Hewlett Packard Enterprise is dramatically revamping its internal compensation, reducing the number of sales plans from 400 to 25 as part of its Next restructuring initiative.
The sales compensation change also reduces the number of HPE internal sales reps that can be compensated on a deal from as many as 30 on a single deal to a maximum of three reps comped on a deal.
HPE President Antonio Neri, who is leading the Next restructuring initiative, announced the changes – which include reducing management layers from as many as seven to four – at HPE's securities analysts meeting Wednesday.
"We have redesigned our [profit and loss] accountability structure and reduced a significant amount of overhead," said Neri. "By doing this, we are empowering our front-line coverage with accountability and [moving] decision making closer to our customers."
HPE CEO Meg Whitman alluded to the changes last week at The Channel Company's Best of Breed (BoB) Conference, where she foreshadowed the new strategy.
"We're going to reward, from a compensation perspective, we're going to incentivize our team to be more about value and more about growth," she said at BoB.
The sales compensation change unveiled Wednesday was one of a number of strategy shifts HPE executives introduced during the securtiy analysts meeting, including a retreat from selling commodity custom servers to Tier One service providers, the launch of a channel-only sales strategy in a number of global markets, the elimination of 40,000 active product configurations in HPE's volume and value business and a revamping of internal IT systems.
The CEO for one of HPE's top enterprise partners, who did not want to be identified, said the sales compensation plan simplification will be a boost for both partners and customers.
"Taking the sales layers out between [Whitman] and [Neri] and the sales teams is the greatest thing that HPE could have done," said the solution provider CEO. "Meg and Antonio are buffered from a lot of problems that get lost in the 'he said, she said.' The fewer layers, the better it is for the channel."
The solution provider CEO said that the number of HPE internal reps paid on deals was out of control. "There were some HPE sales people paid on deals that never did a thing," the CEO said."This is going to save a ton of margin. The fewer people paid on a deal, the better. This had to be done. I applaud HPE for making this move. This is a problem for many other vendors."