HP's Livermore Makes The Case For Reselling Services

As the executive vice president of Hewlett-Packard's Services Organization, Ann Livermore is helping to drive HP into higher-margin technology and business consulting services opportunities. As part of that effort, HP is now trying to recruit more partners to resell branded HP services. In an interview with CRN Editor in Chief Michael Vizard and Industry Editor Craig Zarley, Livermore talks about why solution providers should team up with HP on services and outlines where she thinks the biggest opportunities are.

CRN: In your opinion, what are the most attractive opportunities for selling services?

AL: We see big opportunities for partners from a services perspective and have put programs in place to help them take advantage of them. We think this will continue to ramp throughout the year. With the Partner Sell and Deliver programs that allow our partners to sell and deliver Care Packs for Proliant servers and our printers, partners have huge opportunities.

Those are two of the biggest market spaces anywhere. For partners that want to resell HP branded services, it can be an incredibly attractive economic opportunity. Our partners get to take advantage of the parts logistics network that we have [and] our training and our tools. We provide a set of things that are quite expensive for a small- to medium-size partner to develop. We think we'll have rapid growth in these programs. The printer side of this effort already has 30 companies that are part of the pilot. We think that will grow to over 150 at a rapid rate.

CRN: Any other areas?

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AL: We think wireless LAN services will show exponential growth. The market opportunity is just staggering around site assessment, installations, services startups for small to medium businesses. It's hard to find a business today that doesn't want a wireless network.

CRN: So if you were a CEO of a solution provider, where would you be focused?

AL: If I were the CEO of one of our partner companies, I would be focusing on wireless LANs, storage solutions and then I would make a tough economic choice on whether I wanted to sell branded services vs. building your own. I think that's a pure economic choice. It's an important choice to decide whether you want to invest in building your own infrastructure. If you build your own, you have to be confident that you have the cost model right. There's also an interesting opportunity around blades just because there is such explosive growth.

CRN: Some partners are complaining about their ability to get parts in a timely fashion. Are you aware of any problems in this area?

AL: We should make sure that if we have any issues with particular partners that we work them down and get to the root cause. If we look broadly at the customer satisfaction data that we have, we don't see that in the data. The good news is that if we have some problems with the partners we can knock it down before it shows up in the customer data more broadly. I'm not aware of any particular root cause. We try to talk to some of the partners. If there is something in the customer or partner satisfaction data that we need to work on systematically, we'll certainly do that.

CRN: The whole services space is under incredible pricing pressure. Do you see that continuing?

AL: We believe the services market for the last three years has seen intense price competition. We don't anticipate that the price competition [will be] letting up very much in the services space. We think repeatability and critical mass help in the services business. Our belief is that it is better for services companies to be narrower and deeper as opposed to being shallow in lots of things. Where you can bring a unique intellectual property to bear, you can command a higher margin.

CRN: The entire services market is pretty fragmented. What areas are ripe for acquisition?

AL: It's the most fragmented sector of the whole market. We believe it will continue to be fragmented but you will also see some consolidation. You will see a lot of MandA activity across the services front with companies wanting to gain specific geographic reach or capabilities. We have said as a company that software and services are our two main areas of focus from an MandA perspective. We're not as focused on a really big deal as we are on adding presence in market spaces that we like.

CRN: If a solution provider with a services specialty wants to sell their business, should they call you?

AL: Yes. It might be an area that would be a specific area of expansion for HP. A couple of years ago we did an acquisition in the Atlanta area of Extreme Logic, a services company focused on .Net solutions. That was a great acquisition for us.

CRN: Have you figured out any way to let partners resell more complicated business consulting services from HP?

AL: We have not figured out a recipe on how to do that. It comes down to the partner selling the business consulting services that they are capable of. We have not come up with a business-level consulting service where we can prepackage it. But we do team a lot with our consulting and system integration partners. Very often for partners that have a business consulting capability, they are the lead. We come in and follow to provide the IT.

CRN: Have you mapped the capabilities of your partners?

AL: For partners who want to be delivery partners, we know their capabilities for warranty and uptime services or more broadly on solutions. We know if they want sell, manage or deliver. We know which of those boxes our partners want to play in. There is a huge volume of work for HP to subcontract to its partners.

CRN: There has been a lot of speculation about who will be the CEO of HP. Do you want the job?

AL: I am not going to participate in the speculation about who might or might not be a candidate. This process could go on for a while. What I'm focused on right now is that from a customer perspective and an employee perspective, we keep everybody focused and the customer buying. I feel good about the technology solutions business. We went through a lot of hard work over the last several quarters and still have a lot to do. But I am quite optimistic about the progress we're going to make in this business.