HP bets on the channel

Meg Whitman delivered another crowd-pleasing performance at HP's partner summit in Las Vegas. Sam Trendall went along to find out more

People have been coming to Las Vegas to win and lose their fortunes for more than 80 years. But even in this town of high rollers and high stakes, none can have wagered as much as $120bn on a roll of the dice.

But HP, which rocked up in Sin City for its Global Partner Conference (GPC) last month, is doing exactly that, as it stakes its future on chief executive Meg Whitman's turnaround plan. At GPC 2012 Whitman's tone was, to an extent, one of contrition; partners had just witnessed the unedifying saga of her predecessor's bungled and ultimately doomed attempt to exit the PC business, and HP had some trust to rebuild.

This year Whitman was in a more bellicose mood as she talked up the vendor's might and the progression of her strategy to re-energise the company's fortunes. Even the conference's official motto was noticeably direct and hard edged: "HP - We Mean Business".

In a typically crowd-pleasing keynote, the HP leader voiced a hard line on the practice of in-house sales operatives making moves on indirectly served customers.

"We now have a clear policy about taking business away from the channel and going direct," she said. "My message to you is that this simply will not be tolerated. Everyone in HP is crystal clear on the behaviour we expect, and I am holding myself and our account executives accountable for any behaviour that is not befitting of HP."

Visible progress
Whitman also encouraged attendees to pay scant regard to media reports casting doubt on the health of the firm's finances. She claimed the $10.6bn cashflow from operations generated last year spoke to the strength of the vendor's balance sheet, pointing out that this figure is higher than the most recent annual total of Coca-Cola, McDonald's and Visa. Net debt was also reduced by $5.8bn last year, she added.

The CEO (pictured) restated her commitment to delivering on her four-year turnaround plan for the vendor. Last year was about diagnosing problems, with 2013 being a year for implementing solutions, she said. 2014 will be about recovery, with the turnaround completed in 2015.

"It would be easy to do some short-term things that would make the financials look better, but we are on a journey to turn HP around," she added. "It is not going to happen overnight, but we know what needs to get done and we are doing it. But you will not have to wait until 2015 to see progress."

Tony Price, managing director of HP Authorised spare parts distributor Chiltern IT Parts, attended the event and was impressed by the new hardware on show.

"For me it was a really good event. We got to understand about some of the new technologies and new products, particularly the ElitePad and Moonshot (see opposite). The 3PAR technology is also very interesting," he said. "It was good to understand some of the accreditations in ExpertOne."

Paul Barlow, managing director of partner Servium, welcomed the introduction of linear rebates across all Enterprise Group products, claiming it will make life more predictable for resellers.

"The message about the channel, the overall strategy and making HP simpler to do business with, came across very strongly," he added.

"It can be difficult to work with all the large vendors because of their size. HP has simplified down to two units - PPS and Enterprise - and it is already starting to look a lot easier and a lot clearer."

"I thought [Meg Whitman's] speech was very clear and concise - HP wants to be channel centric. There was also a lot of messaging about HP wanting to listen to its partners and customers, and that can only be good for moving the business forward."

James Napp, UK managing director of Bechtle, claimed he would withhold judgement on the rebate shake-up until all the details are ironed out once it is implemented in May. But he praised the event overall and also singled out Whitman's speech as a highlight.

"She spoke very clearly and directly and I felt she had the respect of, certainly all the HP lot and all the partners I spoke to, which is a great thing - the channel needs a strong HP," he explained.

"It also has some fantastic products to back it all up. The interest we have had in the ElitePad has been phenomenal; it's clear it is going to be a very successful product - it is a real business tablet proposition. We are catching stock as it comes through, and we already have some sizeable opportunities."

