HP Channel Chief: Operational Changes In Place To Improve Channel

Stephen DiFranco, Hewlett-Packard’s channel chief, recently spoke with CRN’s Scott Campbell about progress with HP’s channel programs, cloud initiatives and some news on the Palm/mobile front. The following are excerpts from the conversation:

What progress has been made in some of the areas HP committed to improve at the Americas Partner Conference this spring?

There were a couple of things we committed to at APC. First, we would try to get some channel simplification. Since APC, we have a new leader for Americas operations in Debra LeBlanc. She has selected a new U.S. channels operations leader, John Lundgren. His job is to focus on solving many issues that channel partners wanted fixed.

The first thing is deal registration. This is really critical. We got up on stage and committed to addressing that and we have identified the organizational and people changes necessary to make that happen.

At the core of it, HP tried to accommodate so many different channel partner issues that we created a large, complex channel operational issue. The goal is to simplify that and reduce the number of programs so it’s not as confusing which programs you should use. At the end of the day, fewer is probably better.

The other thing is we promised is to get the leaders of IPG, PSG, ESSN, the software group’s channel, the networking group’s channel and the services channel all working together as one channel team to address things in an synchronized way.

The thing thing we said is we would keep executive access. I’m pleased to say [CEO] Mark Hurd is continuing his meetings with channel partners through the fall.

Is it possible CRN could get invited to one of those meetings?

No. One thing that makes that process work is that it’s truly for channel partners to have unfettered access to Mark. They can ask serious questions about running their businesses. In many cases, HP is their largest hardware vendor, a significant part of their business. They need an opportunity to get to the CEO in an unfettered model. I think that’s critical.

One of the things that we’ve talked about is that we’re putting together a portfolio of products on the x86 infrastructure, the parts that we use to build our PCs and servers and storage and networking products. Our partners can have the ability to sell and service across that portfolio and expand into new businesses. If they’re selling PCs they can expand into security or storage, as HP becomes a company that offers a broad enough line that resellers look at as their their principal franchise, they need access to that company’s principal executive.

At Synnex’s Varnex show earlier this year, you noted that when you joined HP there were many different answer and opinions on the channel internally. How much has the channel’s message been unified across the company?

Getting a new ops team under Debra LebBlanc has been critical. You’re not going to solve the eight ways to run 20 different programs problem without having an operations team that focuses on programs that are truly effective and valuable. There are no fewer than 16 different registration programs available to resellers today. Multiply that by the number of business lines and it’s an unnecessarily complex way to do registrations.

Having a team focused on finding the few that matter is a step in the right direction. We’re reaching out to peers like Frank Rauch and others that have sales responsibility in the channel to align programs and communications to channel partners, simple little things make sure our inside sales organizations address channel in a similar way.

Next: Deal Registration Improvements On The Way

There’s a big difference between what a PSG reseller needs and what an ESSN reseller needs, and it seems a single registration program for all product lines isn’t the answer. You’re not talking about that, right?

There’s no need to have as many as we have today. We have a very broad portfolio and resellers will choose different places to focus.

Some may choose a certain vertical focus, or product line focus. We want to make sure if somebody that spends time on data center has a PSG opportunity that they have the time and motivation to do that. If your customer has a competitor’s brand of desktop PCs, we want you to say ’Have you considered HP?’ and I have a motivation to help you review and consider HP. One thing we want to do is encourage them to look at our entire portfolio.

A few months ago we did a cover story on vendor exclusivity in which a number of VARs expressed concerns about vendors like HP wanting them to sell only that vendor’s products, when in many cases the VARs feel it’s important to sell what they feel is the best solution for that particular customer, regardless of vendor. Does HP need to balance its own goals with those of its partners?

I don’t know of any situation in my short tenure here that this is the best thing for the customer and HP hasn’t been supportive of the best thing for the customer.

I will tell you it’s our job to be the best thing for the customer, so we are the best choice. We have to drive toward that, to have the best product portfolio and services portfolio for those resellers who choose to lead with HP.

We are looking to earn the opportunities to sell the entire product and services portfolio. I am looking for partners who feel the right thing to do for customers is a strategy of having HP lead the way.

Other recent news involved a new electronic health records program. Can you give us a channel update on that?

We just had our first health-care reseller summit two weeks ago in Houston. We brought in 120 resellers to talk about how the entire product line works into health care, alliances we are building around health care and programs we are running for health care.

It was the first time that HP had a health care forum. We had all types of partners and ISVs at one time, across all [business units] by the way.

That shows how HP is bringing an ecosystem to the partner community. We’ve also reorganzied the U.S. PSG channel sales team into the same five territories of ESSN. We took a small group out of that organization and created a specialty organization around health care, FED/SLED, graphics arts workstations and thin clients.

