HP Reveals Planned Changes To Its MDF Accounting Process


Hewlett Packard is giving channel partners an early heads-up on changes to its market development funds (MDF) payments that it says are aimed at reducing auditing interactions and making the process more forward-looking.

VARs will continue to enter MDF plans and their partner business managers (PBMs) will still submit the plans to approval from HP's marketing team. But starting May 1, once the plan receives approval, partners will have to log into the Business Planning Application, enter claims for each fund request and upload their proof-of-spend (POS) and submit claims in order to receive the MDF they've requested.

Under the current process, after an HP partner runs a marketing campaign, they fill out a business results spreadsheet -- usually at the end of the quarter -- which outlines incremental sales and other results derived from the activity. Based on these results HP will then pay MDF to partners at the end of the quarter, and HP also conducts a quarterly review in which it audits a percentage of partners' MDF activities.

The proof-of-spend requirement currently applies only to partners' HP-audited activities, but under the new rules partners will be required to do so for all activities. "If this is all done right it will eliminate our audit process," Matt Smith, HP's director of marketing for the Solution Partners Organization (SPO), Americas, said in an interview.

One of the problems with the current MDF process is that it's backward-looking, Smith said. "We were asking for things 30 days after they happened, but these results are already coming into HP systems. This puts the onus on us in terms of checking results internally and making sure we get the results we asked for," he said.

HP trained its sales force about the changes last week and plans to begin training partners next month. If all goes according to plan, Smith expects HP's MDF process to become more proactive than reactive. "My expectation is that this will shift us from a very backward-looking audit process to forward looking process that's focused on the next two quarters," he said.

Meanwhile, HP is also changing its policy for informing partners about changes to its PartnerONE program. HP previously gave 30 days notice before instituting program changes but is now extending that effective immediately.

"Any time we make changes that impact the number of dollars or cash flow to partners, whether it's before the deal or after, we'll give them at least a three-month notice," Smith said.

Streamlining has been a common theme in the HP channel of late. In November, HP began using a deal registration tool that cut the number of options that partners must consider from 11 to 5 and began drawing clearer delineation between volume- and value-oriented transactions.