Exclusive: HP's Donatelli On Dell, Cisco And Partner Profitability11:00 AM EST Thu. Jun. 13, 2013
HP Enterprise Group Executive Vice President Dave Donatelli, the driving force behind HP's converged infrastructure product portfolio and head of the company's global sales organization, spoke with CRN this week at HP's Discover conference about the changes HP is making to battle Dell in the server market, the shortcomings of Cisco's Unified Compute System and HP's focus on partner profitability. Here are 15 questions for the technology-savvy industry veteran.
We are taking a lot of action. We have seen encouraging early results. And at the same time we are going to continue to look where else we should take action in order to continue to improve.
We have made significant progress on the tools front, and we have more progress coming. So we actually just did an internal review the other day on this and you'll see things like quoting [tools], pricing [tools]; all things that will lead to speed and agility in terms of selling servers have improved. We believe we are going to make significant improvement over the short term. And a lot of these tools we have already previewed with our partners. And the good news is they are starting to come out.
In the volume side of the business, we have made enhancements to our pricing and into our channel programs to speed the velocity of those products through the channel. Again, many of those changes just rolled out within the last two weeks. So they are very new. But we see encouraging signs, and we are looking forward to tracking their progress.
Our goal is with all of these programs whether it is pricing or tools to make partners more independent so they do not have to come back to HP and we do not have to intervene in the transaction. That is our goal. And we are measuring all of that. We can measure how often someone has to come back [to HP for pricing approval in competitive situations]. Our goal is to reduce that as much as we can and as fast as we can do it.
I think a combination of these tools as well as the new products like some of the products we announced today [HP ProLiant servers for SMB customers] are what's going to drive that. And then the future products like Moonshot where we are uniquely positioned in the market with lower cost, better functioning technology that no one else in the world has.
I think this is a very significant change. I think change starts at the top. And the great news is [HP CEO] Meg [Whitman, pictured] has been extremely supportive in making these changes because these require significant system and policy changes within the company. And so I think the company has always wanted to do it. It is just an extremely large and expensive task. But the great news is we have decided to do it. And we are executing on it. So you can see measurable progress today. And we measure it. Even the enhancements we have put out over the last couple of weeks are all meant to make more progress. And you'll see we have a very detailed road map in the coming quarters to continue to address this.
Very clearly what Hewlett-Packard has done is we have had a very clear vision of where this marketplace is going. And we have talked about converged infrastructure which everyone wants to talk about, but we invented it. If you look at our CloudSystem product, we have approximately 1,000 customers running that product line today. And if you look at things like software-defined data center, we today are shipping a software-defined server, a software-defined storage product, a software-defined backup product and a software-defined networking technology.
No one has the vision, the breadth and the depth of technology that HP has to offer. And we offer that around the world consistently with world-class service, all designed for five-nines availability. That is a story no one else has.
I think the difference with Hewlett-Packard is we develop server, network and storage from the ground up to work together versus kind of taking multiple products from multiple companies putting them in a rack and saying it is an integrated architected solution. It is a difference between architected solutions all designed by one company and serviced by one company versus piece parts by multiple companies that quite frankly are now starting to compete with each other. So it is going to be very interesting to see down the road if you are a customer that says, 'Well gee, my partners are now all competitors. How is that going to work out -- particularly over the long term?' With us, you have the certainty that we are one company, one architecture, one throat to choke.
Again, [with HP] it is one company to work with. You know who we are. We are very consistent to work with. We have the architected solution that makes it simpler to buy, simpler to implement and gives customers better value.
If you are Cisco, who did VMware just buy? Nicera. What does Nicera do? [Software-Defined Networking]. How long do you think that partnership [Cisco-VMware] is going to be selling together when they are competing against each other in their core businesses?
I think you are going to see these two companies [Cisco-VMware] compete with each other. So if you are an end-user customer, you are going to have to deal with the fact that the people who supposedly are partnered are now competitors.
It is certainly a risk. And in our case the difference is since we design it in one place -- Hewlett-Packard with all Hewlett-Packard engineers, we are designing our products so they work together more seamlessly all the time. And, again, a great example of that is with the technology called Flat SAN. If you look at Moonshot, what does Moonshot have in it? Server, network, storage, one single product, one single management all developed by one company and one company to support it.
I don't have any specific changes to announce other than to say we have been extremely clear: Our business partners are more than 66 percent of our revenue; we are taking steps every single day to make it more attractive for partners to do business with Hewlett-Packard, to sell more of the Hewlett-Packard portfolio and to ensure that they are paid very well to do it.
Our goal is to make our partners more profitable and to make it most economically attractive to sell the bundle of our products. We have already put in some of those programs. We are measuring those. Those programs are having positive progress, and we are going to keep measuring them to make sure they achieve all the results we want.
Listen, we clearly want people to bundle these things together. And we clearly want to incent our most loyal partners and reward them for being our most loyal partners. And we believe the more of the portfolio they sell, the more they should be rewarded. And we believe it is good for our customers, and we believe it is great for our partners.
We have made our partners a huge priority as part of our turnaround. As you know, we have had a great legacy with partners for years and years and years. I think it is one of the core strengths of Hewlett-Packard. And as you know, when we had our annual partner conference in February [HP CEO] Meg [Whitman] laid out our strategy and said, 'Look, partners are key to us.' As you are also aware, we said in May we are going to start to change a lot of our partner programs and listened to feedback from partners to make it better. And we rolled out all those changes in May. So we are very, very excited about those changes that help our partners make it easier to do business with us and help with their profitability.
We think it is not just about compensation, it is about having great products to sell because having great products makes selling easier. And so what we are committed to doing and what we are doing is giving our partners the best portfolio that they can take to their customers. By having great differentiated products, it is much easier and faster to sell.
A great example of this is the 3Par 7000 Series that is our fastest-selling midrange product in HP's history. And the majority of that revenue comes through our partners. We have seen all kinds of partners who might have become dormant in selling our storage come back because they see that they can have a product that their end-user customer will love, that they as a partner can support, and make money off the support as well as off the sale.
I don't think it is tougher to make the investments, but I think this is a significant transition. Again, I think it is the most significant transition that the majority of people have seen in their careers. And our message back to the partners is we have the road map to get you there. We have the new products. They are available today. We have the current products. They are available today. And we can help you bridge to this new world. So what most people are typically concerned about in a transition is they might be doing well today, and then they say -- 'Where's tomorrow? What is going to happen when today shifts?' Our message is very different than that. We have articulated what tomorrow is: Moonshot, software-defined networking, software-defined storage. It is here. It is tangible. Let us work with you to help get you to this world.