Instead of having PSG call on you for general purpose, and a second call for health care and a third for thin clients, now you get one call and those people are those supported by specialists for applications and product support. That first movement we had to better leverage our PSG organization across the U.S. and better synchronizing PSG with their ESSN counterparts.

Next: More Reasons To Sell PCs

What percentage sell PSG resellers also sell ESSN products or vice versa?

I have spent lot of time investigating that and I do know the numbers. And we will drive more participation. I think the portfolio is a strategic advantage and we may be underutilizing the portfolio. One of my goals is to get a better PSG. If you have resellers focus on SMB, they may want to sell the whole line that focuses in that area like certain Lefthand [networking] products, certain Edge products. We want them to sell the whole line.

We might have someone who sells high performance computing servers and is now selling 3Com and high-end storage products and not engaging on customers on the clients. Now with advent of desktop virtualization, we want them to do that. If you’re doing virtualization at the server, now selling PSG products is becoming important because of desktop virtualization.

What if I’m an ESSN reseller and you come to me to sell PCs and I say, 'No way, there’s not enough margin in it?'

There’s more strategic reasons to encourage our resellers to look at all the opportunities for all their customers other than margin. Virtualization changes that a lot. Now the desktops connect more seamlessly to the data center. Notebook managed services changes that. As we become a community of companies whose employees are more remote now, the choices of what you give them to be remote are more important. You want to make sure they’re secure, serviceable and thoughtfully procured.

All of a sudden, social changes are occurring in the business world and notebooks and desktops become more strategic, more than a transactional buy. The folks managing issues like security in the data center are now asked to look at security for the desktop and in the future they’ll be asked about handhelds and appliances.

Speaking of handhelds, that’s one area that seems underserved by VARs. Now that the Palm acquisition has closed, what does the future hold for that in the channel?

Palm will give resellers the opportunity to offer a franchise that includes mobile devices that are secure on the network. To a reseller doing data center, I can have a practice with Palm devices from HP because that device can be managed and secured through the data center.

One of our competitors in the phone business does a good job selling devices in corporate environments. But they’re not coming from a channel world. Now you have a company from the channel to have a device that has a smart enough OS to shut down if the device is lost or stolen. Now you can start to go out to customers with that. I’ve asked Tom LaRocca to put together a channel program around the Palm acquisition.

Next: Palm Represents Big Channel Opportunity

Do you thing VARs are missing a lot of opportunity now in the mobile world?

Up until now there’s not been a lot of opportunity to be in it. One competitor has chosen a non-channel friendly approach and another has a completely non-channel approach. Nobody brought them with a hardware and software practice that they can deploy. Here’s HP coming along with a Palm consumer device today, but it has some [commercial] features and you can start building a commercial practice.

What will a future HP/Palm smartphone include?

We’re not sharing future roadmaps right now. I have the Palm phone itself, the Pre. It can be set up on Microsoft Outlook.

Are you guys talking with the big application developers about creating mobile-friendly versions of their software so they can perform almost any business task on a phone?

Our intention is to bring a fully serviceable set of services to the consumer and commercial markets based on the Palm OS. Which apps are chosen and eventually deployed are the result of negotiations and conversations with the Palm team. I’m sure we will have consumer and commercial applications and to work with plug-ins. Palm, even before we acquired them, had a plug-in with Salesforce.com. We will continue down that road. And that’s why I’ve asked Tom LaRocca to put together a Palm channel program. Tom has lots of experience and he understands the channel.

Can you update us on the $250 million investment you have with Microsoft in the cloud? What’s the future for Azure with HP?

What I hear from channel partners is they are looking for a way to provide private cloud networks for commercial customers that allow them to leverage a distributed cloud, while maintaining security. The word cloud doesn’t solve all the problems.

There’s an issue of dialogue and development of broadening the portfolio that ensures security, validation, protection and integrity. Anybody can throw up a cloud and provide a data center. What I hear from channel partners is they want to deliver cloud, but with security, protection, integrity. It’s a company’s information, probably that needs to be in an environment that is protected.

Do you envision working with a whole new set of cloud-focused companies and partners, much like you might be looking more at ISVs now say in the health care market?

One thing that managed services shows is that channel partners come from new places. There are new companies now who are managed services providers first. They provide services for deployed clients. I wouldn’t be surprised if we find new partners.

Finally, you’ve been with HP about five months. What do you want to tell VARs

One thing that’s great about this channel is its adaptability. It’s adapted through a massive recession, adapted through refreshes, through Y2K. It’s adapted through virtualization and it will adapt through desktop virtualization.

The channel is incredibly durable. It finds ways to evolve and innovate through challenges. We are committed to make this easier to be a partner. I may be the channel chief, but we have five people leading the channel in the Americas and we work together every day as a team. I may be the guy to do the interviews, but all of us drive every day. And executive access will continue. Mark Hurd will be there. Our objective at the end of the day is to get channel partners to look at us as the best portfolio in the industry.