It's Time To Toss 'Toss'

Here's the crux of the problem. When a solution provider vying for a big Wintel deal on a branded vendor's behalf gets into a competitive situation with other vendors, companies such as HP and Compaq have allowed the solution provider to bid the product below his or her cost to win the deal. In the premerger world, HP called its program Big Deal; Compaq referred to its plan as TOSS.

As it stands, when solution providers win deals under either program, they still must purchase the products from their distributor at the normal markup, submit paperwork to the vendor, and then await a rebate check.

The problem is that solution providers have to fork out the money up front and then wait weeks, sometimes months, for reimbursement. That means many successful channel players have literally millions of dollars of their money tied up while helping vendors win business from Dell Computer and other rivals. In other words, solution providers are floating interest-free loans to help HP and others fight Dell.

Some attempts have been made to make the process more efficient by reducing the time it takes to reimburse the channel. But that approach is dead wrong. This is a pricing issue, not a programmatic one.

Moving forward, HP needs to have the ability to dynamically price its products on a daily basis. Customers need to know instantly the prices they have to pay; solution providers need to know instantly the prices they have to pay. And that's it.

HP and Compaq have whined that the pricing issue is much more complicated than the scenario I've outlined here. Tell that to the customer who asks Dell to quote a price and can get an immediate answer.

Kevin Gilroy, HP's vice president and general manager of commercial channel sales, vows a fix for the pricing dilemma is on the way. Solution providers should hold him to his word.

CRAIG ZARLEY is Industry Editor at CRN. He can be reached via e-mail at [email protected].