How Enrique Lores Is Turning HP Into A Hybrid Work Powerhouse
With the channel at ‘the core’ of everything HP Inc. is building, CEO Enrique Lores is transforming the PC and print giant into a hybrid work powerhouse by integrating Poly into its Amplify program, speeding up the way partners do business, and bringing more partners into services and sustainability opportunities.
Their conference rooms were mostly empty, and yet many of Ken Scaturro’s customers were coming to his company asking for the same thing: big technology upgrades to the collaboration and videoconferencing capabilities of the frequently unoccupied spaces.
It started with “the first customer, then the second and the third, then the fourth, and then it became, ‘OK, we need to start scheduling resources,’” recalled Scaturro, president and COO of Yorktel, an Eatontown, N.J.-based MSP.
This was around spring 2021, and it became clear to Scaturro that a trend was emerging. After the COVID-19 pandemic had driven many employees to work from home the year before, organizations that were now moving to reopen offices wanted to think more intentionally about the way employees connect and collaborate, whether they are in the office or at home. The days of hastily bought webcams were a thing of the past.
“We had one of the largest surges of our existing customers upgrading their facilities that we’ve ever had,” Scaturro said of the collaboration gold rush that marked the start of the hybrid work era.
The large spike in sales and services for collaboration technologies brought more than monetary rewards to Yorktel. It attracted attention from one of the company’s key suppliers, Poly. After Yorktel grew its collaboration business with Poly by double digits in 2021, the MSP received the highest level of recognition from the vendor: Platinum Partner of the Year.
“Part of that is the amount of business that that we drive to them but also our level of expertise to deliver the products and services that add value onto the products,” Scaturro said.
Now Yorktel is set to join the partner program of a much larger vendor where Scaturro sees an opportunity to tell a bigger story about hybrid work. That vendor is HP Inc., the Palo Alto, Calif.-based PC and print giant whose President and CEO, Enrique Lores, is transforming the vendor into a hybrid work powerhouse, thanks in large part to its blockbuster $3.3 billion acquisition of Poly last year.
[RELATED: CEO Enrique Lores: HP’s Business Model Designed For ‘The Channel To Make Money With Us’]
“For us as a managed collaboration services provider, we look at providing managed services from that earpiece through the desktop to the cloud to the end user and back, so I think we’re in alignment on that vision and how that plays out,” Scaturro said.
To Lores, Poly represents a key pillar of HP’s future and one of the many growth opportunities for HP channel partners in the long term. He says the pandemic-induced rise of hybrid work not only influenced his decision to acquire Poly but also influenced the way many HP products are now designed. The company is also looking at ways to integrate Poly’s technologies with others under HP to support the future of work.
“Because of the many opportunities that we have to continue to grow the business—by modernizing our core businesses, accelerating our joint businesses in services, whether it is for small business or for enterprises, [and] expanding into adjacencies—all this is going to create multiple opportunities for us and for our partners to continue to grow,” said Lores, who joined HP as an engineering intern in 1989 and was named to lead the company in 2019.
With an expanding portfolio of products and services, Lores said, HP’s channel-driven business model hasn’t changed, as partners are more important than ever to drive future growth for HP.
This is why HP plans to bring Yorktel and the rest of Poly’s partners into the HP Amplify partner program this November, when its 2024 fiscal year begins. It’s also why Amplify will expand to cover distribution partners and two other acquisitions orchestrated by Lores in the past two years: gaming accessory designer HyperX and remote computing software provider Teradici.
The integration of HP’s new businesses and distribution partners into the Amplify program is part of what Lores says is the vendor’s recommitment to the channel, which also includes initiatives to speed up the way partners do business with the company, to strengthen and diversify its supply chain, and to bring more partners into services and sustainability opportunities.
“It’s to show them that whether it is in the businesses where we lead today or in the businesses where we are going to be in the future, we are a channel company. Channel is at the core of how we build and design our plans. And we want to continue to work with them to expand our business and to grow together. That’s the key message,” Lores said.
In the short term, however, HP faces some big challenges. Like many other companies in the tech industry in early 2023, HP is experiencing a significant slump in demand, particularly with its PC business, due to a variety of economic factors, including inflation and high interest rates. The company’s personal systems business dropped 24 percent year over year in its 2023 fiscal year’s first quarter, which ended Jan. 31.
But Lores believes partners should remain “optimistic” and make plans now for how they will take advantage of a thriving economy when growth returns to the broader markets.
