CRN Exclusive: Whitman, HP Execs Field Tough Questions From Partners On Split

Taking The Tough Questions

Hewlett Packard CEO Meg Whitman and her top executive team Tuesday fielded tough questions from partners on the impact of HP's split into two publicly traded Fortune 50 companies. The two new companies are Hewlett-Packard Enterprise, which will include enterprise systems, software and services, and HP Inc., which will include the company's personal systems and printing business. Here are the partner questions that Whitman and her team fielded on the impact of the split.

Will partner commitment change under the split?

Our commitment to improving our partner programs will not change in either company. Over the past three years, we have focused on making it easier for our partners to do business with HP, delivering consistent, simple and competitive programs that the channel can count on every single day. Both companies will remain steadfast and committed to the goals behind PartnerOne: simplicity, predictability and profitability.

-- HP CEO and Hewlett Packard Enterprise CEO Meg Whitman

Does anything change immediately?

For now everything is business as usual. There will be no immediate changes to our core operations and expectations for fiscal year 2015 [ending Oct. 31, 2015]. We are working hard with you to finish out a strong quarter which, for us ends at the end of October, and then move on to 2015. As I mentioned, we expect that this process will take roughly 12 months to complete. Rest assured, we are committed to keeping you informed and up to date, armed with the latest information as we transition over the coming months.

-- Meg Whitman

What impact will the new HP Inc. have on partners?

We expect the creation of HP Inc. will only accelerate the progress we have made by giving us an even sharper focus on the full breadth of the commercial and consumer space. We want to lean forward and go on the offensive with all of you. We truly believe that this is a great opportunity to accelerate our momentum and invest in marketing resources and timely future product announcements to give you additional fuel to win in the marketplace. Put simply, we are creating a drumbeat of innovation to enable our most exciting products to tell our new story.

-- HP Executive Vice President and HP Inc. CEO Dion Weisler

Talk about the link between HP Inc. and Hewlett Packard Enterprise.

Going forward, HP Inc. and Hewlett-Packard Enterprise will remain close allies. We grew up in a single garage and with this move we expand really into a two-car family garage. We intend to leverage each other's strengths to win customers and drive business for our partners. HP Inc. will retain the current HP logo, which is recognized by millions of consumers around the world. I am super excited about the future of both companies and our ability to work even more closely with each of you to unlock value for our customers.

-- Dion Weisler

Talk about Hewlett Packard Enterprise going forward.

Hewlett-Packard Enterprise will have a unique portfolio and strong multiyear innovation road map across services, infrastructure and software. This will allow customers to take full advantage of the opportunities presented by cloud, big data, security and mobility in the 'New Style of IT.' By leveraging HP Financial Services, the company can create new, unique technology deployment models for customers and partners based on their specific business needs.

-- Meg Whitman

What is the call to actions for partners?

As the primary route to market for HP, you are critical to being there in the trenches with us helping to communicate this news to the customers. We need you do that and what you'll find on the portal [will be] all the materials that you need in order to help you do that. We are three weeks away from the close of Q4, so let's close Q4 strong. Let's actually use the momentum out of this announcement to help us drive pipeline into Q1.

-- Hewlett Packard Enterprise Senior Vice President Sue Barsamian

Why are you so excited about this announcement for Hewlett Packard Enterprise?

This means speed. The market is moving fast. And you are going to watch us move faster. Faster, because we are more focused on the enterprise customers. Faster, because we can simplify because we have a narrower customer set. Faster, because we are going to bring a higher degree of tenacity into this space. We have an incredible innovation agenda. Meg [Whitman] has the inside track on our road map over the next 12 months. It's a pretty exciting next 12 months for us.

-- Hewlett Packard Enterprise Executive Vice President Bill Veghte

What does the HP split mean for HP Software?

For software, this is incredibly clarifying. We see our vision as not only creating great software in its own right that can stand up to anyone else in the market but I think, more importantly, giving value to the rest of the Hewlett-Packard Enterprise portfolio. There is a huge amount of innovation coming out of our R&D facilities right now. I think it is going to produce great new opportunities for partners to come with more complete solutions to the total end-to-end nature of some of our customers' infrastructure problems.

-- HP Software Executive Vice President Robert Youngjohns

How do you ensure HP does not lose operational efficiencies?

We have worked very hard over the last three years to be easier to do business with and we have invested a lot in our IT infrastructure to help service you. The best example being our new Unison platform as well as accelerated quote to cash, SmartChoice, Direct Buy. We don't want to lose any of that. We will make sure that as we separate these companies you don't lose any operational efficiencies. We'll make sure there aren't two user interfaces for both sides of the garage. We hope this will be quite seamless to you.

-- Meg Whitman

Will the supply chain links between HP Inc. and Hewlett Packard Enterprise continue?

We'll continue that. That is a competitive advantage for us today. We want to make sure that you are able to take advantage of that competitive advantage when you compete in the market. There are critical synergies that Dion [Weisler] has built out leading the Printing and Personal Systems Group. Those synergies when you take a step back are the biggest [and will continue going forward]. Correspondingly, there are essential synergies with Hewlett-Packard Enterprise, HP Software and [HP Inc.].

-- Bill Veghte

How will this change affect partners that sell HP printing and personal systems and enterprise products?

Both on the partner side of the house as well on the HP side of the house, the teams are fairly segmented today. Quite frankly, those partners don't see a lot of differences going forward to the day-to-day operating model with HP. The questions really were, when we get to the point of separation will you make it seamless for me to transition my contracts and credit lines to the new companies? That is where you will see us partnering very closely to make sure the technicalities and logistics of how we make this switch are seamless.

