HP To Hand Hundreds of Fortune 1000 Accounts To the Channel

Making the plan unprecedented, HP is opening up its new Enterprise Sales Engagement Model to its enterprise channel partners -- even those who sell competitive products. Up for grabs are hundreds of yet-to-be-determined Fortune 1000 customers.

John Thompson, HP's new Americas channel chief, was scheduled to deliver details of the Enterprise Sales Engagement Model during Avnet's Enterprise Partner Summit in Phoenix Friday. HP and partners alike will benefit from this move, Thompson says, which has been under consideration since February and was signed off by the company's top executives.

"We see this as a net new business opportunity," Thompson tells VARBusiness. "We wouldn't be migrating these customers to partners if we didn't think it would lead to new business for both sides."

The Enterprise Sales Engagement Model could be the biggest move HP, or perhaps any major enterprise IT vendor, has made to throw direct business to the channel in recent memory, says Don McDowell, executive vice president of the partner solutions group at Logicalis, perhaps the largest non-exclusive HP partner.

"It's a huge amount of enterprise business for any vendor to turn over," McDowell says. "It's one of the most positive things we've seen out of HP in a long time."

While a boon to partners, analysts are likely to question the move, given Wall Street has encouraged HP to move more business direct. The information was released publicly today, Friday, at 4 p.m., right after the market closed for the weekend. Some analysts could view the move as risky, considering giving up control of direct accounts to partners could put that business in jeopardy, particularly by giving it to partners who are non-exclusive to HP and also do significant business with IBM, Sun and even Dell.

"I don't see this as a risk," Thompson says. "We have some HP exclusive partners and some with multivendor lines, and both will get some new enterprise business. We think that by putting the partner in the enterprise account, it will deepen the relationship with HP, not weaken it. We're not scared of competition."

It's not clear whether the list of customers that will be turned over to partners will represent business HP was at risk of losing to rivals, or whether the customers are perhaps so well-entrenched in the HP camp that the upside would outweigh the risk. Thompson would only say that the list is still being put together, but the decision was made after extensive research with both partners and customers. Nor was it clear what contractual stipulations will be put in place.

Logicalis' McDowell scoffs at the suggestion that some may view HP's move as risky but rather an opportunity for the company to put more feet on the street without incurring the costs associated with supporting a larger sales force.

"It looks like a really solid implementation of the off-payroll sales force they've been talking about for many years," McDowell says. "It shows that HP recognizes that to grow the business, they need to pull in partners."

Avnet president Rick Hamada agrees. "John [Thompson] is coming in with a fresh perspective and a lot of new ideas," he says. "I believe HP has a sincere interest in growing this channel."

The products affected by the move include Unix servers, such as the soon to-be phased out Alpha systems, storage and software. HP is promising to make sure its in-house sales force is on board with the plan and has already completed mandatory training in how to work with channel partners. HP says it is backing up the training with a new compensation plan that pointedly states any violations in the policy could put direct sales reps directly at risk of forfeiting commissions.

Addressing the key criticism of HP's treatment of partners in the past, Thompson says consistency and communication will be key.

"We'll be very specific about where the partner will play and where HP will play in the enterprise space," Thompson says. "For designated channel accounts, if you're an HP sales rep and you work with a partner, you get paid. If you don't work with a partner, you don't get paid."

Thompson notes that HP has added new management and sales people to complement this effort, and is creating a business oversight board to track the changes. Thompson will sit on that board.

The list of partners should be ready next month.

"We already have an account-mapping process in place for the migration, but it's in the early stages," Thompson said. "It's a systemic approach that will examine who the incumbent partner is in the account, if there is one at all, who has the right expertise to meet the customer's technology needs, who has the right business relationships, etc."

Thompson says he began working on the enterprise sales model last February with Bill Weaver, vice president of U.S. enterprise sales, among others. Thompson adds that his background in the enterprise systems group helped him devise the new enterprise sales model and channel strategy.

"I think moving these customers to partners will help deepen [the clients'] relationships with HP," Thompson says, adding that some HP enterprise partners could win completely new customers with the migration plan. "This could lead to many partners acquiring accounts that they've never played in before."