“We don’t know when, but we know that there is going to be an economic recovery and, therefore, we need to make sure that through this period we position ourselves in the strongest possible way,” he said.
The ‘Future Ready’ Plan
To Lores, the best way HP could prepare for a brighter future during an economic downturn involved some tough decisions. This resulted in a three-year restructuring initiative HP is calling the Future Ready plan. Unveiled last November, the plan calls for a major reduction in spending, which includes making up to 6,000 job cuts, by 2025. At the same time, the company has vowed to invest in growth areas like hybrid work offerings, peripherals and gaming, where HP’s latest acquisitions will play big roles.
“It’s really about making sure that the company is investing in the areas where we see opportunity and where we see growth,” Lores said.
While these investments may not replace the entire 6,000 positions HP could cut over the next few years, Lores said, the vendor will make a “significant” number of hires in these growth areas.
Since channel partners drive more than 90 percent of HP’s annual sales, Lores thinks it’s crucial to ensure they get the support they need during such a massive restructuring effort, and that is a message he said is felt throughout the entire organization.
“An internal theme that we have now is that everybody works for sales,” Lores said. “And especially in these difficult moments from an economic perspective, whether you’re a [research and development] engineer working in the labs, a manufacturing person working the line support or the CEO, the role of all of us is to support the sales team.”
With partners acting as the front line of HP’s sales machine, this means the company’s entire organization must keep the channel top of mind, according to the CEO.
“Everybody at HP is really working to support our channel partners,” Lores said.
With this edict, HP’s global channel chief, Kobi Elbaz, is expanding the company’s two-year-old Amplify partner program to open new opportunities for solution providers with the integration of recent acquisitions like Poly and through other new initiatives.
“Everything we’re going to do looking forward is using the foundation of Amplify because it’s a point-based system. You get points based on how much you do collaboration, how much you [develop] capabilities, how much you [perform], and based on that we rank you,” said Elbaz, who became general manager of HP’s global channel organization in late 2021.
To make the program more appealing to partners, Amplify is extending points and other traditional benefits to HP’s expanded portfolio. It also will introduce a new incentive program, called More for More, that will apply a rate multiplier for compensation to partners that sell a wider range of products and services when it launches this November with the 2024 fiscal year.
“As our portfolio expands, we want to make sure that we drive with our channel partners the best experience we can for our customers, and this means that we want to encourage our partners to work with us across the portfolio,” Elbaz said.
This November is also when Amplify will give partners another new benefit, called Fast Lane, which will simplify reimbursements for market development funds. This will be done through a new automated process for partners to make claims and payments, which is expected to dramatically improve the time it takes for them to get reimbursed.
With HP’s goal of becoming the most sustainable company by 2030, the vendor wants to get more partners involved with the sustainability-focused Amplify Impact program too. Starting in May, the company plans to do this by letting qualified participants in the program—which helps them pursue business opportunities around issues like climate change and social justice—gain a point toward eligibility for Amplify’s Power and Power Services tiers, which unlock advanced incentives.
Elbaz said HP hopes this new benefit will help the vendor achieve its goal of getting 50 percent of partners to pledge to participate in Amplify Impact by 2025.
“It’s another way for us to show our commitment to this and why it’s important for us to make sure that we encourage our partners to be part of the Amplify Impact journey,” Elbaz said.
Beyond these enhancements to the Amplify program, Lores said HP is “investing in other systems and tools to make it much more efficient to do business” with the company.
“Whether it is new [products in the] portfolio, new tools, new programs, we really are fully committed to make Amplify the best program in the industry and to continue to evolve it to meet the needs of our partners,” Lores said.
Moving Faster For Partners
When Michael Affeldt and his team at Buffalo Grove, Ill.-based ACP CreativIT started working on an eight-figure PC deal with a major financial services firm in September 2021, he didn’t think it would take so long to complete that the devices would end up shipping nearly a year later.
The financial services firm wanted to get the best price possible and pushed for ACP to make a bid with Dell Technologies. But instead of acquiescing, Affeldt, senior vice president of commercial sales at ACP, said he told the customer his team would make a bid with its current provider, HP. A primary motivation for Affeldt was HP’s reputation for having a big commitment to partners.
“They weren’t happy about it” is how Affeldt remembers the customer’s response.
But those bad feelings eventually melted away as ACP’s enterprise account manager at HP worked with Affeldt’s team on a “daily basis to make sure that the price was competitive,” even as the scope of the project changed multiple times.
