Avnet, HP Move To Reinvigorate Partnership

Avnet Partner Solutions is enjoying a sort of mini-renaissance with its one-time largest vendor partner, Hewlett-Packard. Executives on both sides say extensive fence-mending and a plethora of strategy sessions and meetings have helped get the two companies on the same page.

"We had some hiccups with HP, but those problems are well behind us now," says Steve Tepedino, president of Avnet Partner Solutions. "Our relationship has never been better."

The relationship may be vastly improved, but what about Avnet's HP business? By all accounts, HP is still being outpaced by its top rival, IBM, which has become Avnet's biggest vendor partner in recent years while HP has struggled with post-Compaq merger integration, executive shuffles and channel strategy changes. But, whereas HP business and involvement seemed to stall for Avnet--and other distributors--in much of 2004, there are signs that this year will bring measured improvements.

For example, HP's new channel chief, John Thompson, wowed an audience of the company's top partners at Avnet's Enterprise Partner Summit in Phoenix last month by announcing that a whopping 30 percent of direct enterprise accounts within HP would be moved to HP partners. Thompson says the opportunity represents more than $5 billion in collective sales within several hundred Fortune 1000 accounts.

As for distribution, Thompson and his colleagues say they have been working hard to rekindle the fire with their top distributors, including Avnet.

"You'll see a number of new programs and efforts rolled out with the enterprise distributors, and we're tightening our relationships there as well," Thompson adds.

HP took a first step in that strategy during Avnet's Enterprise Partner Summit, where Avnet introduced a new suite of services and tools for its resellers, including one specifically for HP solution providers. The program, dubbed ServicesPlus, is designed to help solution providers better migrate to emerging markets and reach new customers. Specifically, ServicesPlus offers tools and services for financial assessment, project management and market-opportunity identification, among others.

"This really gives VARs a lower barrier of entry to new solutions areas, as well as helps them to better touch and find new customers," Tepedino says.

One of the four services announced at the event is an HP-exclusive offering called Renewal Portfolio. Delivered through Avnet's existing Channel Connection portal, Renewal Portfolio for HP automates and streamlines contract-renewal processes for solution providers by giving them real-time views of current maintenance-services contracts and advanced notices of contract expirations and other deadlines. Renewal Portfolio also allows VARs to more accurately process contract quotes and orders.

"HP is excited about Renewal Portfolio because it's helping them improve their contract renewal rate," says Jim Kleeman, vice president and general manager for Avnet's HP business unit. "It will boost solution-provider profitability. How much exactly it will improve it, we're not sure, but we expect our contract services business to grow as a result."

Kleeman adds that Avnet's HP partners have collectively between $7 million and $8 million in services contracts coming up for renewal in the near future, much of it revolving around Unix and Intel servers. Currently, Renewal Portfolio for HP is for hardware-related services only, however Kleeman says Avnet is taking a closer look at HP's software portfolio.

In addition to Renewal Portfolio, other parts of the ServicesPlus program announced at the event include Consolidation Impact Assessment (CIA), a tool that analyzes cost of ownership; ProjectConnect, a project management service; and ClientConnect, a bundled Microsoft CRM solution designed to help Avnet customers quickly enter the CRM market. Both HP and IBM are supporting the ClientConnect offering.

HP solution providers within Avnet are optimistic about the vendors' new efforts. Specifically, Tim Joyce, president and CEO of Roundstone Systems, an HP partner based in Alameda, Calif., says the back-end cost savings offered by both Avnet and HP are hugely beneficial to his business, contributing to $1 million in extra profitability. "PartnerOne is a great program, and we're excited about where HP is going," Joyce says.

Avnet president Rick Hamada is also optimistic, and believes that Avnet and HP, along with their mutual enterprise solution providers, will develop a sound plan to grow business worldwide, not just in North America.

"John [Thompson] has come in with a fresh perspective and a lot of new ideas, and HP is soliciting feedback from us and partners like never before," Hamada says. "I believe they have a sincere interest in growing this channel again."