HP: Compensation For Performance

Last week HP detailed a sweeping plan that retools its sales strategy for value products, a plan it says will drive significantly more enterprise business through solution partners.

It follows a similar PC volume sales strategy announced in November, in which HP said it would stop outbound sales calls to end-user accounts from its Colorado Springs, Colo., call center.

Hurd&'s view of solution providers and how they interface with HP&'s direct sales force brings new clarity to HP&'s channel strategy and promises considerable rewards for partners that align themselves with the vendor and push HP solutions in the market, solution providers said.

Speaking at an HP securities analyst meeting in New York last week, Hurd said the computer giant is aligning partner compensation with performance. “Not all partners are the same, and we are trying to align our channel compensation much the same way we align our internal compensation,” he said. “Believe it or not, at HP not everybody gets the same thing [in terms of compensation]. And in the end, most of that revolves around performance.”

HP-only solution providers applauded Hurd&'s promise of greater compensation. “Give us a quota; tell me what I have to get to so I can over-achieve my number,” said Craig Harper, president of Lilien Systems, Larkspur, Calif. “Measure, track and report; that&'s what it&'s all about.”

Hurd added: “We look at the channel in multiple ways. There is a strong desire to make our view of the channel generic. Are we direct? Are we indirect? Are we channel-friendly? The issue for us really isn&'t nearly that simple. We look at multiple segments of the market, and we try to align the opportunities we see in the marketplace with the opportunities for us to partner. So we are looking for very specific types of partners. All partners are not the same. For us, it is very important to find partners that add value.”

At Avnet Partner Solutions&' HP partner conference in Phoenix last week HP also drove home that value proposition by outlining its new sales engagement strategy for value products, including business-critical servers, storage and OpenView software.

David Booth, HP&'s senior vice president and U.S. country manager, Technology Solutions Group, told Avnet partners that HP has aligned 50 to 60 enterprise solution providers with the vendor&'s TSG sales force, completing a process begun last July. Booth added that HP has reorganized its field sales force to better concentrate on its 400 to 500 named direct accounts while at the same time driving more enterprise business through partners. HP&'s Enterprise Account Managers (EAM), previously responsible for up to eight named direct accounts, now are responsible for only four.

The Palo Alto, Calif., vendor also has a new group of Value Territory Reps covering about 20 non-named enterprise accounts. “Their mandate is to drive business to business partners,” Booth said.

“We are better and stronger together instead of having two random acts of selling going into the client location,” he said. “If we work cooperatively, there is a tremendous opportunity for both of us to grow in the high-end double digits.” HP said that in 2005 about $58 billion, or about two-thirds of its revenue, was sold through the channel.

HP solution providers at the conference said the reorganized enterprise sales efforts signal a renewed focus on partner sales.

“HP realizes that as they reduce the number of reps that are covering accounts face to face, they need to step up their reliance on partners to cover that void,” said Jeffrey Liebenthal, president and CEO of Trilogy Solutions, Cranbury, N.J. “EAMs used to cover 15 accounts … today we heard it was down to four.”

Booth said that while HP moved some partners inside the TSG, the message is not that they are favored. “The message is that we have to be able to incubate with key business partners and make sure we get absolutely right with them in terms of account engagement, solutions alignment and execution across our broad portfolio of products and services and share that process,” he said. “We are not going to play favorites among resellers except for those that want to double down with HP.”

Marc Sarazin, vice president of sales and marketing at AdvizeX Technologies, Burlington, Mass., said being mapped into the TSG means his organization will act as an extension of HP&'s sales team in key accounts, and the TSG sales force should funnel more business his way. “In the past, they would have just taken that business direct,” he said.

Reining in the call center means more business for the channel as well. Laurie Benson, CEO of Inacom Information Systems, Madison, Wis., said HP has already stopped making outbound sales calls to her customers. “This is absolutely business that is being turned over to resellers,” she said.

HP&'s ProCurve Networking division last week jumped on the bandwagon by revealing that it plans to build specializations into its channel program. Following the model it established in Europe, ProCurve over the next six months aims to create separate tracks within its North American partner program: one to support its large base of SMB partners and another for its growing number of enterprise partners, said Mark Thompson, global sales and marketing manager for ProCurve Networking by HP.

Though most ProCurve partners focus on midsize customers with up to a few thousand seats, the percentage of enterprise partners is growing faster, Thompson told CRN last week at Interop-New York.

“One of the challenges with a one-size-fits-all VAR program is that it doesn&'t quite meet the needs of those partners targeting the Fortune 500 or the SMB,” he said. “In Europe, we&'ve split the programs to customize the benefits, and we let the partners self-select [their category].”

JENNIFER HAGENDORF FOLLETT contributed to this story.