Damage Done: HP's Lost Year

Hewlett-Packard solution providers say Leo Apotheker's 11-month tenure as CEO, set in motion and sanctioned by HP's board of directors, has inflicted significant damage to the company's channel legacy.

More than a few HP partners that were 100 percent focused on providing end-to-end HP solutions when Apotheker took the helm have embraced competitive offerings. And some are even now in the process of adding competitive offerings like Dell, Lenovo and Samsung. What's more, even those partners that remain loyal to HP say that new President and CEO Meg Whitman is going to have to move quickly to rebuild the channel trust and loyalty that has been lost over the course of the last year.

"This whole last year working as a partner with Leo Apotheker as CEO has been a shocking experience," said Rick Chernick, the CEO of Camera Corner Connecting Point, a Green Bay, Wisconsin HP partner who has remained one of the company's most loyal partners. "HP is a company that I have the utmost respect for and make a living from, but it just didn't feel good under Leo's command. There was no connection between Leo and the channel.

"I just didn't feel like I wanted to follow him into battle, but I stuck with HP because I believed in the management team underneath him including Todd Bradley, Stephen DiFranco, Mike Parrottino, Frank Rauch, and Dave Donatelli," said Chernick."I applaud the board for making a change. I sincerely hope and pray that this is the right move. The partners and customers need to be recharged. Something had to be done. I keep repeating to myself: 'This too shall pass.'" Chernick is not alone. Other partners say that HP has lost channel ground under Apotheker. "They lost loyalty and trust," said the CEO of one of HP's top partners who asked not to be identified. "They did a lot of things that were not consistent with HP. It is a slippery slope when you lose the confidence of your partners. You can't measure the impact in dollars and cents of all of those losses today. It hasn't fully been felt yet. But partners have started taking on other product lines and customers are looking at other options"

Whitman is already moving to restore the loyalty and trust of HP customers, partners, employees and investors. One of her first orders of business was a no-nonsense recommitment to HP's robust hardware business. That's no small matter given that partners and customers believed that Apotheker gave short shrift to the hardware business which accounts for the vast majority of HP's $126 billion in annual sales.

Besides reaffirming HP's commitment to the hardware business, HP solution providers said it is critical that Whitman move quickly to rally partners with a clear message on how solution providers fit into HP's future. The long and short of it is partners are still reeling and trying to stomach the August 18 announcements (killing the HP TouchPad Tablet, buying enterprise software maker Autonomy at what some see as an almost obscene price, and the decision to look at spinning off HP's $40 billion PC business).

NEXT: HP's New CEO Needs To Show Channel Fire And Passion "Whitman needs to come out with a very clear message as to the direction that HP is going to go with the channel," said the CEO of another top HP partner. "That means a clear statement on the Personal Systems Group Spinoff, the Autonomy acquisition, HP's EDS business and what it all means for partners. The channel community represents the largest sales organization for HP. We need to be in the know --not in the I don't know."

Partners said they are anxious to see if Whitman has the passion and fire for building out an aggressive indirect sales channel that was front and center during former HP CEO Mark Hurd's tenure. Hurd regularly conducted joint sales calls with partners in the form of regional partner customer roundtables.

"I would urge her to continue the customer executive roundtables that were first initiated by Mark Hurd," said John Convery, executive vice president of vendor relations for Denali Advanced Integration, one of HP's top national enterprise partners headquartered in Redmond, Wash. "We did two of those roundtables with Mark Hurd. Every customer who attended those is today loyal to Denali and HP and continues to be a customer."

Several partners, who did not want to be identified, blame the HP board of directors for the chaos and confusion that battered HP in the last year. "It was obvious to anybody with an eye on the company that Leo was the wrong guy when they hired him," said one HP partner. "The board did damage to the company and to the channel. They have eroded the fundamental trust that is essential for a productive relationship with partners. They are going to have to get it back."

One way to start to get that trust back is to put an HP solution provider CEO on the board of directors. It's not a far-fetched idea given that partners account in one way or another for the majority of HP's sales. What HP would gain is invaluable insight into what is going on in the sales trenches. That would rip the HP board out of what one partner calls the "reality-free zone" that it operates in when making decisions like spinning off the Personal Systems Group (PSG) business.

Chernick, for one, who has been selling technology products for 40 years and has built Camera Corner Connecting Point into one of the most respected solution providers in the country, feels that putting a partner on the board would bring a fresh perspective on the real-world business challenges facing customers and the channel. "The board could use a streetwise partner who knows what's going on in the field," says Chernick, a member of the Green Bay Packers Board of Directors.

He's right. Someone like Chernick, a down-to-earth, respected Midwest business leader who is not afraid to tell it like it is, would add a lot to a board of directors that could stand to go out on a few sales calls with partners.