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Whitman Must Bury 8/18/11

Reversing course for HP after former CEO Leo Apotheker turned the biggest IT channel upside-down, is a job CEO Meg Whitman is facing head-on.

August 18, 2011 is the day that will live in infamy for HP VARs. In one fell swoop, HP’s former CEO, Leo Apotheker, announced it was possibly spinning off its PSG division, killing its six-week-old TouchPad tablet and buying a UK software vendor, Autonomy, for more than $10 billion.

Over the months, this date has been specifically referenced time and again by VARs -- and even HP executives -- as an indelible mark left on the company -- a time when the biggest IT channel was turned upside-down and defined more by uncertainty than predictability.

One cannot understate the damage done to the channel by the 11-month tenure of Apotheker. Since 8/18, the HP channel has been in limbo trying to decide whether it should stick with HP, or diversify and invest in other vendors. This is all against a backdrop of extraordinary change within the technology marketplace as VARs try to shift their business models in order to capture some of the cloud and mobile revenue. Still others are looking to an unlikely ally -- Apple -- in light of its astounding iPad success.

And HP’s other competitors aren’t standing still. They are aggressively recruiting some of HP’s finest and architecting its field sales force to capitalize on the uncertainty. Cisco, who had its own share of difficulties during the past 18 months, seems to have recovered and, according to VARs, is a formidable foe with a field sales force that is working hand-in-hand with the channel. HP meanwhile, they grumble, does not have a clear channel strategy and the field is rife with conflict and confusion.

Enter Meg Whitman. One hundred days on the job, Whitman has been forced to focus on cleaning up the chaos Apotheker has rent. But in the next 100 days, she needs to prove she understands channel dynamics, has an overarching vision for where HP needs to go and communicates that strategy far and wide.

One of Whitman’s strengths -- from her days at eBay and on the campaign trail in 2010 -- is communication. She will need those skills to assuage solution providers’ fears. HP’s channel clout and influence is waning as it loses mind share and market share. While Whitman hasn’t met with many channel executives face to face yet, she needs to hear their concerns. Ironically, she also needs to take the politics out of HP and break down the silos that are so firmly entrenched in the company. Today, HP is a company of individual product divisions rather than a company that stitches products onto an overall vision.

Furthermore, Whitman should take a page from HP’s old playbook, circa 2001, when channel engagement was at an all-time high. One of the first changes she should make is to appoint a channel chief. In years past, HP had one channel chief who was the channel face of HP. Other large technology vendors have a similar role. HP has moved away from this and has upwards of a dozen “channel chiefs” within divisions that report up to the division presidents, making it difficult for solution providers to align a face to HP’s channel.

Finally, HP needs to reinstitute the “hard deck” to minimize conflict in the field. This was a list of companies that HP’s direct sales force owned, and any companies outside the hard deck were fair game for the channel. Today, the hard deck is unclear or unspoken. What’s more, many of HP’s competitors have implemented a similar model.

Reversing course is a big job for Whitman, but hopefully a year from now, 8/18/11 will be a distant memory, and HP and its channel will be back in all its glory.

BACKTALK: Kelley Damore is VP, Editorial Director for UBM Channel. You can reach her via e-mail at kelley.damore@ubm.com.

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