HP Exec Jack Novia Opens Up About Enterprise Channel And Logistics Problems

Jack Novia, who was recently appointed senior vice president and managing director of Americas region for Hewlett-Packards's Customer Solutions Group (CSG), spoke with CRN Industry Editor Craig Zarley and CRN News Editor Steven Burke about the company's enterprise channel and logistics problems. Novia took the job after his predecessor, Jim Milton, and CSG Executive Vice President Peter Blackmore were fired in the wake of a $208 million operating loss in the third fiscal quarter ended July 31 for the enterprise server and storage business. Below are excerpts from the interview.

CRN: Do you plan to increase the amount of business going through your channel partners in North America?

Novia: The answer is yes. And it is in the context that we plan to increase market share in enterprise for HP across North America. Through market share growth we are absolutely going to be utilizing channel partners. No change in the strategy from what you've seen in the past. If anything, we are going to reinvigorate the action within our organization.

CRN: When you say you are going to increase the channel business, is that because you are increasing overall enterprise business therefore all boats rise with the tide? Or is there a specific effort to send more business through the channel?

Novia: The answer is yes and yes. From my perspective each of our business segments, our enterprise, our SMB, and our public sector, have a goal to grow our overall share in the business and the channel is going to be a critical part of that growth. The second point is that should be clear to everybody is that in order for us to have an effective reach to do that we need our channel partners in the enterprise for reach and capability.

id
unit-1659132512259
type
Sponsored post

CRN: In your new role, do you have direct responsibility over HP's enterprise channel or is that the responsibility of HP's Solution Partners Organization?

Novia: I'm responsible for the sales and overall growth for HP Americas. We set not only the sales connection and the field engagement but the growth strategy for the business which includes how we come to market. The SPO organization is the primary hub for us to deal with the channel. That channel leader, as you know, we are in the process of interviewing and closing on that very soon, will be a critical member of my team.

CRN: What's the percentage of enterprise business going through the channel and what would you like to see that mix be in the future?

Novia: Today we are looking at around two thirds of our overall business going through the channel. As I look at the over all mix in our enterprise business today, I don't see that dramatically off from what we'd like to see in the future.

CRN: Do you believe that the problems that have hampered the enterprise business, including shipping delays and other logistical problems are behind you?

Novia: I think we have a really good handle on the problem that we've dealt with through Q3 (HP's third fiscal quarter ended July 31). The team is working quite diligently right now and we will be by the worst of the situation in this quarter. I don't want to put a percentage on it, but I'm all over it personally and I think we've seen the worst days in this situation.

CRN: Have you met with any channel executives at this point and what is your plan to do so?

Novia: In just a couple of days on the job here, it's been just getting to meet my direct reports. I've reached out to the channel community and just exchanged some short messages with folks like Don Richie (Sequel Data Systems), Rick Hamada (Avnet), and Pat O'Conner (Agilysis) and its my intention to not just reach out but to make sure that I am a critical part of their growth plan going forward. So you'll see lot of my personal time and attention along with the [new HP] channel leader working with the executives in the enterprise channel because I absolutely believe that they need to be a critical part of our team.

CRN: Over the past two years, HP enterprise partners have seen their business drop significantly from what it used to be. Specifically, what are you going to do to grow that enterprise business?

Novia: I am a big believer that you can't have an independent channel strategy and an independent account team strategy. One of the things that I am working with my team on right now is we really believe that the secret sauce to connecting with the channel partners out there is to get rep to rep and manager to manager relationships at the absolute local levels. And part of that is really centered around the fact that in order for either organization to get the growth we have got to make sure we are mapping our accounts and our channel partners together. We are starting it at the local levels. We are going to be building that into basically their growth and their development plans. It is great for [HP Senior Vice President] Kevin [Gilroy] and I and the rest of the team to declare the channel as a great asset for us but unless we are driving it down to the street level we will never get that traction.

Point two is as I look at our marketing spend and our marketing envelope I want to make sure that we give our fair share of marketing dollars, demand creation and leads to the channel. Without the opportunity for them to go off and fulfill it is certainly not going to be beneficial for either one of us.

So we are trying to design them in at the sales coverage level, at the marketing spend level, the channel enablement program level and I have asked all the business units that are working with us right now to make sure that we have a very, very strong sales through strategy with the SPO (Solution Partner Organization).

CRN: Are we going to see increased channel spend and bodies to make this one seamless sales force from the direct guys to the channel?

Novia: The first thing we want to do is to implement the plan that we have already set out. This is not about a major change in spend or reallocation of resources. This is about delivering on our commitment that we sat down and talked to the enterprise channel about.

CRN: How are you going to get the direct sales force and the channel on the same page if you don't have direct responsibility with the channel chief reporting into you so they have accountability based on what you are seeing in the field?

Novia: Let's be clear. The total growth of the business that we have got to deal with is our responsibility here in the organization. I absolutely have had no problem working with the channel prior and nor do I intend to see any problems going forward. And quite frankly Kevin and the team have been an integral part of what we do. That is not an issue. That is a non issue as far as I am concerned.

