HP is to add a new business unit in its Software division that will oversee the company's business intelligence (BI) and information management offerings.

The BI arm of the new Business Information Optimisation unit will sell internally developed data warehousing technology, said Ben Barnes, the newly appointed vice president and general manager of the BI group.

But some HP users said they are dubious about buying key software products and services from a company that specialises in developing and supporting hardware products.

Ashok Bakhshi, IT director at US-based manufacturer Schindler Elevator said that his company "would not normally go to HP for that type of support. It is not their forte."

Over the next several years, Schindler plans to deploy an enterprise data warehouse from SAP, Bakhshi said. Schindler uses enterprise resource palnning (ERP) software from SAP and hardware from HP, he said.

He added that any proposal from HP to use its data warehouse software "would have to be extremely compelling from a performance and business-value standpoint before we would make the switch out of SAP."

Bill Kehoe, CIO of the US Washington Department of Licensing, said that the state agency has a BI project under way that is based on Microsoft's SQL Server database software. Although the department is a big user of HP server and desktop computers, it wouldn't seriously evaluate the vendor's software before taking the time to see how HP's services compare with those of other vendors "who have more [BI or information management] experience," he said.

HP began shipping one of the unit's key products, the Neoview data warehousing offering, in October. Officials this week declined to name any companies other than HP itself that are using Neoview.

The technology includes an HP fault-tolerant server running the vendor's storage and database software. HP said it is using Neoview internally as part of an ongoing effort to consolidate more than 700 data marts into an enterprise data warehouse.

Not only is Neoview a "large, very scalable, very high-performance data warehouse," but its price tag is also comparable to the offerings of competing data warehouse appliance vendors, Barnes said.

Data warehouse appliances, which are available from several vendors, include combinations of high-performance hardware with database, storage and other software. The systems are generally preconfigured for specific tasks such as strategic analysis.

Barnes said that HP expects that better tapping the BI and information management market can boost its corporate revenue by expanding its business within existing accounts.

HP officials declined to provide details about the company's BI and information management product plans. And it has yet to hire an executive to lead the unit's information management operation, officials said.

Henry Morris, an analyst at research firm IDC, said that HP has long been involved in the BI business, because it provides servers that IT operations use to build and run data warehouses.

Morris said he expects HP to rely on partners such as Cognos, Business Objects, SAS and Hyperion for the BI tools used for reporting and analysis, unless it moves to purchase such a vendor.

"In terms of the overall solution for BI, there is much more to be gained in terms of overall revenue from services," said Morris. "Generally speaking, for every BI project, services are the most expensive [part], because expertise is in short supply."