With image so vital to the general perception of a company, many firms would probably describe themselves as the Rolls Royce or Ferrari of their particular industry.

But Hewlett-Packard (HP) settled for a more unconventional vehicle as the symbol for its 2007 partner conference: the Smart Car.

Under the tagline of Smart Energy, the theme of the vendor’s annual Preferred Partner Conference in Barcelona was all about using energy wisely. Translated into channel sales talk, this meant maximising upsell opportunities on every deal and squeezing every available dollar out of customers, regardless of size.

Over the past year, since its last partner conference in Las Vegas, HP has been rolling out its Smart-branded suite of partner tools and offerings as part of its Preferred Partner Programme (PPP).

This year’s conference kicked off with an amusing cartoon clip of Jos Brenkel, vice-president of Solution Partners Organisation (SPO) EMEA at HP, driving around Europe in his HP-branded Smart Car to spread the HP message. As if by magic, he arrived on stage in Barcelona in the same car to deliver his keynote.

“We have put thousands of kilometres on that car,” he said. “We have driven very fast and every time we turned the corner we took over the competition. Without you [partners] we would not have made that journey.”

Incidentally, the car was the cause of much amusement during the conference, particularly at the end when it was supposed to be driven offstage in a blaze of glory. But unfortunately it wouldn’t start, leaving a red-faced Brenkel trying to slink away without being noticed.

However, on a more serious note, HP made a number of important announcements over the two-day conference, not least with the hard-hitting statement that about 15 to 20 per cent of its EMEA partners would lose their Preferred Partner status following the launch of the 2007 phase of PPP (CRN, 25 September).

“Last year, we said we wanted to work only with committed partners because it is key that we drive profitability,” Brenkel said.

HP is taking a hard line on non-performing partners. Last year it revealed its intentions to slash partner numbers by as many as 2,000 (CRN, 24 January 2005).

“Next year we want more of the same,” Brenkel said. “We want to drive more loyalty and focus on execution.”

However, Brenkel added that HP will also take on new partners across EMEA over the coming year. Since last September, HP claimed to have invested more than $300m in its EMEA channel. This is split roughly between $200m in channel compensation schemes across EMEA, $8m in certification and training, $100m in co-marketing activities and $30m in channel programmes and capabilities.

During 2007, HP said its partners can expect to see more investment in specialisations and the launch of a new wave of partner loyalty programmes. However, in a move that set tongues wagging, chief executive Mark Hurd revealed that the vendor was recruiting more direct sales people. He insisted this was aimed at helping partner sales, as well as HP’s direct sales.

“We are scaling up our salesforce to have more HP-badged sales people,” Hurd said. “We want a bigger HP share of the wallet, but we are not going more direct by hiring more sales people.

“I wish we had partners that were totally dedicated to HP. The channel is a big competitive advantage for us. There is no way we can get to all areas of the marketplace without partners, or perform the logistics that we need without the help of the channel. But we need them to sell.”

Hurd added that “HP intends to do everything we can short of anything illegal or unethical” to become the best.

“We want partners to go into the marketplace and compete and win,” he said. “We want HP to give all the support [to partners] we can.”

On the second day of the conference, HP got down to the nitty gritty by unveiling more sweeteners for loyal partners in the form of extra compensation and a new Gold level Preferred Partner accreditation.

Sean Gallagher, development and sales programme director at HP SPO, said: “We have followed through with what we said in Las Vegas. Did we do it perfectly? No. Is it finished? No. Do we believe it is the right strategy? Absolutely.”

Gallagher added that HP intends to continue building end-user awareness throughout 2007 and also increase differentiation for specialist partners.

Earlier in the year, the vendor launched 10 specialisations (see box, below left) that guarantee to provide partners with additional revenue opportunities (CRN, 22 May). But Gallagher said that this still requires work from HP partners.

“Once you are a Preferred Partner, you are not one for life,” he said. “It means maintaining a certain level of quality.”

Gallagher added that partners can earn up to 30 per cent margin, depending on whether sales targets are hit. Those that reach 80 per cent of their sales targets are rewarded with a 15 per cent bonus. Those that hit 100 per cent of their targets will receive a 30 per cent bonus.

“We will invest where we get the return,” he said.

