HP PartnerOne Chief: Expect Changes Aimed At Helping HP VARs Sell Against Cisco

HP PartnerOne Chief Tom LaRocca, who oversees HP's robust PartnerOne channel program, spoke with CRN Editor News Steven Burke and Senior Editor Joseph F. Kovar about PartnerOne incentives aimed at providing more up front margin on HP products including HP's popular ProCurve line.

LaRocca, vice president, marketing and strategy, Solution Partners Organization, Americas, was at Everything Channel's XChange Solution Provider conference urging partners to sell more of the HP product portfolio. At the same time, HP is poised to close its $2.7 billion acquisition of networking product provider 3Com.

HP's ProCurve push combined with the 3Com acquisition is part of a no holds push to take market share from networking leader Cisco.

Here are excerpts from the question and answer session with LaRocca.

What are we going to see from PartnerOne to help HP partners be more successful selling networking products like ProCurve against Cisco?

ProCurve was one of the first groups that came to us and wanted to take some of their back end (rebate dollars) and put it in the front end. They wanted to be very, very focused on the resellers in the marketplace and the reseller reps to capture their mind share.

So they were one of the first ones that actually helped build out the strategy for us on how we were going to go to market with front end benefits on the (HP ProCurve) deal registration program.

You are going to hear more and more from us about ProCurve. Obviously I can't talk about the whole 3Com (acquisition) because it is not a closed deal yet. But that is huge in the marketplace. That is going to be a big impact for us in the networking environment. That is going to bring a level of products and solutions that are going to be new to the ProCurve guys.

So are we going to see a lot of help and investment from HP PartnerOne for VARs that want to sell against Cisco up and down the networking stack

Absolutely.

How big a priority is that for you?

It's a big priority for us. Absolutely.

What ultimate impact is it going to have on VAR's profitability that sell HP networking (products) versus Cisco?

Well I think if you talk to our ProCurve networking guys out there they will tell you they like the program. They are very much in favor of the direction that we are going. They like the fact they are getting their money up front in some of these deal registration benefits. Their growth tools are on the back end. They like the investments. I think they like the direction we are going with ProCurve.

Talk about what specific changes are you making to make sure partners are rewarded for selling the full portfolio?

Obviously, PartnerOne has many different facets to it that work in their favor if they want to make investments with us across the portfolio. So if you're a partner selling today desktops and notebooks and you want to get into the server market which is sort of a logical progression for them there are investments there. There are deal registration investments. There are training investments. There are programmatic investments. There are growth tools.

Let's say you are an Elite in our blade category and you are not really selling our notebooks; You are selling someone else's desktop and notebooks. If you are Elite with us in blades you automatically get into the PSG (Personal Systems Group) growth programs. So you are going to get investments with us at the beginning of your sales cycle with the PSG products.

You are going to get entry into the growth tools. You don't have to hit any revenue bars for PSG. You simply gain entrance because you are a valued partner in a different part of our product solution set. That is one good example of how we take partners who have a core competency in one area and work with them to build one out in another area.

When did you start doing that?

We've been doing that for six months.

Are you doing the same thing with IPG (Imaging & Printing Group)?

Yes. If you gain entrance into an Elite program with HP and that was your entry into PartnerOne you now can take advantage of the other growth tool programs that are in there from the other business units.

How many elite partners do you have across the product lines?

There are several hundred Elites when you stack them up altogether across all the product groups.

Those are the ones we are most invested with. Those are the ones who are very invested with HP and we are highly invested with them.

Have you had partners that have changed their product mix based on the PartnerOne incentives?

I wouldn't call it changing their mix. I would call it increasing the breadth of their offering. So they have added another core competency or another solution to their expertise so to speak with the end users. They may have been very storage and server centric and going to market with that core competency and now they are offering a wider breadth of our products in different areas because of the investment we have made with these folks.

Next: LaRocca Talks About The Push To Get Partners To Sell More Of The HP Portfolio

Talk about the move to get partners to sell more of the HP product portfolio?

We encourage the resellers to be selling across the portfolio. We want to bring in one reseller who can sell across the portfolio rather than having multiple resellers into that end user. It is better for HP. Then we have got one reseller selling across our product groups. We can hold them accountable. We can create some growth elements there and do account planning.

How many partners are selling the full HP Product portfolio today versus a year ago and how many will be selling the full portfolio a year from now?