CRN: There were in 2000 a significant number of HP-only enterprise channel partners. You have kind of lost that. What message can you give to the enterprise channel partners as to why they should partner with HP?

Novia: I have never made any bones about the fact that I think a great channel partner is a partner who is heterogeneous. So when you are dealing with customer's needs there is a lot of different products and capabilities out there. I am not afraid of working and competing against our competitors like IBM and others with our product line and capability. From my perspective I think the differentiation that is going to come from great channel teaming and growth from our partners is going to come from do we have a product line that you can make money with, first and foremost. Second do we have a market call center and selling model strategy that is there for them supporting them every step of the way, and are they designed into our customer satisfaction and business strategy plans.

Quite simply that is the way we are designing the business to go forward. Again I will tell you it is no change in the strategy, but we are going to pick up the pace and really work hard with the enterprise partners. We are not done with our channel partners. Until we build that pride, that sense of community back, and we show them every time they come to HP they are going to get a faster answer and better support, that is how you win the hearts and minds of the channel. And that is what I am committed to do.

CRN: What changes are you going to make right out of the gate to kick in this enterprise business?

Novia: I think part of it is you lead by example. I have got my business leaders chartered and set up to work with each of these key channel partners so they are a part of each of those business segments. The strategy piece of this is critical. If you don't have [partners] designed in, let's face it all you'll ever have is a transactional relationship. We are committed to designing our partners in.

The second point is you've got to sweat the details. Part of the work I am doing right now is I am trying to get a better understanding as my team is as to what are those little roadblocks that might get in the way of a channel partner's success. Again I am going to pay a lot of attention as Kevin's replacement around what things do we need to fine tune in our partner program, what changes do I need to make on the product side to make them successful. It is about the little things and about the big things on the strategy along with the fact that we have got to get them (the channel and direct sales team) working in the field together.

Our folks out there are measured for total growth. They are not measured on one thing or another. It is really critical for them to get as much business as they can and that is why it is important for them to partner.

CRN: How are you going to get the direct sales and services teams to work together with channel partners?

Novia: I actually think it is happening and happening a lot of key places around our mid tier and large accounts. First off our compensation program is designed to not take a piece of business from the partner. It is critical for us to maintain that neutrality here because again we are getting back to try to grow market share. I don't intend to make any additional changes in that space. But I do intend to send a message and a leadership message out there that more HP coverage is better. We are engaging the amount of resources we have on account coverage and make sure that rather than hire somebody if I have a channel partner that has done a great job of covering an account by all means we are going to do that.

So it is really about implementing the design that we talked to them about back in the channel partner conference we had not too long ago and it is just about making sure they are connected at the local levels along with the right market programs and making sure we take out any glitches that we might have in the channel.

CRN: Will you send out any emails or letters to the partners?

Novia: I will but I would like to do that with the new [channel] leader who will be coming on shortly. And you can bet that my presence will be felt amongst everyone of our major enterprise partners and quite frankly our a lot of our two tier partners who I have gotten to know and love over the years. I am no stranger to this business. I used to run the [Digital Equipment Corp.] channel way back when. I am used to understanding the needs of our storage partners and our server partners. There is a lot of best practices I have seen over three companies here. There is no one company answer or the other. Between Kevin and I and the other thought leaders in the business you can be damn sure that we are going to make sure that we invigorate this channel and really go after it in a big way.

CRN: As you come into this job and look at the state of the channel, what is your assessment of it and what are your goals there?

CRN: My assessment is we have work to do to regain the hearts and minds of our channel partners who might be selling in multiple environments today with IBM and other companies. My goal is to get our company in the position and get our organization in the position where we are the preferred vendor to do business with. Plain and simple.

CRN: A lot of mid-tier partners say their HP business is dropping and they say they are spending 60 "70 percent of their time dealing with HP rather than engaging with customers on new sales opportunities. What are you going to do to fix that?

Novia: I would call a lot of those partners who I have worked with over the years very specialized and very capable either by geography or by product line. We have got to rebuild that sense of community. So one of the things that I am asking my business unit leads right now to do as an example is I want to harness up all our storage partners out there in the top tier and second tier of our business.

I want to make sure the SPO organization gets the full support of our product divisions. Look, the way I envision a successful channel is our sales force is the channel and our direct sales force. I don't differentiate between the two. Okay. So when you kind of set that mindset as the leader in the business what you find is that the organization starts to make sure that the care and feeding of the channel is job one. So I don't expect the SPO organization to try to do everything.

We are asking the business units to really respond to make sure we get the appropriate training to the channel. That there is the right information out there. That we work with Kevin's team to make sure that PartnerOne is continually tuning and growing so they can make money at it. I don't think we are perfect in this space. I don't think we are perfect in quoting and designing, but the way we will fix this is through a list of issues that the channel partners are telling us are key. Quite frankly we will use the enterprise council to help drive some of that change.

