HP says UK firms will only be able to upgrade to newer, more agile IT systems if they cut their exisiting overheads.

Many IT departments in medium to large organisations are spending an "astonishing" 80 percent of their IT cost base running their existing portfolio of applications and hardware, Steve Gill, HP's UK managing director, Computerworld UK.

HP is increasingly advising its clients about how best to make this switch, he said: "A lot of our large enterprise customers look like us, with different offices around the world and a large infrastructure, and they are asking us how to change their balance of spending on IT."

"In our company we are getting towards spending 30 percent on existing operations and 70 percent running new applications that create new business opportunities and make us more reactive," he said. "It is an achievable number for anyone."

Gill said it was "very difficult" for businesses to react quickly to a changing environment and to competitors' actions if they did not have the ability to spend in the right areas. He said it was one of the key challenges that IT chiefs and CEOs faced today.

HP's services business forms part of its technology solutions group, which expanded dramatically last year when it bought Mercury for $4.5bn.

The services business generated approximately $7bn in the UK, its largest division outside the US, out of global revenues of $92bn in the year to October 31 last year. It is also working hard on its green credentials.