HP Inc has claimed that a new quoting tool it introduced earlier this year is helping to curb special bid pricing abuse in its UK channel, a practice it claims is now almost extinct.
Historically a common source of grey market kit, special bid pricing abuse or misuse involves resellers securing a discount on kit from a vendor for a specific customer opportunity but deliberately over-ordering and redirecting the surplus to another customer, or broker.
Neil Sawyer, UK channel director at HP Inc, said an "instant" quoting tool the vendor launched in February, IQ, has both cut the time it takes partners to obtain quotes and made it harder for rogue resellers to subvert its bid processes.
The tool has created a "more transparent and fair playing field for the 99.9 per cent of resellers that use our systems appropriately," Sawyer said.
"We don't tolerate this misuse of our systems," he added.
"Where we have seen grey market issues appear – albeit in a very small, single-digit number annually – ultimately it can cause a lot of disruption. We are seeing more and more end-user-specific pricing requests that allow us to associate our serial numbers to a specific customer, which means we can manage the market more with our resellers. Ultimately, that cuts down on a lot of these activities that previously existed."
Sawyer said instances of misuse he had witnessed in the last 12 months have been "tiny".
"We've cut it out almost completely now," he said.
Partners who break the Ts and Cs of their contracts will face legal and financial consequences, Sawyer (pictured) promised.
"It's a road we rarely go down, but we have a fantastic audit team employed specifically to monitor the market," he said. "They do a great job of getting hold of anonymous information and researching it.
"We are backing those partners who represent our business responsibly in a transparent way, and that comes as a result of a multimillion-pound systems improvement we have put in place."
Some 70 per cent of partner pricing requests are dealt with in under two hours since the tool was added, down from a minimum of seven hours, Sawyer claimed. The vendor is also getting the price right first time in two thirds of all cases, where previously 70 per cent of all pricing was escalated for a second review, he claimed.
Matthew Wood, group sales director at HP partner Concorde IT Group, felt Cisco is leading the pack when it comes to clamping down on the grey market but agreed that special bid pricing abuse is becoming less common in the HP channel.
"It's been incredibly frustrating when partners have abused HP's processes and have got away with it. Have they eradicated it? Probably not 100 per cent if I'm honest, but it's great to see them taking steps to sort it out," he said.
Omar Waine, vendor alliances manager at HP Gold partner Millgate, said HP had invested heavily in its brand protection team and was asking more questions of resellers. To give HP more visibility into its own business, Millgate centralised its bid desk three years ago, meaning its account managers can no longer do their own purchasing and sell to whoever they liked, Wain said.
"We play by HP's rules and engage with the account managers that are now based in Barcelona. We've lost business to resellers who have falsified bids and got a massive discount - it does happen.
"IQ has made the process a lot simpler and easier for HP to have visibility of deals and end-users, and what's been shipped out and consumed, so it's probably made a big difference."
Michael Collins, vice president of strategy and channel at Dell EMEA, said Dell had "good governance" around its pricing approval processes.
"Given we have been running a direct business for many years, that process is pretty well defined for us," he said.
"We have regular, frequent audits to ensure that the product associated with those opportunities ends up in the right place. The end-user verification and upfront due diligence that's placed in making sure the business intelligence associated with the customer – ie number of employees and making sure the opportunity makes sense – is all done during the bid approval process."
New acquisition will bring UK cloud service provider's global headcount to over 700
Law firm claims that Oracle lied to investors over what is driving its cloud revenue growth and boosted sales through 'threats and extortive tactics'
Vendor claims to have demonstrated 'growing commitment to the telecoms space
Global channel boss Joyce Mullen claims partners wanted 'more predictability'