HP's Whitman: Stoking The Partner Growth Engine
Months before Hewlett-Packard's Global Partner Conference, CEO Meg Whitman asked for the list of top partners who hadn't yet confirmed they were attending. Soon after, she grabbed a conference room and spent three hours, starting at 6 a.m., calling solution providers to personally invite them.
Later that same day she was back on the phone, from 7 p.m. to 9 p.m., dialing more names on her list. Making personal pleas to solution providers to attend a partner conference is a task most CEOs would pass on. But not Whitman, who found several partners on the other end of the line thinking it was a prank call. "No one hung up, but there were a few that were like, 'I'm being had,' chuckled Whitman. "’Who is this?' It was very funny. I said, 'Well, you would be surprised who is on the other end of your phone.'"
The calls were no joke. Of the 80 partners Whitman personally reached out to with a pledge that it would be worth their time to attend the conference, about one-third committed to make the trip. "It was the personal touch," she said. It wasn't just Whitman making the calls. She had set up a contest with the members of her top executive team aimed at bringing more partners to the table as part of an all-out channel sales growth charge for 2014.
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"Number 1, 2 and 3 job is growth," said Whitman of the call to action for partners at this year's conference, to be held from March 24 to 26 in Las Vegas. "Second, it needs to be profitable growth. None of us are in this to make no money—the partners least of all. Third is to restore trust and confidence in HP so that we are top of mind so that as they're allocating their resources, their ISRs [independent sales reps], their marketing dollars, we get more than our fair share."
The tireless Whitman, who has been working 18 hours a day and regularly doing business meetings on weekends in nonstop turnaround mode, has been doing more than her fair share to move the channel sales needle. Over the past 12 months, she has met with more than 1,000 partners. The former eBay CEO said she knew "in her bones" when she took the HP job that it would be partners that would power an HP turnaround. So she made the decision to personally oversee a complete overhaul of the company's partner strategy and programs. Not only, she decided, did HP need to reinvest in product innovation to restore the company's legacy as one of the crown jewels of Silicon Valley, it needed to reinvest in partners to restore HP's rich partner heritage.
Whitman is driving what in HP parlance is called a "new style of IT" along with a new style of IT partner. That has required astronomical investments, including a more than $100 million sales transformation initiative that includes a single unified channel sales platform called Unison based on Salesforce.com. It also required a companywide effort to put partners at the center of everything HP—from product planning to sales and even a massive marketing overhaul aimed at letting partners leverage the $112 billion computer giant's multibillion-dollar marketing muscle.
"There has to be a growth plan for every single one of our partners," said Whitman, who reviews the business plan in Unison of every partner she meets with. "What market segments are you going to go after, what products, with what marketing campaigns, how are we going to collectively grow the business, down to a quite granular level. The devil is in the details."
Whitman's hard work is beginning to pay off. So far, all of HP's top-tier Platinum partners and 20 percent of Gold partners have business plans with the company. Solution providers that two years ago were shifting business away from HP to competitors such as Cisco Systems and EMC are now building out rigorous business plans aimed at driving big gains in their HP sales and profits. The change in the partner conversation from fear, uncertainty and doubt to confidence regarding HP's channel commitment and future has Whitman feeling good about the company's progress, but certainly not ready to declare victory.
"My headline is progress—more work to do," Whitman told CRN. The channel is now HP's fastest growth route to market, making up 75 percent of HP's sales. "It is growing faster than the rest of the business," she said. "It is not fast enough for me. But it is growing faster."
It is not insignificant that Whitman has used some of the lessons she learned in her unsuccessful run for governor of California to restore partner faith in HP. "In politics when you are explaining, you are losing, and it is like that with the channel," said Whitman, sitting in a conference room with CRN editors at the Westin Seaport Hotel in Boston earlier this month after addressing nearly 300 industry analysts along with her executive team. "When you are explaining, you are losing. When you are talking about how we are going to grow the business together and what the opportunities are in the market, what is the innovative technology, that is when you are winning. That is the big difference."
NEXT: Winning With Partners
Winning With Partners
That big difference is changing the dynamic in the sales trenches and rattling the channel landscape. Anexinet, an HP Platinum converged infrastructure partner, two years ago took Whitman's channel commitment to heart and began putting more muscle behind the new-style HP solutions and "de-emphasizing" rival vendors such as EMC and Cisco, said John Kolimago, vice president of technology solution sales at the Blue Bell, Pa.-based company. "In two years we flip-flopped from EMC being our No. 1 storage line back to HP," he said.