-- Sue Barsamian

Will PartnerOne go away?

Absolutely not. PartnerOne is all about simplicity, predictability and profitability. Those core tenets are foundational. They will be foundational for both companies going forward. You may see that the PartnerOne name will need to go with one entity or another. I think you'll see both companies very committed to consistency and the foundational tenets of PartnerOne. We will continue to evolve and improve it year to year as we do in the normal course of business. You'll see the DNA of the core program carry forward with both companies.

-- Sue Barsamian

Will there be benefits to selling the full HP portfolio?

There will be benefits for selling across both new companies. The way you can sort of think about this is the StarAlliance with the airlines. You get mileage points when you fly United and you fly another member of the StarAlliance. We want to make sure there are still real meaningful benefits from being willing to sell the Printing and Personal Systems side of the house as well as enterprise and software.

-- Meg Whitman

Will HP Financial Services still be available within HP Inc. for Printing and Personal Systems products and customers?

Yes. Absolutely. HP Financial Services has been a very important and powerful tool inside of our business in PPS as well as inside the enterprise side of the business. It will remain a very powerful weapon.

-- Dion Weisler

Talk about the benefit of HP Financial Services for partners.

HP Financial Services has the ability to create offerings where customers can buy as a service, which is a real trend in the market whether it is PC as a service, print as a service. That is a real important role for HP Financial Services.

-- Meg Whitman

Why will the split take 12 months?

This is simply what it takes. We have to look at the tax implication in every country in the world in which we do business. We have to streamline the legal entities. There are well over 700 legal entities that this company has created. Those need to be simplified and separated. There is three years of audited financials for each of the different businesses. Of course, because we have operated as one we don't have those three years of audited financials.

-- Meg Whitman

Talk about the supporting functions that need to be split between the two companies.

With the separation of IT, sales operations, legal, HR, finance, we have to make sure that each business is equipped with the right backbone and infrastructure to make sure that we are nimble, smart, focused and very low cost. We obviously operate in an enormous ecosystem so unless this is well planned, thought out, communicated and delivered seamlessly we will not have met our objectives.

-- Meg Whitman

How will you make sure that you do not lose focus on the day to day business?

We will have a team on the separate side. We will have the majority of the folks driving on the day-to-day business. We are not confused. You and I have a lot of business to do over the next 12 months, and we are going to go do that business.

We are focused on delivering on that opportunity in FY 15. An example of this is what we are doing together with our Generation 9 Servers and Windows Server 2003 end of life. That is an incredible business opportunity. Rest assured, we are setting ourselves up for the future, but we are really, really focused on delivering that growth and profitability together in FY 15.

-- Bill Veghte

Does Hewlett Packard Enterprise imply small and medium sized clients are no longer part of your target market?

Absolutely not. As we think about the target markets, it is actually much more complex than just a division between enterprise clients, small- and medium-business-size clients. Enterprise clients themselves are becoming much more fragmented. Often selling to an individual department or an individual line of business is becoming part of the enterprise sales motion. We absolutely have to develop the sales motions across all those boundaries: small businesses to medium business to enterprise and then to line of businesses within enterprises.

-- Robert Youngjohns

What does HP mean when it says Hewlett Packard Enterprise?

'Enterprise' we use really interchangeably with ’business.' I suppose we could have called it Hewlett-Packard Business to incorporate government, big business, small business, medium-size business. To the extent that is the interpretation, we need to make sure that we surround that communication with small, medium-size and large business. So ’enterprise' for us is shorthand for 'business.'

-- Meg Whitman

What impact will there be on HP Labs?

HP Labs will continue. This brand name is recognized around the world. For 80 percent of HP Labs this is quite simple: Many of the downstream projects are very related to Enterprise Group or to software vs. the Printing and Personal Systems. So we can separate many of the projects quite easily. And then 20 percent are somewhat entangled.

HP Labs, the entity, will live in Hewlett-Packard Enterprise, but there will be a licensing agreement from any invention in Hewlett-Packard Enterprise to Dion [Weisler's] business. So it will be completely seamless.

-- Meg Whitman

How will this affect channel compensation?

PartnerOne is the framework for channel compensation. So this really gets back to the PartnerOne answer, which is the foundational tenets of simplicity, predictability and profitability. We actually feel incredibly good where we are with PartnerOne and with channel compensation. We do believe that partners can make more money and drive more profitable growth with HP than virtually any vendor out there in the technology space. That is foundational to the success of our program and will continue going forward.

-- Sue Barsamian

Does this mean you will not host the HP Global Partner Conference (GPC) in 2015?

No. Absolutely not. The Global Partner Conference is in Las Vegas in March 2015. We will do GPC as a combined entity. Obviously, we will have a lot of focused discussion around both prospective go-forward agendas. But this is a one HP 2015 GPC in Las Vegas.

-- Sue Barsamian

You told us that HP was able to bring more value as an integrated company not too long ago. What has changed?

The progress that we have made over the last three years has enabled us to take this step. Three years ago, we had a lot of improvements to make.

This market is moving faster than any I have seen in my career, and I come from the consumer side of business and that always moved fast. These are huge, enormous changes and my view is we are going to be better able to execute the next phase of this turnaround if we can be more responsive to the market, more responsive to your needs and a faster, leaner two entities.

-- CEO Meg Whitman