CRN: Is there any actual change you can make to change the dynamic on the amount of time partners are spending dealing with HP on logistics issues?

Novia: You can bet that priority one right now is to get past any backlog issues that we might have and make sure that we have got the right channel inventory and the right channel positioning from a product point of view.

I have been spending the last couple of days with the team down here in Houston on that. I think that will be a huge time saver for our channel and will get them focused on selling and delivering to the clients.

As we continue our relationship here I am not only interested in strategic issues, I am interested in understanding is there things inside our model that is slowing down our resellers, like is their quoting and configuring issues. Are there things that we need to change within our model? I just don't have enough data on that yet and will get enough data on that with the combination of what we do with our channel team here and feedback that I am going to be getting over the next six weeks with our key partners.

CRN: One thing that is going on is that changes are being made that the SPO organization doesn't know about. Is there anything you can do to put the heat on other organization to make sure they are communicating effectively changes that are taking place impacting solution providers' sales general and administrative expenses?

Novia: We absolutely need to and will do a better job of forecasting any changes in our business model so we can better understand the impact to the channel. Quite honestly, the way I would do that is through the SPO organization utilizing the enterprise council who I value dearly and have worked with many of those partners for many, many years. You are right. We will do a better job in that space and that is part of just doing better business and getting them more enamored with HP over their other competitors.

CRN: How tough are you going to be with everyone that is involved in your organization in keeping people on point and on the channel strategy and not deviating from that plan?

Novia: We are going to be very tough on it. But let me be clear about something: The channel strategy and what we ask the SPO to take a leadership role on is the mechanics of that. That is square in the hands of the SPO organization and we are going to support them every step of the way on that. But the guidance and strong feedback I have given my team here is this is not about do a channel plan and then do a market growth plan or go to market strategy.

This is about you do not have a go to market strategy unless you have a channel plan embedded in that. Part of that work is the inspection we are going to do down to the street level. So it is not going to be good enough to say, 'gee I am planning on using enterprise partners in product x or geography y.' I want to know how are you going to do that? What are you doing to network with the partners? What is the training strategy? What is the development plan? Do we have the right resources in the field to support them? Do we have the right product distribution strategy to enable them?

That is the kind of last mile, the finite detail that we are going to be working here. This is not a separate strategy. This is a design in of the channel strategy. And the mechanics of how we communicate and how we pay is all centralized through SPO which is absolutely paramount to our long term success.

CRN: It sounds like there is going to be much more rigor around channel metrics in terms of each of the business units. How much tougher are the metrics going to be when these units are doing their plan visa via the channel?

Novia: Yes it is going to be a requirement for each of the business units and each of the segments to design the channel strategy in. It is absolutely a no go decision on us approving those plans. It gets back to reach and capability. It gets back to affordability. We absolutely need that channel for the reach and the expertise they have and quite frankly they have done a heck of a job on account relationships out there. We want to capitalize on that. I also want to make sure that this is not just a product discussion. I want to make sure we keep working our ways to enhance their capabilities through selling services. The services group over the last year and a half grew their business over 30 percent in the enterprise channel. And we are not done yet. We are absolutely not done yet. We think there is huge potential for them to grow and make money. It is not just about designing them into what they have always done.

It is about figuring out a way to enhance their capability with all of the stuff that we can bring to the table. I absolutely believe that when a channel partner looks at us and looks at an IBM they are going to see a capability of services and capabilities to expand their product line. We have got more tools in the bag. That is the bottom line. And we are going to make sure they have access to those and can make money at that.

CRN: How big a cultural change is their going to be in terms of the channel orientation of the business units?

Novia: I don't think it is a cultural change. It is an absolute forceful implementation of what we have already set up from a design point of view. It is about execution, precision execution. There is no major change here. I don't have to go redesign the book. It is about maniacal execution here.

CRN: When you looked at it what kind of execution has there been here and are you satisfied with it or dissatisfied with it stepping into the job?

Novia: I think we have got a lot of work to do as an organization. I think we have a great start with what we have already begun. So I am not dissatisfied. But I will tell you that satisfaction will come when the channel partner is making money and we are growing market share with the business. So I will always be working hard and never satisfied until both of those aspects are made.

CRN: When are the business units going to bring plans to you that have these channel metrics built in instead of just a general we support the channel?

Novia: We have already been working on a re-igniting and a re-support of a lot of the programs we have in the server and storage space. This is not a mandate that is coming in email tomorrow. We have already begun this process. We recognize the fact that it is absolutely critical for us to step up our efforts in this space.

I have been reviewing and have been reviewing the channel strategy and plans for the last month or so and our goal here is to step up the efforts and you'll see that in actions that we have out in the field through demand programs and through our channel connections with our field sales force.

CRN: What is the final message to the channel partner who is skeptical that HP can be a good channel partner?

Novia: I think that anybody who has worked with us over the years knows that HP has been pretty damn consistent with the channel. The expertise we have on our leadership team in the channel space, myself included, realizes it is critical for us to grow our business with the channel. We'll do it with actions and not words. That is the bottom line.