Q&A: HP Sales Chief Details Plan To Take Down Cisco

Fueled by HP's $2.7 billion acquisition of 3Com, Randy Seidl, HP's senior vice president of the Americas, Enterprise Servers Storage and Networking, is aggressively driving HP's sales reps and partners to knock on more doors and show up in every networking deal against rival Cisco. Seidl is emphasizing what he calls HP's 25 years of networking experience in the battle against Cisco.

At HP's Americas Partner Conference, Seidl spoke with Everything Channel Vice President and Editorial Director Kelley Damore and Editor News Steven Burke, about Cisco's exorbitant margins, the battle in the sales trenches with Cisco and how HP and its partners are going to win. Here are excerpts from that discussion.

Talk about the three key selling points for partners selling HP rather than Cisco?

For the partners it is about making money. The value proposition to the partners is that they can make money based on the programs and go to market activities we have. Number two is we have a high (sales win) rate so they have a chance of selling something. Third, our (sales) mapping plan is that we will align with them in our enterprise accounts whereas some of our competitors will have 10 people working on a deal. We align and map crisply.

Lastly, partnering is important to our DNA and our market. In my first four months at HP, I spent more time in the partner community than doing anything else because I am so passionate about it.

For customers on the networking, storage and server side versus Cisco, first we are uniquely positioned short term and long term to know the full enterprise. You think about converged infrastructure around server, storage and networking, we are the only company that has IP (intellectual property) across all those areas. The second thing is we have a very open architecture versus being closed. The third thing from a pure pricing perspective, it is known that Cisco gets very high margins in that space

So if you take a look at server, storage and networking, Cisco's margins in round numbers it is probably 70 percent. And it is not just the product margin they make but also on the services side. So we feel we are going to come in and be very aggressive to disrupt the networking marketplace. Whether you are in the SMB, commercial or enterprise space it should be beneficial to the customers because now they actually have a viable alternative so they have choice.

Compare HP's margins to Cisco's margins.

HP runs our business on a lot lower (margins) than that Cisco number. We are not going to publically disclose the pricing strategy. I'm not trying to be evasive, but the point is we run our company at a margin level that is much lower. They run theirs at a margin level that is much higher.

Talk about the HP proposition on services and the Cisco margins on the services side with the annual services fee for enterprise customers and then discuss the SMB margins.

With our server, storage and networking services in most accounts we have by definition more feet on the street than anybody else. So in a lot of cases it is very easy for us to kind of scale. So it's not like we are coming in with net new people that need to service (networking accounts). There are some nuances relative to knowing networking. We think from a scalability perspective we think our model is built to run more efficiently than what Cisco has.

Compare your services margins to the Cisco margins.

Hardware is pretty black and white. Services margins are a little more of a grey area because it is based on utilization. We're not coming out and saying publically what percentage lower our services margins are. We have people already on site doing server and network services. It's not like it is a net new proposition for us having to bring people in to do the services.

NEXT: Getting The Sales Force Ready To Take On Cisco

Talk about how you are getting the sales force and partners engaged to make sure they understand the 3Com integration story and they are aggressively selling everything from 3Com VoIP to security.

We are actually using the Americas partner conference and InterOp as a good spring board.

(HP CEO) Mark Hurd is hosting a lot of the top networking partners in a full-day summit roundtable discussion. Pleasantly enough a lot of partners that might otherwise have been in San Francisco at Cisco's networking event have decided to come here.

On the HP side, I have a new management structure that is in the midst of being announced that will be beneficial. And then we are growing aggressively in terms of feet on the street with sales resources, partner resources, solution architect resources.

Ultimately none of that matters unless you have somebody that has an HP networking card calling on the customers. So we are making sure that we are rallying the HP troops and partner troops to make sure that we are going in and knocking on all the doors. There is obviously huge room for improvement although we are currently number two in the networking space.

With ProCurve even without 3Com we are still a distant number two to Cisco. The biggest value-add that I see is it is amazing how upset customers are that they really have not had a viable alternative to Cisco in the enterprise networking space. I go on calls every week where they are very excited about the opportunity for us to help them.

How many calls you have been on and how many customers are talking about the fact they didn't have a choice?

I try to do ten sales calls a week. Everybody I would say is upset. I think it really comes down to the Cisco tree huggers that are the network managers in the accounts and how strong is that factor. Last week I was in Ohio where the CIO, CFO and the technology senior leadership staff were all fine with aggressively trying to get off Cisco. And they felt they had enough power or control to help the tree huggers get their fingers off the trees.

