Is HP's Double Down Paying Off?

It's been more than a year since Hewlett-Packard Chairman and CEO Mark Hurd promised he would double down on HP's most loyal partners, those solution providers that bet heavily on the vendor. So far, the results are mixed.

While HP seems to be making significant progress with SMB solution providers that sell industry-standard ProLiant servers, some longtime HP-only enterprise solution providers say their loyalty is not being rewarded. They cite HP's recent Fast-Start program, which gives ProLiant-focused solution providers an oppor-tunity to quickly reach certifications on HP enterprise storage.

"With programs like Fast-Start and other initiatives, we are seeing less loyalty from HP," said Don Richie, president of Sequel Data Systems, an HP-only enterprise solution provider in Austin, Texas. "It seems that those who are larger but sell all of the different lines, such as IBM, EMC and others, are the ones reaping any sort of reward. Because HP appears to want to gain their attention, they are willing to forsake our commitment and investments."

HP's new Fast-Start program, unveiled in June, is designed to quickly enable ProLiant server solution providers to sell its EVA 4100 enterprise storage array. But Richie and other HP EVA enterprise solution providers that made a several hundred thousand dollar investment to bring on the product line complained that the new Fast-Start program opens the door for inexperienced VARs to take on the EVAs without proper training and certification.

HP, for its part, said after a six-month grace period, those new storage partners will have to make the same investments as existing enterprise storage partners to maintain their EVA storage certifications.

"We have a big push in storage," said Adrian Jones, HP's vice president and general manager, Americas Solutions Partners Organization. "And we believe this was an opportunity where we would not get channel conflict by going after server resellers, and that's what we've done. We are adding a healthy pipeline with absolutely zero conflict with our existing channel partners."

While HP enterprise solution providers remain wary of the program, others acknowledge that where HP's double-down promise is paying off most is in tighter relationships with the vendor that have resulted in new business opportunities.

HP, for example, appears to have upped the ante in its bid to wrestle business away from rival vendors with a new sales plan that funds solution providers' employees to go after business in global 2000 accounts where HP has little market share.

The new Account Investment Program (AIP) calls for HP to fund all or part of the salary of solution provider employees for six quarters, while the channel partner prospects for new business in select accounts assigned to the partner by HP.

The Palo Alto, Calif.-based vendor declined to reveal the number of solution providers or accounts involved, but sources familiar with AIP put the figure of solution providers currently participating in the plan at close to 20 and the number of accounts they are targeting at about 90.

Jones called AIP a "no coverage" initiative. "It's where we don't have the coverage that we'd like today from the end-user sales team," he said. "[We said] 'Let's make sure we have coverage in these key end users and have channel partners go cover these accounts.' This no-coverage initiative is a jointly funded HP/partner effort to go after those accounts, and that's what we are doing in the midmarket space."

Solution providers note that the initial participants in the AIP strategy include a majority of regional and national players who are primarily HP solution providers.

Larry Holzenthaler, executive vice president of sales and marketing at Total Tec Systems, an HP solution provider in Edison, N.J., added that the AIP accounts his company has been assigned have the potential to turn into an annual run rate of several million dollars in HP products. "The channel has some hunters that [HP] can use," he said. "This is a way to put some of our proven people out into going after new accounts that would be difficult for us to afford."

HP's SMB solution providers say that double-down for them translates into more attention from their HP channel reps, which means more leads and more business.

"They've given us an opportunity to make a few extra points [of margin] by selling smart," said Rick Chernick, CEO of Camera Corner Connecting Point, a Green Bay, Wis.-based SMB solution provider that switched all of its server business over to HP this year.

But Chernick said the biggest dividend comes with the number of HP channel people willing to work with him to win new business. "We have a very large storage opportunity that we are working on, and it's going to be HP," he said. "It's a $700,000 opportunity, and our HP storage rep came all the way up from Chicago to spend the day to help us work on it. HP has just been there to help us. HP understands the relationship."