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10 Things Wrong with the Current HP Way in the Channel

 
 
By Michael Vizard  |  Posted 2008-02-27
 
 
 

No matter how great the potential is, there comes a time when hope gives way to frustration. The general consensus among the solution providers attending Hewlett-Packard's annual partner conference in Las Vegas this week seems to be that no matter how much they love HP, progress on key issues that cost them time and money seems to be agonizingly slow.

Channel Insider sat down with Adrian Jones, HP's channel chief for North America, to discuss many of these issues, and what follows is a description of 10 specific challenges facing HP and the company's planned response to the issue.

1. Ease of Doing Business: HP and its partners continue to be victims of the company's profit and loss structure around different business units that have to negotiate with each other every time a partner needs help closing a deal. This greatly extends the amount of time it takes for the solution provider to get a price quote or approval for specific types of solution configurations. There appears to be no plan to shrink the number of major HP business units, which are responsible for servers and storage, personal computers, printers, and software. But Jones did say the company is working diligently to improve the coordinated response times of the territory managers associated with different business units.

2. Lack of Competitive Storage Products: HP has struggled in this category for the past four to five years. The company says its latest storage introductions will close the gap with rivals, but Jones concedes it will be another six months before HP sees any real results from this latest effort. Meanwhile, several solution providers expressed dismay that HP allowed Dell to acquire EqualLogic and feel that HP may need to do something dramatic in the storage space to recover momentum.

Click here to read about HP's channel struggle to win in the U.S.

3. Slowing Server Sales: Beyond the simple fact that it's more difficult to sell servers when the companion storage products are not that strong compared with the competitors, solution providers report that server sales might be slowing because customers are getting better utilization rates by deploying VMware on top of their existing servers.

4. Lack of a Virtualization Strategy: HP has signed some recent alliances with companies such as VMware, but the company has yet to put together a meaningful virtualization strategy in the channel that creates more opportunity for its channel partners. Jones says the company is working on a plan in this area.

5. No Coherent Approach to Managed Services: The business model of solution providers is transforming rapidly, but beyond a few programs for managed services in the printer space, HP has been largely caught flat-footed by the rise of managed services in the channel. Jones says solution providers should watch HP in this space in the coming months.


6. Lackluster ISV Initiative: Half of all hardware is sold when the application is installed, but ISVs were pretty much absent from HP's partner conference this week. In particular, HP has been remiss in partnering with ISVs that could help shift applications from IBM mainframes to high-end HP servers.

7. Software Group Missing in Action: HP has made some admirable investments in software lately by acquiring a number of companies. Most of the HP Software Group was absent from the conference this week, and it appears the HP Software Group is in the process of setting up its own separate channel program and related conference.

8. Not Enough Emphasis on Services Products: This may be as much a problem inherent to the HP partners than the company itself, but the fact remains that the percentage of partners selling high-margin HP Care Packs on top of low-margin hardware products remains fairly low. This may also suggest that the percentage of partners opting to attach HP peripheral and memory products to every PC sale may not be as high as it could be.

9. Conflicts with HP Professional Services: HP has big ambitions for this group, but as yet there are no clear rules for engagement between HP Services and the services operations of its channel partners beyond the fact that HP would like its partners to resell HP Professional Services.

10. Misaligned IT Systems and Reporting Mechanisms: Partners are concerned about the amount of time it takes to get compensated by HP. The reporting applications and the associated IT systems they run are being consolidated, which in turn is disrupting business processes. Every discrepancy has to be resolved on a case-by-case basis, as it could be as much as another year before HP consolidates all its systems.

Click here to read what HP CEO Mark Hurd had to say in his keynote at the partner conference.

To HP's credit, the company has made phenomenal progress in terms of reducing the amount of conflict between its direct sales force and the channel. Its solution provider partners generally remain steadfastly loyal, and the company remains a critical component of the channel as a whole.

But its recent financial success overseas and in the consumer market, coupled with wave after wave of reorganization, has left more than a few partners wondering whether HP has become a little complacent in the channel by focusing on modest adjustments at a time when partners are dealing with economic uncertainty and technological upheaval.

With some luck and effort, HP will find its way in the channel again—hopefully, sooner than later.