourcing agreement valued at 225 million Euros.

-- A three-year, multi-million deal with Cathay Pacific airline to manage Internet and intranet operations and mission-critical Web services.

"We needed a proactive and experienced partner that could combine technological strength with deployment flexibility and an understanding of our business needs," said David Ho, manager infrastructure delivery, Cathay Pacific. "We found this partner in HP Services."

HP Services has deployed a 24x7 operations team at Cathay Pacific to assist the airline in managing all of its Internet and intranet operations and systems. The team, which works closely with both the IT and business departments of Cathay Pacific, is responsible for the overall stability, security and manageability of the Cathay Pacific Web infrastructure. HP Services also will ensure that the applications environment provides the connectivity, scalability and flexibility that Cathay Pacific will need as it adds new services in the future.

The new customers announced today span all of HP's worldwide regions and target industries, including financial services, telecommunications, manufacturing and government.

HP Services also signed a multi-million dollar contract with Shanghai General Motors (SGM) to optimize the company's supply chain management system. The deployment of build-to-order processes are designed to make SGM's plants among the most advanced automotive supply chain operations in the world. As the prime contractor, HP will be working with Deloitte Consulting to deploy the solution.

"HP has demonstrated the breadth of its services solutions and the depth of its automotive knowledge," said Zhang Xin-quan, chief information officer, SGM. "HP's global resource advantage and management commitment have enhanced our confidence in the successful implementation of this project, which I believe is a win-win project for each party."

Recent reports from a variety of analyst groups also underscore the growth and momentum of HP Services. Last month, Forrester cited HP as the leader in overall Organic IT data center development based on HP's products and services for server provisioning and storage virtualization technology and a better product roadmap. In late March, IDC issued its European desktop and network management services forecast and analysis for 2002-2006, which ranked HP in the leadership category.

In addition, HP Services was listed in the leader quadrant in two recent Gartner Inc. reports: "The 2003 Desktop Outsourcing Magic Quadrant" and the "2003 Help Desk Outsourcing Magic Quadrant." In each report, Gartner evaluated 16 North American service providers based on their vision and ability to execute desktop and help desk services.(1)

About HP

HP is a leading global provider of products, technologies, solutions and services to consumers and businesses. The company's offerings span IT infrastructure, personal computing and access devices, global services and imaging and printing. HP completed its acquisition of Compaq Computer Corporation on May 3, 2002. More information about HP is available at http://www.hp.com.

(1) The Magic Quadrant is copyrighted February 2003 by Gartner, Inc. and is reused with permission, which permission should not be deemed to be an endorsement of any company or product depicted in the quadrant. The Magic Quadrant is Gartner, Inc.'s opinion and is an analytical representation of a marketplace at and for a specific time period. It measures vendors against Gartner defined criteria for a marketplace. The positioning of vendors within a Magic Quadrant is based on the complex interplay of many factors. Gartner does not advise enterprises to select only those firms in the "Leaders" quadrant. In some situations, firms in the Visionary, Challenger, or Niche Player quadrants may be the right matches for an enterprise's requirements. Well-informed vendor selection decisions should rely on more than a Magic Quadrant. Gartner research is intended to be one of many information sources including other published information and direct analyst interaction. Gartner, Inc. expressly disclaims all warranties, express or implied, of fitness of this research for a particular purpose.

This news release contains forward-looking statements that involve risks, uncertainties and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Risks, uncertainties and assumptions include the possibility that development and performance of products and services may not proceed as planned; that benefits expected to be realized from contracts may not materialize to the extent or in the timeframe anticipated; and other risks that are described from time to time in HP's Securities and Exchange Commission reports, including but not limited to HP's quarterly report on Form 10-Q for the quarter ended January 31, 2003, and subsequently filed reports. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, HP's results could differ materially from HP's expectations in these statements. HP assumes no obligation to update these forward-looking statements.

Contacts



HP
Brad Bass, 240/944-2638
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