Affeldt said what helped seal the deal with the financial services firm was HP Wolf Security— the hardware-enforced endpoint security software that HP introduced earlier in 2021—especially since many of the customer’s employees were still working from home at the time.
But it was ultimately the competitive pricing, enabled by the responsiveness of HP’s local representative, that brought the deal to the finish line.
“HP was really willing to work not only with [the customer] but also with ACP to make all parties feel like they won. That was a huge thing for us because when you get to deals of this size, a point here or there matters significantly,” said Affeldt, who previously led HP’s Midwest channel business.
Affeldt said experiences like this with HP are why he’s heartened to hear that the vendor’s new chief commercial officer, Dave McQuarrie, is moving more decision-making to local roles.
“I think it’s a great move to give some autonomy and, ultimately, some quick responsiveness from a pricing standpoint back to the field,” Affeldt said.
For McQuarrie, who moved to HP’s top sales role last fall after serving as general manager for the personal systems business, giving more autonomy to local markets is about remaining competitive. “We’re in a position where every customer and every partner and every opportunity is a fight, and we need to win every fight, and the way you do that is you operate quickly and make decisions closer to the market,” he said.
Some channel partners are already noticing that HP is moving faster because of the changes, according to McQuarrie, who said that the vendor wants to localize decision-making wherever possible.
“We’re going to keep moving decision-making authority as close to the customer as we can because it’s going to mean that we’re going to be more responsive, we’re going to make better decisions, and that’ll give us an opportunity to serve more customers more effectively,” he said.
There are other ways HP is trying to move faster for partners.
For instance, recent improvements to HP’s configure-price-quote tool have led it to produce configurations five times faster, giving partners results in a matter of minutes instead of days or weeks.
When it comes to special pricing matters, currently half of price quotes are generated instantly, and HP hopes to increase that to 70 percent when the 2024 fiscal year begins.
It’s also much quicker for partners to set up new customers, with results happening in less than one day compared with the five days or longer it used to take. HP aims to make customer setup something that partners can complete in a matter of minutes in the next fiscal year.
Then there’s the supply chain, which HP is strengthening and diversifying to improve lead times for products and ensure it doesn’t go through a repeat of the major shortages it experienced during the first few years of the pandemic, according to McQuarrie.
“We were not sufficiently diverse in who we were able to source components from and so when a particular component provider had problems, that meant we had problems, and now we are much more able to spread out our procurement to the places where supply exists,” he said.
The company also has tighter relationships with its suppliers now, and it has also standardized designs across many of its products so that components can be more easily swapped between them.
“We now have the ability to share componentry [and] system architectures that are more standard across our platforms, thus being able to direct supply to the most important parts of the demand if we get into such a situation,” McQuarrie said.
HP has spread out its manufacturing and logistics footprint across the globe too.
These changes have already allowed HP to cut lead times by more than half across its portfolio between the beginning of this year and early 2022. “We think we’re in much better shape than we were when we came into the pandemic,” he said.
HP’s Vision For The Future Of Work
Brett Bailey remembers how uncertain things felt for his company’s business when the pandemic hit in 2020 and his customers fled their offices.
“When you’re a channel partner engaged across many technology areas, and the pandemic hits and you see print volumes go to zero, it was a very scary time,” said Bailey, vice president and partner at WBM Technologies, based in the Canadian province of Saskatchewan.
But with that fundamental shakeup to work culture came a significant growth opportunity: margin-rich IT services that would allow WBM to shift away from low-margin hardware sales.
One area where WBM has made this push with HP is managed print services. While the company started to embrace the practice before the pandemic, its benefits became more apparent than ever with customers that had untold fleets of unused printers and copiers languishing in empty offices.
“When all of a sudden nobody can come to the office, the cost of idle printers and copiers was magnified,” said Bailey.
So WBM did something that may have seemed counterintuitive to hardware-driven solution providers of the past: The company made a business out of removing printers from customers’ offices and replacing them with significantly fewer but better devices. But the real value came from offering managed services around the new printers and charging customers based on how many pages they printed.
The result was that WBM’s managed print practice “grew more during this period than at any other time in our history,” said Bailey.
“I suppose that to the overall print industry, a WBM program that takes an organization from 5,000 devices down to 2,500 devices will look like the market has shrunk by 50 percent. But to WBM, this is a net-new engagement: It’s growth, new relationships and, if we are creating wow-factor results, maybe new opportunities as well,” he said.
