Hewlett-Packard is sending a stern message to direct salespeople in its Technology Services division: If you try to snatch away an HP channel partner's deal, you might find yourself looking for a new job.
HP recently revised its rules of sales engagement to more clearly define the role that partners and Technology Services direct sales reps will play in joint sales situations. For the first time, HP has instituted a recourse policy under which direct sales reps that violate the revised rules of engagement will be subject to termination, according to Ken Archer, vice present of channels and alliances for HP's Technology Services group in the Americas.
Archer says the rules are designed to build trust between HP direct sales, channel partners and Alliance partners like Red Hat and SAP.
"The key objectives are clear, predictable and specific behavior, both from the Technology Services sales force and from the partner community," Archer told CRN in a recent interview. "We want to encourage and initiate stronger, clearer communications between our HP direct sales teams, partner business managers and our partners."
Mark Romanowski, executive vice president of ASI System Integration, a New York City-based solution provider and member of HP's Partner Advisory Council, helped develop the new rules and is satisfied that they'll help eliminate channel conflict. "The new rules definitely have enough teeth," he said. "We've wanted this for a very long time. It's fair all around and not just a one-sided program."
The new Technology Services rules of engagement are in effect now in the U.S., and HP will roll them out globally on Nov. 1 along with its new ServiceONE specialization. HP is now conducting mandatory sales training for all 40,000 of its Technology Services direct sales reps worldwide, and next month will begin offering Webinar-based training to partners, Archer said.
HP announced the Technology Services rules of engagement internally on July 20 and communicated the details in a "very, very detailed email" co-signed by Archer and Joe Bottazzi, senior vice president and general manager of HP Technology Services Americas business. Unfortunately, HP declined to share the email with CRN, agreeing only to outline its main points, so it's unclear exactly what's spelled out in the new rules.
Also unclear is whether the departure earlier this week of 31-year HP veteran Bottazzi, who is leaving HP to pursue an opportunity outside the company, will impact how the new rules are communicated and enforced.
Next: How The New Rules Will Apply To Partners
Archer did, however, offer some specifics on how the new rules will apply to channel partners. For new Technology Service business that partners bring to HP, the partner will take the lead and HP will provide sales strategy and support.
In cases involving global accounts, HP will "probably" take the lead but partners will have a clearly defined role that's spelled out under the terms of the new rules, Archer said.
"We are not looking to take the lead and cut the partner out," Archer said. "Instead, we will work together collaboratively on the opportunity in ways that are well defined and well-understood."
Guidance of Technology Services installed base deals will be determined by who owns the customer relationship, whether it's HP or the partner, according to Romanowski.
The rules apply both ways: If HP subcontracts services to a channel partner, the partner will agree not to try to steer the customer to another vendor. If the VAR controls the customer, they can work with HP without fear, Romanowskisaid.
"If I'm working closely with HP, I can be sure that HP isn't going to come in and take that business away from me," Romanowski said. "They're risking their reputation if they don't abide by the rules."
All of this sounds great, but HP partners could be forgiven for not jumping up and down with excitement, as previous HP efforts to address Technology Services channel conflict have fizzled. One HP partner, who asked not to be identified, is still stewing over a $5 million deal he brought to HP recently that was taken over by HP's Technology Services direct sales.
"We're now trying to see what we're going to get from that deal, whether it's a referral fee or piece of the services engagement. That's why I'd love to see some enforcement [of the rules of engagement]," said the source.
Pete Busam, principal at Equilibrium Consulting, a Marlton, N.J. solution provider that works with HP, says partners have heard the same promises about eliminating channel conflict in the past, and many will remain timid until they see a lasting, meaningful change in behavior. "I've personally had bad experiences with HP services on custom engagements, and ultimately sought other partners to fill the void," he said.
Archer acknowledges past "inconsistency" in channel-direct engagements but says it stems from the fact that many Technology Services direct sales reps haven't previously worked for channel focused companies and aren't familiar with the channel model. "That is why this is all mandatory. We want everybody to understand strategic partners, and we want to educate them on how to work with partners," Archer said.
Next: How HP Is Looking to Smash Channel Conflict
Archer also points to past friction in maintaining installed base contracts and renewals in cases where the partner is taking the lead and maintaining the customer relationship. HP hadn't sufficiently defined the sales engagement rules in HP-led situations but now they're clearly spelled out, he said.
"That lack of clarity and inconsistency caused conflicts. We would get mistrust, and I would get escalations that the HP rep wants to take this direct, a feeling there that they didn't really collaborate. So we are eliminating all the direct conflict there," Archer said.
HP sees the revised rules as a key to the success of its ServiceOne services strategy and program, which gives HP's services partners the ability to offer a full suite of HP professional and consulting services. HP knows that without trust, partners are going to be reluctant to bring new business to HP and will instead try to work the customer themselves, Archer said.
But in some cases, partners haven't been able to close deals on their own and have ended up losing customers. With the new rules, HP is hoping to build trust and convince partners that they'll still have opportunities to make money even when they bring in HP's sales muscle, Archer explained.
"We should be able to really help partners economically. And we should be able to help ourselves by having partners bring us into deals that we would have never found otherwise," Archer said.
Archer, a former solution provider executive, former Avaya channel chief and a 24-year HP channel veteran, returned to the company earlier this year to help with HP's services charge. With the new rules of engagement, Archer says he's hoping to install the channel as the primary growth engine for Technology Services.
"If you don't prioritize and maintain trust and predictability in partnering relationships -- and I am talking about sales engagements -- then everything kind of falls apart," Archer said. "You will not get the extension and augmentation of your selling and delivery if partners don't trust us or we don't trust them."