"Our trajectory is to grow our HP business faster and more profitably than any of the other lines of business we have," said Kolimago. "I see us continuing to de-emphasize our relationships with HP's competitors because, frankly, they don't return to us as good an investment on the capital we spend as when we spend it with HP. That capital is our sales and technical talent and marketing dollars. HP's PartnerOne program is far and away the gold standard. It is more lucrative than any other vendor program we have ever participated in."
Anexinet, No. 213 on CRN's Solution Provider 500 list, a ranking of the top solution providers in North America by revenue, has 260 employees, with the vast majority of them being technical talent. The company is taking full advantage of PartnerOne, said Kolimago, growing its HP business 30 percent in the last fiscal year and aiming to grow it at least that much in the current fiscal year.
Kolimago, in fact, expects the profitability of Anexinet's HP line of business in the current fiscal year to be more than double that of its Cisco business. The stronger pivot to HP comes even though the server and storage powerhouse also sells Cisco's Unified Computing System.
Kolimago said his sales team never got the level of channel commitment and engagement with Cisco that it has now with HP. As a result, Anexinet is ramping up its HP networking business. "With the advent of HP technology in the networking space, we don't think we are at a strategic loss by de-emphasizing our relationship with Cisco," he said.
Kolimago said he feels HP networking's full-court innovation press, including a software-defined networking effort tied tightly to HP OpenStack initiatives, will have a bigger payoff for Anexinet and its customers.
But it's more than HP's strong product portfolio that is pushing Anexinet toward HP, he said. It is a comprehensive HP business plan on full display in Unison as a 24/7 system that involves all of Anexinet's employees from sales and technical talent right up to the CEO. Whitman's willingness to put herself on the line for Anexinet also is fueling the shift. One example: a personal email Whitman sent in October to a large manufacturing customer to help Anexinet close an $8 million HP 3Par deal. The personal guarantee that HP was fully committed to making sure the customer was more than satisfied pushed the deal over the goal line, said Kolimago.
"It was awesome," he said. "In 20 years in this business, I have never seen that kind of CEO channel commitment and engagement. Meg actually took the time to put her money where her mouth is and actually show us it was important to her and HP. That made quite an impression on my sales team. How cool is that? HP has got our back all the way to the top."
Whitman made the same kind of impression on the 1,100-member sales team at Insight, No. 12 on CRN's Solution Provider 500 list. The Tempe, Ariz.-based solution provider is aggressively investing in the end-to-end HP product portfolio including Autonomy, said Insight President and CEO Ken Lamneck. Whitman put together a personalized video for the Insight sales team, singling out specific members for their contributions, thanking the team for its 2013 performance and rallying it for growth in 2014. "We haven't had anybody that has come and done the kind of outreach she has done with salespeople at that level," said Lamneck. "It was huge. She has that rock star type of allure to her. To have that kind of personalized message was really special. She has made a huge impact with her personal engagement style and involvement."
NEXT: Partners Stay In Unison
Partners Stay In Unison
The next chapter in the Palo Alto, Calif.-based company's story is a stepped-up pace of product and channel innovation. HP, in fact, is rolling out a number of major channel initiatives aimed at taking the turnaround to another level, including getting more partners on its Unison Salesforce.com sales platform; significantly increasing the number of partners bringing HP software and services to the market; and the launch of a new executive sponsorship program that for the first time requires all of HP's senior vice presidents and vice presidents to oversee partner accounts, doing quarterly reviews and visiting those partner accounts on-site twice a year.
The Unison platform, the work of some 300 developers over 18 months, may well be the biggest game-changer in creating tighter alignment between HP and its partners. "No other company that connects with the channel has a collaborative platform like this," said John Hinshaw, a former Boeing CIO who was Whitman's first senior executive hire and is the driving force behind the Unison development effort. "This is really the partner's whole window into everything HP."
Today there are 50,000 partners with joint business plans on Unison collaborating with HP partner business managers and sales teams, sharing leads through the platform, using Salesforce.com Chatter to get questions answered and getting speeded-up quotes on HP products, including servers and converged systems. In the second half of the year, Hinshaw, executive vice president of technology and operations, is promising what he calls the "holy grail" for partners: a compensation component that allows them to instantly see the bottom-line commission impact of any deal. Even without the compensation component, Unison has had a dramatic impact on solution provider satisfaction, with scores for those using Unison shooting up to as high as 88 percent from 60 percent before the platform.
Unison is helping drive a channel renaissance for a company that was focused on cutting costs to make earnings and had clearly "lost its way with the channel," said Hinshaw. That changed under Whitman with HP investing two times more in channel sales tools vs. direct sales tools. "You have to invest in order to grow in the sales channel," said Hinshaw. "So we made those investments and they are paying off."