WBM’s managed print practice is part of a broader portfolio of solutions—ranging from end-user computing to security services— that the company views as a collection of interconnected experiences in the workplace. Bailey said that perspective aligns well with Lores’ vision of HP as a hybrid work solution provider, especially with its acquisition of Poly.
“An acquisition like that makes it very easy for us to continue not just a vendor relationship with HP but a more strategic alignment because they’re bringing the technologies forward that we need to create the experiences that our customers need,” he said.
For Lores, Poly represents an opportunity for HP and its partners to diversify their offerings and grow sales. But he also sees it as an opportunity for the vendor to develop better ways of working in the future by more closely integrating Poly’s technologies with others it owns.
One issue HP is tackling with these future solutions has been a defining trait of the hybrid work era: the awkward asymmetry of hybrid meetings, where remote participants can only see colleagues gathered in a conference room at a distance, which can make it hard for the former group to read body language and feel like they’re a part of the conversation.
To solve this, Lores said HP is looking at ways to connect laptops in the meeting room to the videoconferencing system to create a more dynamic experience for remote participants.
“If you want to see the people in the room, every PC today has a camera and a speaker. So the vision is, how do we integrate those into the system in the room?” he said. “So if you’re looking at that, you can connect to Jeff’s PC and you can see Jeff’s face bigger and see what his reactions are. Is he happy with what Enrique’s saying? He’s thinking if Enrique’s speaking too long, he should stop. You can really see that by connecting to his camera, and this is one of the experiences we are going to be [developing].”
Lores said HP is also looking at consolidating management tools for PCs and Poly devices.
“There is a big opportunity of integrating our PCs and the rest of the videoconferencing technology to deliver better experiences for IT managers because now they want to be able to use the same tools they use to manage PCs to also manage the room. Then the equipment in the room is a PC that controls a bunch of screens and monitors and speakers. They want one common tool to manage that,” he said.
A Services-Driven Future
When Lores thinks of the ideal channel partner for HP’s future, it’s one that not only sells the vendor’s full portfolio of products, it’s one that also gets behind the vendor’s services push.
But Lores knows it will take work to get more partners selling HP’s services, whether that’s managed print services or Device as a Service, among others.
“This means a lot of changes for us, we understand. These will require changes for many of our partners, and we are committed to help them to do it,” he said.
A key driver for HP’s services business moving forward is Dave Shull, Poly’s former CEO, who joined the vendor with the acquisition as president of the new Workforce Services and Solutions organization. It is now a $4 billion business, mainly thanks to managed print services and Device as a Service.
Lores said that he couldn’t think of anyone better than a former CEO to manage and grow the division as a business, especially someone who was moving his previous company in that direction.
“As we had many conversations when he was running Poly, he had a very clear vision about how to grow the services and solutions business. At Poly, this was the direction they were taking with the company. That fits extremely well in what we’re trying to do,” he said.
HP is working on making it easier for the company’s partners to manage the full portfolio by integrating the tools and programs of HP’s services, according to Lores, “which will help them capture more business and eventually help them make more money.”
To Shull, the move to services will require more than just tools and programs. It will also require partners who are willing to change the dialogue with customers to move from a transactional approach to a “lifelong” customer relationship services model.
“They have been selling those customers our PCs and our printers, which we love and we appreciate. Now we are saying, ‘We have got to have a different conversation. We have got to have a broader conversation. Every time you touch that customer, think about the lifetime value of that customer,’” he said.
This is music to the ears of Yorktel’s Scaturro, whose company only had a distribution relationship with HP prior to the Poly acquisition. He finds it encouraging that HP not only kept Shull on board but also kept on individual contributors from Poly.
Now as Yorktel prepares to join HP’s Amplify program, Scaturro sees a lot of promise with how the two companies can grow together.
“It’s the strength and brand of HP. It’s the financial backing of HP. It’s the customer base and the ability to sell into the HP customer base. Part of it is the lifetime value of the customers of HP that were predominantly transactional, and the ability to move from a transactional business to more of a partnership business and moving up the value scale instead of selling products,” he said.
As HP seeks to shift more of its business to a services model and become a hybrid work powerhouse at the same time, Lores believes it’s important that he holds regular conversations with the company’s channel partners because “it’s a great way for me to ground myself in reality.”
“Those conversations for me are invaluable,” he said. “We need to make sure they have everything they need from us because if they win, HP wins, and that has been our goal.”