HP gets choosy over MDF

Vendor will cough up only for loyal partners that can prove ROI

HP has advised partners struggling to obtain market development funds (MDF) to demonstrate their loyalty and prove an ROI case.

According to several HP Gold partners ChannelWeb spoke to, HP's enterprise arm has been less willing to part with MDF budget in recent quarters. According to one source, some of those who did obtain funding in HP's last fiscal quarter typically received half the normal amount.

Talking to ChannelWeb, Kevin Matthews, UK and Ireland channel manager for HP's Enterprise Server, Storage and Networking (ESSN) arm, said it is important to remember that MDF is a discretionary rather than contractual benefit for Gold and Preferred partners.

Although Matthews (pictured) claimed the overall MDF pot had not shrunk and that there had been no high-level changes to the way it is allocated, he admitted HP is being stricter about which partners it backs.

"We are asking for more information from partners to ensure we are getting ROI," he said. "I think that is the right thing to do in a tough environment where both HP and the partner need a return."

Asked why some Gold partners may have seen a decline in MDF last quarter, Matthews said the policy is to back loyal partners over those who hedge their bets with rival vendors.

"Partnering is a two-way thing," he said. "If they work with me across the HP portfolio, I will look favourably on them. If they pick and choose, they will get less."

HP has also asked its distributors to focus on a core set of smaller partners they see as a good bet for growth. Some MDF has been attached to this scheme. More than 100 resellers in this camp will enjoy formalised account planning from HP's Q3 beginning 1 May, Matthews said.

There are plenty of other ways to make money with HP besides MDF, Matthews added, including through its Pay for Results rebate scheme and Partner for Growth deal registration programme.

"We are also putting a lot of investment into training," he said. "We have a mobile training organisation that will visit a reseller's premises free of charge."

Matthew Wood, group sales director at HP Gold partner Concorde IT Group, was among those to complain of diminshing resource from HP.

"We do not feel the level of focus from HP has been what it should be for a period of time, certainly from a marketing and partnership point of view," he said. "It is no surprise that our spend with HP has dropped, while rising with others."

Damien Harold, managing director of Xact Marketing, an agency that HP uses to craft marketing campaigns for smaller resellers, said: "We have seen the same commitment from HP but it has probably been more targeted. They are trying to use the funds more proactively and share across the board as best as possible."

Alex Tatham, commercial director at HP distributor Westcoast, said he had "a lot of sympathy" with HP because some of its partners had squandered MDF in the past.

"HP is right to demand good ROI," he said. "Loyal HP partners that have stuck with HP are more likely to get a share of the funds as they will definitely sell HP to any end users they drag in. As a loyal HP distributor, it suits us."

Matthews stressed that ESSN has increased its headcount and partner resource in recent months, having added a specialist storage team last November to help partners in that segment.