Target: 100 Percent Software Coverage
Investing more in software and leveraging partners broadly to sell it is a critical piece of the next phase of the HP turnaround. George Kadifa, executive vice president, software, who oversees a team of 4,000 engineers and developers, said the company's $600 million software research and development budget is on the rise. And so, he said, are investments in teaming with solution providers. The software move is not a niche play but, rather, a broad and deep partner strategy powered by a new generation of converged infrastructure software appliances such as the HP Converged System 300 for Vertica. "We are literally trying for 100 percent coverage," said Kadifa, who added he is confident that the converged infrastructure appliance software strategy will kick the partner software quotient into high gear.
"We needed products where our partners could actually succeed, and it is not going to be a full change in personality for them," he said.
To take that software strategy to the next level, Kadifa has brought on board former Oracle colleague Harry Gould as vice president of software, worldwide alliances and channels. Gould over the past year has been aggressively ramping the software partner push. HP software is now part and parcel of the HP PartnerOne channel program with software requirements to hit top-tier Platinum targets.
What's more, Gould just four months ago rolled out new software subscription consumption models for managed service providers: the Cloud MSP and MSSP (Managed Security Service Provider) programs. "It is subscription-based so it is recurring revenue and these partners are now embedding us into their managed service platform," he said. "What we find is our competitors are not approaching the market the same way, and we are winning business."
Walking In Partner's Shoes
The executive sponsorship program, meanwhile, began rolling out in December. About 150 senior executives already have partners they are responsible for, with another 250 senior executives in the process of teaming with partners.
The senior executives are rolling out detailed "heat maps" that analyze where solution providers can increase sales and profits by targeting specific product areas or market segments. "We are going to partners with market intelligence," said Printing and Personal Systems Senior Vice President Jos Brenkel. "You can see if partners are missing out on the hottest parts of the market."
Lynn Anderson, a senior vice president and chief of staff for HP who is part of the executive sponsorship program, said the program has changed the dynamic in HP by getting senior executives to walk in a partner's shoes. "We are sitting across the desk from the partner, understanding the challenges and adding value," she said. "You come back to HP with a very different view about the life of a partner."
Whitman's leadership has led to a striking difference in how HP approaches partnering with the channel vs. competitors, according to Anderson. "Our competitors talk about, ’Here is how you can go deliver value as a partner,'" she said. "At HP, we believe we have actually done a shift. We have shifted to the power of 'we' and together HP and our partners are going to drive growth."
The Channel Is Like 'Night And Day'
It is that kind of sales alignment that has partners looking back at the chaos that engulfed HP when Whitman took the helm as a distant memory. Mike Strohl, who for the past 20 years has charted the IT landscape as CEO of Concord, Calif.-based Entisys Solutions, an HP Platinum solution provider founded by his father, said he has simply never seen the kind of channel turnaround that Whitman has engineered in such a short period of time. He credits Whitman for going beyond the traditional CEO channel rhetoric and instilling a deep-seated change in the sales trenches. "We certainly are, in a shockingly short period of time, light-years away from where we were," said Strohl, whose company, No. 287 on CRN's Solution Provider 500 list, fits the bill of HP's new-style IT partner with 50 percent of its 110 employees made up of highly sought after technical talent. "It's like night and day. The partnership doesn't feel like the traditional reseller/vendor partnership. We are going to market with HP with our interests aligned."
That alignment is driving big sales growth for Entisys, whose HP business went from $12 million in 2012 to $33 million in 2013 with profits up 60 percent based on the PartnerOne program changes. This is just the beginning of what Strohl sees as a period of unprecedented HP sales growth for Entisys. He sees the company's HP business growing to as high as $50 million in 2014 with another 50 percent rise in his profitability based on PartnerOne changes.
In 2015, Strohl sees his HP business growing to as much as $75 million as he ramps up business in Southern California and invests more aggressively in products such as HP's next-generation converged systems, HP networking and HP software products such as Autonomy. "The opportunity is there," he said. "It is just a matter of execution."
Strohl sees a bright future for his company and other new-style IT partners even in the midst of the difficult transitions facing solution providers as they adapt to cloud computing. "We are investing aggressively first and asking questions later because we believe in where HP is going and their approach to partnership," he said.
Chris Case, CEO of Sequel Data Systems, an HP enterprise partner in Austin, Texas, that has built services offerings around the HP product portfolio, said there is more collaboration than ever before between the HP direct sales force and his company, No. 405 on CRN's Solution Provider 500 list. Case pointed to a huge complex data center consolidation deal that Sequel and HP are teaming together to try to win.