In some other accounts, the CFO or CIO may be upset but are really not going to go and tell network managers that have built careers with Cisco to replace it. I would say 100 percent of the calls at the senior level have an issue with it and don't like it. And 80-90 percent are happy for us to be aggressive to see what we can do to help.

We'd love it to be 100 percent HP networking everywhere. But if we get bread crumbs everywhere we will have phenomenal growth.

Aren't the CIO's big (Cisco) tree huggers?

It is more the next layer down. In the financial services space where Cisco has been most successful, they are happy to try to engage (with HP). You can't just flip the switch overnight to make it happen. But they are very happy to engage us.

Take a look at the traction that we have as the largest technology company, Fortune 10. All of the biggest tech buyers out there are strong customers of ours. You have the high end of the pyramid where we are very focused. And we have been doing a lot in the past six months in terms of growing partner share there. So we have very strong growth even without networking. And in the SMB space we are having phenomenal growth as well.

NEXT: On Cisco Playing The FUD Card

Sometimes Cisco plays a Fear Uncertainty and Doubt (FUD) card that if you don't want your network to fail, buy Cisco. How do you combat that?

This goes back to IBM FUD 20-30 years ago. I think in today's day and age, HP ProCurve and 3Com are known, proven products. So it is not something coming up new. So I could make a comparison: ProCurve and 3Com known, proven, dependable, reliable, robust versus on the (Cisco) UCS (Unified Compute System) side you could say not known, not proven, very small traction, closed not open architecture. I would rather have our hand at the poker table than theirs if I could use that analogy since we are here in Las Vegas.

The biggest objective is us really showing up. There are a lot of things we can do to improve to show up earlier and faster. There are also so many people in the networking side that have built their careers on Cisco that we need to ask: Is the management bold or strong enough at the senior level to say why this is good for the end user company.

For partners how much more sales growth and profitability do you think they can get selling HP ProCurve and the HP networking line versus Cisco?

The margin they get from Cisco is not as rich as the partner programs that HP Is rolling out. We have a stronger value proposition to the channel relative to the margins that partners can achieve. We have a more disciplined, mature channel. So if you are going to invest and work with us on large deals and competitive opportunities, we have specific programs like Value Big Deals and Value Express where we will co-invest with partners and protect their investment. So again, per deal they will make more money. And they will have a better chance of winning. So it comes down to more margin per deal and a better win rate.

What is the hit rate going head to head against Cisco on networking deals?

It is improving and we are obviously just getting the legacy HP team ramped up on 3Com. A lot of the opportunity on my side with server, storage and networking is making sure we are showing up faster and being more aggressive.

NEXT: On The Legendary Sales Transformation

Talk about a couple of specific wins against Cisco with partners and what is the difference?

Most of the ProCurve business we do is through the partner community. There are hundreds of those (sales wins) every quarter.

What sales behavior do you see out there are you particularly happy with and what sales behavior would you like to change?

You have some of the legacy HP bad behaviors, where it could be partners or us, where they are not aggressive enough, not showing up enough, not selling the whole portfolio. They are not doing the right homework when they go on sales calls. They don't have an agenda when they go on sales calls. Afterwards they don't do prompt recap letters. We have something going on called Legendary Sales Transformation which is basic sales blocking and tackling. There is a lot of that we are working to improve fast with our partners and with our selves.

We are also making sure that we are coaching and developing to have the best talent. So if somebody is not performing to the standards that we want, we will work them to manage them up and if that doesn’t work, we will take the opportunity to upgrade.

Talk about what impact the Legendary Sales Transformation is having.

Now versus a year ago, there is a whole different level of amped up and ramped up sales DNA relative to what we are doing and how we are doing it and what our expectations are of not just ourselves but our partners.

What were you most surprised or angry about when you first took the position?

For me coming in as an outsider and being here seven months, it has been great to be able to make a lot of changes fast, and be bold and be aggressive relative to what we want to do and how we want to do it. The two shocking points were that the company and the products were as strong as it was. What was stopping us from further greatness was really ourselves relative to sales execution.

A year from now where do you see the HP progress versus Cisco?

A year from now the difference is (Cisco) UCS (Unified Compute System) is dead and we have had phenomenal market share growth in the networking space. And customers are thrilled and partners are making a lot of money.