HP Enterprise To Sell Exclusively Through Channel Outside The Fortune 500

Hewlett Packard Enterprise plans to shift hundreds of millions of dollars of small and midmarket direct sales business to channel partners in the coming months.

HP Enterprise is drawing a line in the sand and will refuse to pay its end-user sales teams on deals with clients outside the Fortune 500 unless the transaction went through a channel partner, according to Scott Dunsire, vice president and general manager of HP's Americas Channel Organization.

"You want culture change?" Dunsire asked the nearly 2,000 attendees of Synnex's Inspire National Conference in Greenville, S.C. "You hit your salespeople in the pocketbook."

[RELATED: HP Enterprise Will Not Pay Direct Sales Force For SMB-Midmarket Deals]

Dunsire said Friday that HP's Commercial Two (clients outside the Fortune 500 with more than 1,000 seats) and small and midsized business (SMB) accounts have already been placed in the hands of HP Enterprise regional directors and vice presidents, who are going through the list now and setting up a strategy to transfer those relationships from the vendor's direct sales force to channel partners.

"We're moving hundreds of millions of dollars to the channel," said Dunsire. "We cannot get to where we need to be unless we invest in the channel."

HP Enterprise will continue to sell directly to clients designated as Global (the vendor's top 60 customers such as Bank of America and General Motors) and Commercial One (other customers in the Fortune 500), though Dunsire noted that 70 percent to 80 percent of these deals already go through the channel.

To ensure that this tectonic cultural shift actually takes place, Dunsire said, HP Enterprise will place enormous roadblocks in the way of any sales rep who wishes to carry out a Commercial Two or SMB deal without involving a channel partner.

In order to sell directly into these customer segments, the sales rep must first get approval from HP Enterprise's governance committee, which is run by a sales operations person and Jeremiah Jenson, vice president of Americas channel sales for HP Enterprise. The sales rep would then have to get Dunsire to sign off on the deal.

Finally, Dunsire said, the sales rep would be required to prepare a 30-minute presentation for Robert Vrij -- HP's senior vice president and managing director for the Americas -- explaining why the deal shouldn't go through the channel.

"I don't know one salesperson in their right mind that would want to do that," Dunsire said. "We are going to make it extremely difficult."

HP Enterprise also plans to add an additional 36 personal selling areas for its own team to get from covering three-fourths of the United States to extend to the entire country. Dunsire said the additional HP staffers will be focused on driving more business into the white space and generating additional demand for the channel.

"The only way to be successful as a channel company is to generate demand on behalf of channel partners," Dunsire said. "An HP badge carries a lot of weight with CIOs."

HP Enterprise will also simplify its pricing process with the launch of One Path, which will be formally unveiled Nov. 1 and launched Feb. 1, 2016.

Dunsire acknowledged that pricing HP products can be difficult today because of all of the vendor's different business units. But One Path is expected to provide partners with greater pricing predictability so that they can know from the outset what the margins will look like on HP product sales, Dunsire said.

CLS Technology today primarily uses Lenovo to sell into the education and health-care verticals, according to Lyndsi Scurlock, co-owner of the Graceville, Fla.-based Synnex partner. But she said that might change now that HP has committed to going through the channel more.

Tecnet has been burned several times in recent years by HP's direct sales force, according to Matthew Van Heyst, director of operations for the Victoria, B.C.-based Synnex partner.

"As soon as a deal got too big, HP would pull it out of a partner's hands," said Van Heyst, who said HP would too often take the plum deals and leave him with just the crumbs.

The remarks, though, left Van Heyst hopeful that HP will be a better partner to Tecnet going forward. Specifically, Van Heyst said he was very pleased that Dunsire committed to changing the sales culture.

PUBLISHED OCT. 2, 2015