"That probably would not have happened two years ago," he said. "It no longer feels like we are competing with the HP sales force, and they don't feel like we're taking anything away from them. It's a joint opportunity for both of us to make money. The pipeline is huge and it's getting larger and larger every week. We have lots of opportunities we are working together."
If Sequel and HP are able to close those deals, this year could be the highest HP sales year for Sequel in its 28-year history, said Case.
Case, who has been driving deals involving HP for Sequel for the past 15 years, said he rates Whitman as the best of the lot of HP CEOs Sequel has worked with over the years, from the direct sales emphasis favored by Carly Fiorina to the cost-cutting driven by Mark Hurd to the "black hole" created by Leo Apotheker.
Whitman has stoked the HP innovation engine and has partners talking business outcomes rather than commodity product speeds and feeds, said Case. "The conversations are less and less product-focused for us every day," he said. "It's more about what customers are trying to do and how we can together drive business outcomes. It's no longer my blade vs. your blade. It's a whole new conversation."
NEXT: The Cultural Shift
The Cultural Shift
The changing partner conversation is in no small part due to the sense that the HP culture has changed under Whitman from a group of siloed business units pitted against one another to a single, unified HP. Partners point out that the new HP fiscal year that began Nov. 1 marks the first time Whitman has the advantage of a new unified channel program backed up by her own handpicked executive management team. In June Whitman named Dion Weisler executive vice president of Printing and Personal Systems and then two months later named former COO Bill Veghte as executive vice president of the Enterprise Group.
Majdi "Mike" Daher, CEO of Denali Advanced Integration, Redmond, Wash., No. 114 on CRN's Solution Provider 500 list, said Whitman's greatest accomplishment is unifying a $112 billion company with 300,000 employees and 150,000 partners. "HP is the one company that can top any competitor with its portfolio and be No. 1 across the board in clients, servers, networking, data center and cloud," he said. "HP's biggest competitor is themselves. It has always been themselves. If they can overcome the internal challenges and tear down the walls built up of mistrust and missteps over the last four years, then I believe they are unstoppable."
Whitman does not get the credit she deserves for breaking down the barriers to build a better HP, said Daher. "When Meg came into HP it was a very, very difficult and chaotic situation with lots of pockets of power and people doing their own thing, building their own empires," he said.
Veghte said Whitman has gotten the team focused on the opportunity in the market and made it fun to work at HP. "We have got a lot of work still to do but what is happening is the cycle of courage and confidence is there now," he said. Veghte, a New Hampshire native who grew up on a farm, said the soil has been tilled, the lawn has been reseeded and the green grass is starting to sprout. "Not all the grass is the same size," he said, but it is growing. His message to the market: "We have a vision, we have innovation, we have a really strong leadership team, and we are moving with tenacity and courage. Bet against us at your own risk. Bet with us for growth."
Restoring HP's Legacy
HP partners say that message of growth is resonating with them.
They say that while the final chapter of the HP turnaround has yet to be written, they are confident Whitman is on track to restore the company's legacy as a bastion of innovation.
"She came into a company that was not stable and had under-invested—if not disinvested—in technology and has made the tough decisions and invested in innovation," said Mont Phelps, CEO of NWN, No. 88 on CRN's Solution Provider 500 list. "At the end of the day, this is really a technology business. You have got to bring value above all else to have a business, and Meg has done that. She has been willing to make the tough decisions and has created a culture of accountability, responsibility and performance."
Phelps said he is impressed by Whitman's "passion" to make HP great again. "It's a big, daunting task, but you can see the progress with a lot of good things happening," he said.
"Meg is taking one of the iconic brands in the whole world in the IT industry and rejuvenating it and putting it back to where it should be," said Insight's Lamneck. "She is totally committed to taking that brand and putting it back where it belongs. A strong HP is important to the whole channel ecosystem. There are only a few manufacturers that really drive so much of the channel. A healthy HP is critical to all of us."
Entisys' Strohl said that as an HP partner he is glad Whitman took the HP job but, as a lifelong resident of California, he is also disappointed Whitman was not elected governor.
"Her legacy isn't just going to be the restoration of one of our country's great organizations, but she is going to transform the way the entire industry goes to market as a result of the way she partners with customers and works with their partners as a whole," said Strohl. "If the job she has done at HP is any indication of the impact she would have had on the state I have spent my whole life in and love dearly, I could only imagine the kind of things that would have been going on in the state today had she won the election. I think she is a winner. She has a way of not just solving the problems by the numbers, but getting to the core of what matters most to people. She would have probably created a model that other states would have wanted to follow."