I would tell you that we have a lot of partners that sell across the portfolio.

I think it is a fair statement to say that we have more partners today selling across the portfolio than we had a year ago at this point in time. That would be a fair statement and we can verify that through the number of people that gained admittance into growth goals that didn't have them before.

What is your message to partners who sell more of the portfolio?

They are going to see more investments from us as they sell more and more of the portfolio and they will get to participate in a lot of different investment vehicles from us. Not only investment vehicles, but training vehicles, certification vehicles. All of these things lead to growth and profitability for these partners.

Do you think we are going to see a shift here where solution providers that step up and sell the full portfolio are going to become more profitable and see more growth?

I do because they are going to have more opportunities afforded them. Take a reseller that is doing well with our servers and notebooks how many printer opportunities is he tripping over trying to get to the boardroom in every one of these customers he is meeting with? Is there a managed print services solution inside that customer? Probably unlikely. Take Denali Advanced Integration for instance. Two years ago they weren't in the printer business at all. Now they are in the managed print service business and they are really seeing opportunities in that. They are seeing growth in that business.

Talk about other changes you have made to PartnerOne to help partners?

One of the things we have done in the last couple of quarters is we have balanced more of our investments front end and back end.

So I would say if you looked at our history maybe a couple of years ago we were primarily a back-end focused investment PartnerOne program strategy. Now we are much more balanced. There are a lot of different reasons to do that. One of them is giving some of these smaller partners money on the front end versus giving it to them on the back end. That is a cash flow incentive for them. So it is a benefit. And obviously somebody like a CDW it may not have that huge of an impact on. But if you are one of our thousands of partners out there cash flow has a big impact.

It also affects profitability at the deal level. We know that many of the partners pay their reps and compensate their reps on deal profitability. This allows us to compete more effectively out there in the marketplace.

Was the majority of the PartnerOne program back-end (rebate) focused before this?

It was a majority back-end focused. Now I would offer up that we are much more balanced. I think at this point in time we like where we are. We have talked to many of the partners. We will continue to make tweaks or changes as the competitive market out there makes sense for us. If we get driven to something because of a competitive change in the market or because growth or some other element going on out there forces us down a path we can look at that. But right now I think we have a good balance.

That's a major shift you have made ahead of other guys. What impact has it had on competitors?

I think we forced other people's hands out there in the marketplace with a change in their structure and their strategy and how they pay off benefits.

When we drive and develop these initiatives we don't do it in the vein of changing the landscape of the competition. We do it in the vein of what is going to get growth for HP and our partners. How are we together going to go out and grow the market in different segments and different verticals and such.

We meet with these guys on many, many occasions. We did over 50 (HP CEO) Mark Hurd roundtables (with partners) last year. Over 50 that is average of one a week. For a Fortune 9 CEO to get in front of that many partners and spend that much time and this year we'll do more than that provides us a lot of bidirectional feedback. We're able to get a lot of good information and solidify strategies and such and determine where we need to go.

That is a big tool for us. Not only do we do that with Mark Hurd we do it with the rest of his staff.

How many of those roundtables with partners will Mark Hurd do this year?

I don't know but it will be more than 50.

Talk about the changing PartnerOne deal registration dynamics.

We have primarily focused our front end investment changes to our deal registration programs. So each business unit has a deal registration program that caters to specific terms and conditions for that particular business unit. And that is where we have really changed our focus there. That not only provides better cash flow for the partners but it also drives right to the heart of the profitability of the sale. It catches the sales rep's attention. And he is going to get paid on margin in most cases and the front end incentives make sense.

Where has that front-end incentive paid off in higher market share?

Servers. ProCurve. Notebooks. We are experiencing growth in all those categories right now. And all of those categories now have front end deal registration programs.

Give an example of how that works with a VAR?

A VAR goes into ACME Furniture and finds a notebook deal and goes on and registers the deal as a new business opportunity.

If it qualifies as a deal, then, when he closes that deal he gets the discount up front. He doesn't have to wait x amount of weeks on the back end to receive a check from HP. He gets it up front as part of the deal.

Are VARs giving away that margin?

The responsibility of managing margin is on their shoulders. They would really have to make sure that this didn't fall to the Street. In other words they would be taking front-end dollars and giving it away in a margin deal. They have to be much more conscious of this. They have to be more responsible about how they are pricing out the product. It does put that responsibility on their shoulders. But in turn they get much quicker access to the money.