Details for the Gold level certification, which will apply to both SME- and enterprise-focused partners, were very thin on the ground, but Gallagher said HP expects between 10 and 20 per cent of EMEA partners to attain the Gold level. The vendor does not expect to appoint any Gold level partners until June next year, with the final line-up not being revealed until 2008.

“Gold is a challenge,” he said. “It is not aimed at diluting the Preferred Partner Programme. The objective is to have an internal club of partners that are very focused on HP.”

Brenkel denied that the new Gold level tier was similar to HP’s ill-fated Centres of Excellence scheme, which required partners to make significant investment in HP certification to stand out from the competition. This was eventually axed in 2004 (CRN, 27 June 2004).

“Yes, Gold partner level is built on the Centre of Excellence concept, but the only reason that didn’t work was because we outsourced some of the programme to distribution and we worked with the wrong set of partners,” Brenkel told CRN. “We did not stick to our original criteria.

“We now have a long list of resellers who are asking how to become a Preferred Partner, and we need something to take other more dedicated partners to the next level.”

In addition, HP launched two new tools for its Smart Portal partner extranet. First, Smart Leads, which is being piloted with selected partners in the UK, South Africa and Italy. This matches qualified leads with the best partners to suit a customer’s needs. It is due to be rolled out across Europe in March next year. Second, Smart Finance, an initiative aimed at ramping up leasing among SME customers. Smart Finance has been piloted in Finland since June 2005, but it is also due for wider EMEA roll-out next year.

Despite the somewhat sketchy details of the compensation model and the new Gold level, the conference received a positive response from channel attendees.

Loay Lawrence, commercial director at reseller Vohkus, said: “Everything was explained fairly openly and the emphasis on specialisations was put very strongly, which is a route we are going down.

“Before it merged with Compaq, HP was introducing a whole host of channel strategies, but everything was put on the back-burner until the merger had settled down. Now things are starting to work out and, although things are far from perfect, HP is definitely doing better than any other vendor out there.”

Greg Carlow, managing director of VAR Repton, said: “The Preferred Partner Programme has been outstanding for us. If the Gold level gives us a bit more for extra investment then that’s fine.”

However, Carlow did express some concern. “There seems to be a lot of emphasis put on HP to the exclusion of all else, but customers don’t want that,” he said. “To compete in the market, we need to be in touch with the likes of Dell, Sun and IBM. To expect partners to supply just HP is self-defeating for both resellers and HP.”

David Simpson, commercial director at VAR Softcat, welcomed the Gold accreditation and said the message from the conference was generally positive.

“At the moment there is a one-size-fits-all approach and many partners are shoe-horned into the programme, but the Gold accreditation offers some differentiation and is a way of saying you are committed to volume growth,” he said.

“Our relationship with HP has never been better and that gives us confidence in promoting it. The fact that it only wants to work with committed partners is a good thing: why should resellers who are not committed to selling HP receive the same benefits as those of us who are?”

However, one VAR – who asked to remain anonymous – said the Gold level will not be popular with larger partners because it requires 100 per cent commitment to HP.

“It is going to be interesting to see how many mid-market level VARs are willing to become Gold level,” the VAR said. “It is not such a risk at the lower end of the market, but if HP cannot say that it is not going to go direct, who in their right mind is going to want to commit 100 per cent to HP to become a Gold level partner? It is certainly going to be a challenge for HP.”

Abdul Terry, marketing director at Equanet, said HP will never escape questions about its direct sales arm.

“Smart Portal has definitely helped our business, and the fact that HP now has more account managers focused on channel issues always leaves a good taste,” he said. “However, it is bad news if going forward we see more conflict [between indirect and direct].”

Terry welcomed HP’s policing of its Preferred Partners.

“If there are partners out there who aren’t cutting the mustard and meeting the criteria, HP needs to get rid of them, otherwise there is no benefit in the rest of us taking part in the programme,” he said.

It has been a while since HP has had such a positive reaction from the channel, so it is fair to say that the vendor has listened to partner feedback and is acting on it.

But laying the positive vibes aside, HP – along with all the other major vendors – still has a lot of hard work ahead of it to fully convince partners that its direct plans are not to the detriment of the channel. To do that it needs to keep its foot on the accelerator and ensure all the moves it makes in the future are as ‘Smart’ as the ones it seems to be making now.