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Can an IT department cut its annual spending by 30 percent and still remain effective? Hewlett-Packard is on track to do that under a five-year business transformation plan that calls for cutting IT costs from $3.04 billion in 2003 to $2.11 billion in 2008.

HP offers a case study for tech managers on how to consolidate operations. I have learned of at least seven places where the $98.5 billion company, which makes PCs, servers and printers and offers consulting services, plans to transform its business.

Click here to read about how HP kept its dominance in the PC field in the fourth quarter of 2006.

Consolidate data centers. Over five years, HP plans to cut the number of data centers from 85 global locations to six super-centers, in three U.S. sites. Plans call for a tightly coupled grid-like structure to connect the six data centers for redundancy and fail-over backup.

Consolidation has made it possible to eliminate underutilized computer capacity and to create a shared arrangement, including virtualization, for computing and file sharing.

In achieving this goal, I understand that HP plans to reduce the number of servers from 19,000 to 10,000 while increasing processing capacity. HP spokesperson Michael Moeller, in a voice message, said the number of servers will go from 22,000 to 14,000. He confirmed other—but not all—plan highlights.

Read the full story on 7 Places to Clean the Clutter in IT

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