HP urges resellers to target Compaq base

Vendor encourages partners to look at new markets and pledges to clear up channel confusion.

Hewlett Packard (HP) software resellers should treat the Compaq customer base as their own, resellers were told at HP's annual software partner conference in Prague earlier this month.

The Compaq user base has opened up new NT markets to existing HP resellers and the merger can offer new product opportunities to former Compaq partners.

HP said it is also keen to offer traditional Compaq resellers the opportunity to sell its flagship management software, OpenView. Resellers are being encouraged by HP to look at these new opportunities.

Jane Ayes, marketing director at reseller OCSL, said partners had been told that the Compaq customer base was their own at the conference in Prague, the first partner conference since the merger was completed.

Mark Nutt, technical sales manager at reseller Morse, explained that, as an existing HP partner, Morse would benefit because Compaq customers will now be more likely to look at HP products.

As well as encouraging existing partners to focus on the new customer base, HP suggested that Compaq resellers should continue to sell in the areas they targeted before the merger.

Reseller overlap

Mike Fitzgerald, channel recruitment manager at HP Software, indicated that there would be overlap between Compaq and HP resellers but that, in general, the deal had opened up new markets to partners.

"We will need to expand our channel but the new resellers have to be the right ones," he said. "If a former Compaq reseller wants to be a software partner of HP it must be willing to meet our criteria. If so, we will be willing to work with that company."

However, Fitzgerald emphasised that the company does not want to over-distribute and will not be able to accommodate every reseller. "We are looking for quality, not quantity," he said.

The software division of HP currently has 40 dedicated OpenView resellers in the UK, but Paul Hodgetts, general manager at HP Software UK, saw no reason why this should not double as a result of the new installed base.

However, he added that resellers must be capable of offering value-added services. "We will offer the opportunities but it will be down to the skills of the resellers," he said.

HP Software wants resellers to understand the services that can add value to its products. To that end, the vendor has brought together its software partners and developer services under the new HP Partner Care programme.

This will support resellers in providing services to help design, develop, deploy and implement operating systems. HP claimed that resellers can get higher margin from these types of activity. Despite the increased number of partners it will have inherited from the merger, HP is still looking for resellers focusing on management services.

Consultancy margins

Resellers can gain about three times as much margin from consultancy as from selling OpenView licences, and HP Software is looking for partners with a service provision capability, according to Nutt.

"[Morse's] OpenView turnover was £5m last year and we want it to be £6m this year. For us the appeal is the high consultancy revenues," he explained.

Ayes agreed that high margins come from services which the reseller partner adds on top of the product to tailor customer requirements. "The value-add services can be a mixture of different things, such as training, project management and bespoke customisations," she said.

For former Compaq partners that have an existing customer base but do not have the skills and resources to sell, implement and support OpenView, HP maintained that it will arrange partnerships between existing and new partners.

Fitzgerald insisted that Compaq hardware resellers, which have the opportunity to add on OpenView to a sale but lack skills, can still benefit.

"They should contact the HP channel team and it will find out whether it will suit their business model. If appropriate, they will do just the hardware and the HP channel can assist them with the software," he said.

HP's software division has already put training staff in place to help resellers, and said it will help with business development activities.

The company expects its software business to double as a result of the merger with Compaq. It is now investing for growth in a market that currently accounts for 10 per cent of HP's worldwide turnover, according to Hodgetts.

"The software business offers customers solutions for their business needs, gives resellers high margins and returns profit to HP's business," he said.

The vendor believes that OpenView has an opportunity to share in the education, government and publishing verticals after Apple named it as its preferred services management software for its new range of servers.

"This offers us and our partners a large installed base of iMacs," said Michael Bueckle, worldwide marketing and channel manager for software field operations at HP.

Integration targets

HP Software admitted at the conference that there is confusion among its resellers at the moment, but said that the situation will soon become clear. The vendor has set three 30-day periods in which it must integrate different aspects of the two businesses.

At the end of these periods, the firm hopes to be in a better position to allay channel confusion. But Fitzgerald indicated that HP and Compaq resellers will not face a sudden change in how they contact the vendor.

"For now, resellers need to contact their regular source and, over time, we will bring these contacts together in the new HP," he concluded.

SUMMARY

• HP's software division has told its partners to treat the Compaq customer base as their own.
• At its partner conference in Prague the vendor said that Compaq resellers will be encouraged to sell its OpenView software, provided they fulfil certain criteria.
• Services still offer the most revenue for its channel.
• HP said it will help resellers that do not offer their own services to partner with resellers that do.
• HP admitted that there is confusion in the channel, but said this will be cleared up when the integration with Compaq is complete.