Q&A With HP's New Americas Channel Chief: John Thompson

John Thompson, who was most recently vice president and general manager of commercial solutions for HP's Personal Systems Group in the Americas Region, has been selected to succeed Gilroy after Gilroy was promoted two months ago. In his prior position, Thompson oversaw operations, supply chain, product marketing, life-cycle management, competitive analysis, pricing and sales development for HP business PCs, notebooks, handhelds, workstations and its Emerging Technology Global Business Unit. Thompson, who joined HP in the wake of the company's merger with Compaq Computer, has a 15-year tenure with the combined company. In an interview with senior executive editor T.C. Doyle and senior editor Jeffrey Schwartz, he discussed the challenges he faces.

VB: Can you give us your top line view of how HP is doing in terms of partner satisfaction?
Thompson: I think overall, HP has made good progress on multiple fronts"both on the total partner experience front as well as the total customer experience. We are leading in the industry in terms of establishing a direct compensation program tied in with the partner and the TCE satisfaction.

VB: When you say direct compensation, what are you referring to?
Thompson: For example, we are actually working with partners and the partner remuneration situation, based on how well we score collectively together. Because this is a partnership, we'll actually look to remunerate those partners who are doing well in terms of providing the best customer satisfaction. We are working some of the details as it relates to [this effort]. We are constantly looking for ways to improve the processes associated with this and try to make it easier for the partner to do business with HP and eliminate any kind of red tape that's required so we can get down to what we have to get down to which is taking care of our customers.

VB: Clearly our ARC research found HP trailing IBM in overall satisfaction. How do you plan to address this?
Thompson: I think it depends on which studies you that you look at. Clearly we have done a number of reports that tracks our relative position on partner satisfaction; we think we are doing extremely well. We are doing some things to constantly improve our situation as it relates to partner satisfaction, particularly in the enterprise space. If we look at some things that we've done most recently, in terms of Q4, we've looked at accelerating some of our MDF programs, establishing numerous sales specialists across the organization particularly in the enterprise arena, and we are looking at a number of sales programs perhaps within the quarter and as we go forward to really drive and further our investment here. Clearly we know there's a difference between the volume business and the value business, and the value business we reward those investments, the certification, the training programs, the feet on the street that we are looking at laying out in concert with our partners.

VB: Some of the issues the partners do have, regardless of which study you look at, is the ongoing tension created from HP trying to grow its direct business. Do you have any thoughts there? Do you think the company will continue along that plan? Do you plan on suggesting any ways that you can mitigate those conflicts?
Thompson: HP does two-thirds of its business with the partner community, which is actually more business than IBM does with the partner community, and more business than Sun, EMC and Dell combined together. That's also indicative of the progress that we have achieved. Its over a $50 billion business we do in concert with our partners. In fact if you look at the HP revenue alone with partners, we would be ranked 21st on the list of Fortune 500 companies.

VB: We're familiar with those numbers, but there's a perception by the partner community that there have been overtures from HP that there is more of a focus on trying to grow the direct business.
Thompson: I don't think it's so much a matter of growing the direct business as it is we continue to grow our partner business. The businesses I have been associated with actually have shown double digit partner growth. Clearly as part of customer reach out there, it's a matter of how we reach the maximum amount of customer, how do we fulfill that in concert with our partners or through our high-end capabilities. We clearly see growth in the indirect arena as we go forward.

VB: Coming from an outside solution provider organization (SPO), can you say how equipped you feel to address some of the concerns plaguing some of the company's channel partners?
Thompson: I think it's good to bring a fresh perspective to the business, second of all, being outside is a relative term, I have managed $1 billion to $15 billion businesses, which, frankly, have been largely partner driven in terms of the revenue streams. I spent three years working closely with the channel in Europe and Asia and multiple years here in the U.S. My background includes work with partners in the volume space, whether we're discussing PCs, and in the value space, as I used to manage P&L for storage as well as enterprise servers, Unix as well as Microsoft, as well as prior to joining HP did a lot of work in the printing business. So actually I think I am extremely well equipped to understand what the partners need in terms of driving the business, I have done it successfully within the past and with a historically and now in my new role dedicated solution provider organization. Clearly, I will have an opportunity to be a further advocate for the partners and the industry as we drive the business forward.

VB: Tell us about that fresh perspective. What new ideas and thoughts do you have toward growing the partner business?
Thompson: Job one is to get out and listen to partners and that's what I've been doing. I've spoken with 40 partners within the last 48 hours. I'm hearing a lot of very positive things about HP's relationships that already exist, I'm also hearing input from them where we could accelerate growth together. So we certainly we proliferate that feedback into our strategies and programs as we go forward here. Clearly, the number one part of the job is to deliver the current quarter across the enterprise as well as the volume spaces and I'll be spending the next two to three weeks at a number of channel events working with customers, looking for ways to improve existing enterprise programs as well as executing the aspects of the HP strategy that are meant so successful.

VB: Where are some of the key areas of room for improvement that you see at this point?
Thompson: I think you can always make improvements, the more efficient that we can make our interaction with the partners, as well as work that we've done in concert with our own supply chain and logistics activities. If we can take, for example, cost out of our own supply chain, where as appropriate, and leverage the strengths as it relates to partners in something that we have done in the past and will continue to do. The other areas include looking at the enterprise programs"we are in the process of implementing a number of programs to improve pricing turnaround time, as it relates to a variety of big deals, and we are of course working issues as it relates to ensuring the best possible product availability. We can always optimize upon doing that. We have items that we put in place this quarter which has already shown good progress in that arena and we will continue to do that.

VB: Some partners feel the eHIP program has been an unmitigated disaster. Do you plan to revisit HP's plan to stick with that program?
Thompson: I think there are aspects of the eHIP program that are long overdue, I think there is also a misunderstanding in terms of eHIP is lumped in with some other related issues, which have noting to do with eHIP, so we don't want to through the baby out with the baby with the bathwater with this. We do look at eHIP as it is structured and look to optimize that. Being in the role for less than a week here, what I will tell you is that listening to partners, getting input there, and if we require to make adjustments, I'll make adjustments as necessary.

VB: How much of the team will be yours and yours alone? Will there be a wholesale turnover beneath you? Do you plan to bring in your own organization?
Thompson: I think there is an exceptional team already in place, in fact I think the average duration of the staff is 15-years plus with the company as I am as well. The average tenure in terms of working with channel partners is over a decade for each team member. There's a very strong team that is already in place and I intend to work with that existing team as we go forward.

VB: Do you see adding or paring down the number of partners you have in any given area?
Thompson: I think it's too early for me to answer at this point. It depends on which segment we are discussing. In general I think we have excellent coverage across the marketplace, and a good overall strategy that's in place in the second half.

VB: If you could say one thing to partners that have been struggling with their own level of satisfaction with HP's various programs and initiatives, what would that message be at this juncture?
Thompson: The message would be that HP is here to listen to you, that HP has an open approach on this ad we are going to work with you to accelerate your business in a profitable fashion in concert with HP.

VB: What's your view toward HP's relationship with distributors?
Thompson: I have had conversations with distributors. Everyone has their own unique value to prove across the industry. The VARs are critically important to HP and distribution can provide some supplemental activity to VARs and where that's appropriate, clearly they have a large role.