Driving towards future growth

As HP posts record Q3 results, Sara Yirrell speaks to EMEA head, Antoine Barre, about the firm's plans for the future

Antoine Barre, HP

HP’s EMEA channel head has something of an obsession with motoring imagery, but he is very keen to get across the point that the channel is HP’s main driver for growth.

Three months into his new role as EMEA vice president, Solution Partners Organisation (SPO) at HP, Antoine Barre is feeling confident about the coming quarter, particularly as the vendor’s third-quarter turnover hit a seven-year high last month (CRN Online 17 August).

“Overall things are going pretty well,” he said. “The momentum that HP continues to have in the market is pretty strong. The feeling is that there has been a lot of work done, but there is still a lot of work to do. Our strategy continues to be unchanged and we are executing on our PartnerOne strategy and Preferred Partner Programme as before. I am just trying to put more fuel and oil in the [channel] engine to drive it even faster.”

HP’s EMEA channel business grew 16 per cent in the last quarter, with the channel representing 75 per cent of all HP’s business, Barre said.

“We want to simplify a lot of the activities that we are seeing today,” he added.
The vendor is ploughing resources into its Rising Star programme, increasing the marketing material and sales incentives available through distribution to smaller partners that fall outside the Preferred Partner level.

Barre also defended the company’s controversial decision to axe HP’s Smart Choice sales tool before it even got off the ground.

“We were in agreement that we did not want to take the programme further. The return that it was bringing us was not as high as anticip-ated,” he said.

“We see more opportunity to grow HP’s business in other areas. Also on the reseller side, in terms of the effort they had to put in with Smart Choice, it was not worth the return that they would get out of it.

“I am really of the mindset that I want to drive a few things and execute t hem really well, as opposed to driving a lot of things where we get neither the leverage nor return, and where we don’t have the bandwidth.”

However, not all HP’s partners were happy with the decision.

Sue Richards, managing director of reseller EBM, said: “It is a shame that HP has taken away Smart Choice because it was just starting to work. I think it took some time because initially it was just a store and was not linked to a back-office system. But as a result of an email shot we sent out we actually opened 34 new accounts. It was one of the best things HP has done.”

Similarly David Gould, commercial director at DSGi Business, which incorporates PC World Business, Equanet and Macware, said: “I was disappointed with the scrapping of Smart Choice I think HP invested a lot of time and money in the initiative and I still think there is merit in that type of configuration. In the longer term I believe this type of approach to the market will work.

If I were involved with HP I would have persevered with it.”

Loay Lawrence, commercial director at VAR Vohkus, said: “Smart Choice was working for us and was a very positive thing.”

Barre said that instead an increasing focus for HP and its partners would be on upselling or ‘attach’ as the vendor calls it.

“This is not only on the services and accessories that are attached to products, but also on the high-margin product portfolios such as workstations, storage and servers and also care packs.”

Sean Gallagher, development and sales programme director, SPO at HP, added that the vendor has also changed its compensation model to put more emphasis on attach, with partners able to earn up to 30 per cent more margin if they achieve their attach goals.

“During the first quarter that we introduced this it didn’t have much impact because the best partners were still becoming aware of the upside. However, it is starting to kick in now as partners earn more and it has really been very encouraging,” he said.

HP’s drive seems to be paying off. It has held its biggest rival, Dell, off the top spot in the PC market for several quarters with IDC’s second-quarter PC market figures giving HP an 18.8 per cent share of the market, compared to Dell’s 12.2 per cent share (CRN, 27 July).

But Barre said the analyst figures were no reason to be complacent.

“It is always a challenge to know that everybody wants to take your space. There is as much feeling as ever inside HP that we need to be on our toes and to keep active and dynamic. We need to keep the momentum going.

“We have been able to increase our lead in the PC market for a combination of reasons. The first is the product design, which has involved a huge effort by our design teams around the way the product looks. We have also been consistent in our communication with our Personal Again campaign that ran right around the globe.”

Barre said pricing was also an important factor in retaining the competitive edge.
“We need to have a very competitive pricing structure through a combination of selling through retailers to consumers and small office/home office customers, commercial channels selling to the mid-market or selling direct to mainly large consumers we have been able to find the right balance and pinpoint where we need to be focused.”

Dave Poskett, director SPO, UK and Ireland, said: “We also have a very effective supply chain of both distribution partners and second tier partners. That is one of our key differentiators in the market.”

Barre added that HP intends to drive further into the SME market, which is an area of pure channel play.

“In the past two and a half years we have put a lot of focus on Preferred Partners and we see the opportunity to get more business not just in PCs but also in printers and volume servers. That kind of business is generated through growing smaller partners.”

Gallagher added: “We have had a very mid-market focus, but we are looking to get the marketing message out to smaller business customers and that is something we are doing on a broader scale.”

Barre said HP is constantly evaluating its partner base to ensure its channel is fresh and the vendor will continue to expect partners to renew their status on a yearly basis.

“We want to reward and put more focus on the right partners. There is no specific exercise to right-size our distribution or the amount of Preferred Partners we have we are just carrying out a constant review of our channel’s performance.

“If there are partners that are performing really well, they will be granted Preferred status. If they are constantly coming at the bottom of the rankings, they will lose their Preferred status,” said Barre.

Gallagher said: “The search for high-potential partners is non-stop. We want to identify where those partners are and where we need to invest in them disproportionately. We are getting better and better at identifying those partners and are in the process of selecting them for 2008. There will definitely be new blood coming into our channel.”

Joe Hemani, chairman of distributor Westcoast, said Barre was doing a good job so far. “There have been a lot of changes in the previous two years at HP and Antoine has held the fort pretty well since he came along. He understands the channel. He is also driving the internal HP team faster and is a safe pair of hands as far as I’m concerned.”

Stewart Hayward, commercial director at WStore, said: “HP is definitely listening more to partners, but it is still very much a European organisation, which is not always the best thing for the UK channel.”

DSGi’s Gould added: “Our HP relationship is as strong as ever. We work very closely with it and we feel that the relationship is developing.

“HP is as good as any tier-one manufacturer in terms of consistency of messaging and clarity of communication. In my view, the organisation is treating the channel well and as a partner we are benefiting from its above average growth in the market.”

Lawrence said: “If you compare HP with other vendors, it is actually miles ahead of the competition in terms of the marketing it does with the channel and its supply chain programme such as Top Value.

“Obviously, it is not perfect and there is always room for improvement, but if a vendor is doing something positive, which HP is, then it deserves to be mentioned.”
However, some of the biggest challenges facing HP and its channel include identifying how SME customers will buy their IT in the future, according to Barre.
“If you look at some of the evolutions that are happening in the market, the way that we are selling and distributing products and solutions is constantly changing,” he said.

“I think we will see growth in the e-reseller model and if we look at the activities and partnerships occurring within the telco space, that situation is also changing.
“Virtualisation is increasing in popularity. In addition, utility firms might be something we look at with regard to product distribution. Micro changes such as these are situations that we constantly evaluate.”

Barre said HP is doing a lot of analysis of future buying patterns.
“We are also conducting a lot of research with large customers into how they are buying. That is shaping our channel strategy to some extent. But I think we are going to continue to see a lot of changes in the coming years. However, we are continuing to drive the foundation of the business based on working with the channel.

“We are working on optimising our channel strategy, not revolutionising it,” said Barre.

“We are increasing the investments that we are making in the channel and HP’s commitment to the channel is as strong as it has ever been. I would also like to thank our partners for the contribution that they are making towards the continued success of HP.”