Key developments from GDC

Software
HP used the Nevada get-together to shine a light on its software portfolio and encourage hardware VARs to explore opportunities in this area.
The vendor giant wants to make big increases in the percentage of software revenue it funnels through the channel and urged partners to get on board with a $10bn (£6.5bn) opportunity. George Kadifa (pictured below), executive vice president of HP Software, told assembled hardware and services partners that "we would like to see HP software being the third arrow in your quiver".
In the IT management and cloud space the vendor wants to quickly accelerate its percentage of indirect sales from 60 to 70 per cent. In the security arena it hopes to move the channel centricity figure from 35 to 50 per cent. In big data, HP wants to more or less double the portion of sales it generates indirectly, with the near-term target of moving from 26 to 50 per cent of sales accrued indirectly.
"For people who have been in the hardware space, we want you to become a software partner with us," said Kadifa. "We want to help you differentiate in the marketplace and we want to simplify how you do business with HP."
Elsewhere HP unveiled its first formalised Autonomy partner programme. The scheme has been designed to resemble the existing HP PartnerOne framework, which it will become part of over the next year. The scheme has three tiers: Business; Preferred; and Specialist. Steve Reny, senior vice president of market development for HP Autonomy, claimed that "we are going to be very clear about how [VARs] make money from this".
"Previously, if you were making an investment in Autonomy technologies, it may have meant investing in multiple programmes," he added. "Frankly, it may have felt too hard to work with us."

Programmes and certifications
Simplification was the watchword in Las Vegas as HP unveiled sweeping moves to consolidate rebate structures and certifications and pledged to make itself easier to do business with.
The vendor announced that it is moving to a completely linear channel rebate structure, with rewards paid to partners from the first dollar of sales. Upper limits on the total amount paid out are also being removed and the HP Enterprise Group is slimming four compensation programmes into just a single one.
Alessandra Brambilla, EMEA channel vice president of the Enterprise Group, told CRN: "We are facing an economic environment that is really hard to predict, so it is very difficult to make targets because the market can go up or down."
Across the Printing and Personal Systems unit, base compensation levels will be primarily linked to hitting revenue targets. In the more value-focused Enterprise Group, rewards will be geared to the attainment of higher levels of specialisation.
Partners will typically garner about 60 per cent of total rebates from the base comp level, said HP, while rewards for securing business with new accounts will account for about 10 per cent. Both these will be paid according to biannual plans.
Payments related to the achievement of bespoke goals in each business unit will comprise about 30 per cent of total rebates. These goals will be set on a quarterly basis.
Alongside the simplification of the rebate scheme, the ExpertOne training and certification programme is also being given a trim, with 44 badges to be reduced to just 22. Brambilla explained that the transition and implementation process across the region will take up to 18 months, and that partners will be given a grace period of up to a year to continue to use their existing set of specialisations.

Hardware
HP's top hardware executives seemed in bullish mood about the vendor's tin portfolio in Vegas, with a number of client and infrastructure products singled out as potential big sellers for the channel.
Stacy Wolff, vice president of industrial design for the Printers and Personal Systems (PPS) unit, showcased the capabilities of four machines he believes will be key parts of resellers' portfolios in the coming months. First up was the Envy X2, which Wolff described as "the best hybrid out there", followed by two laptops from the EliteBook range: Folio and Revolve.
Finally came HP's long-awaited return to the tablet market: the ElitePad. Wolff (pictured, right) highlighted the premium materials used in each product and characterised the new-look portfolio as "gorgeous, gorgeous, gorgeous".
Jos Brenkel, senior vice president of sales for PPS, said: "You need an industry-standard product with industry-standard software that you can integrate into your business. The ElitePad is a proper business tablet."
Todd Bradley, executive vice president of PPS, also highlighted the opportunities provided by HP's portfolio of printing technologies and services.
"Whether you sell supplies, printers or managed print services, the opportunity to sell ink into the office is unprecedented," he claimed.
In the datacentre, Enterprise group executive vice president David Donatelli cited 3PAR storage and HP networking as key products. He also expressed his excitement at the upcoming launch of the first HP Moonshot low-energy server products.
"Over time this will become the dominant form of computing in the world," he told partners. "And you are here right at the beginning."