Q&A: HP Channel Sales VP On The Full HP Product Portfolio Partner Alignment

Frank Rauch, Hewlett-Packard's vice president of enterprise servers, storage networking (ESSN) channel sales, spoke with CRN Editor/ News Steven Burke at solution provider NWN Corp.'s national sales conference in Raleigh, North Carolina about HP's plan to work hand-in-hand with partners to grow sales in about 9,000 emerging growth midmarket accounts.

Here is an excerpt from that discussion on how HP sales changes will impact partners in the sales trenches.

Talk about the value proposition you are bringing to enterprise partners regarding the full HP product portfolio. How are the incentives changing to drive solution providers to embrace the full portolio?

I would look at it in two different ways. We are really giving them a market opportunity. There are two ways you can drive margin and profitability. Either you get more margin from the manufacturer or the vendor or you create top line.

Most of our focus has really been around driving top line right now. It has really been driving revenue growth for the partners. We are trying to make it easier. We are trying to develop collateral that allows them to do it. We are developing battle cards, etc., that allow them to be able to customize the value proposition, whether they are talking to a hospital, state or local government, or federal government.

But are you changing the terms and conditions for solution providers? Specifically, are solution providers being incented or even favored in deal registration if they have got the full portfolio?

We have converged the infrastructure lead right now. That really rewards the partner for being the lead in multiple categories. There are financial advantages. We are looking at other financial programs we can do to either incent the partner at the deal level or to be able to incent the partner in aggregate to be able to sell more of the HP portfolio.

Obviously the partners that are going to carry the HP flag in multiple categories are being mapped more into accounts.

The thing I want to make clear is we are looking at channel currency in more ways than just margin.

With converged infrastructure you are rewarding partners for being the lead in multiple (product) categories. What does that mean for partners?

Our partners really wanted us to be able to reduce cost of sales through demand generation, through walking them into account, through mapping them into accounts, etc. We are taking that currency and how we are driving mutual growth and mutual top line.

Solution providers say they are seeing pressure in the field to carry more of the HP product line. It seems like you have had a dramatic change in (sales) philosophy in the last three months.

What we are saying is we have always valued HP exclusive partners. Let's kind of start there. What we are saying is we have developed a process, a playbook to be able to map partners into 12,000 accounts. We may have a partner in there selling our Blades and selling our ProLiants very well. But they may be selling somebody else's networking. They may be selling somebody else's storage, etc. We will put another partner in there to be able to compete for those other product categories. It kind of goes back to my point around driving top line.

But at the same time we are developing products like (HP Blade System) Matrix (converged software, server, storage and networking platform that automates service delivery for the data center). We are expanding the converged infrastructure value proposition, etc., so it makes it more appealing and easier to sell the HP portfolio.

We will continue to look at portfolio programs whether they be at the macro level, meaning in aggregate growth type of (channel) programs or whether they be at the micro level, which would be more of a deal-based type of program to be able to find ways to incent partners to be able to do that.

Next: The Big Bang Of Donatelli And Seidel

What is the big bang that ESSN Executive Vice President David Donatelli and HP ESSN Senior Vice President Randy Seidl have brought with them?

It is sales culture. When you look at Donatelli and you look at Seidl, they are both very, very sales oriented people. We have gone back to the basics for lack of a better word. We have gone back to blocking and tackling. We have gone back to not having internal conference calls. We have gone back to maximizing our time in front of customers, following up within a half hour of getting out of that customer, and being able to orchestrate and monetize pretty much every customer engagement.

There is a level of accountability that goes from the top to the bottom of the organization. The bar has been raised and people are stepping up to it, in my mind.

The bar is being raised for HP internally. I assume the bar is being raised for partners as well. It is not the old way of doing business. What changes will partners see?

I think what you are going to see is you are going to see tighter governance models. I think you are going to see scorecards that predict and project both leading indicators and failing indicators in terms of both revenue and conversion with leads, number of sales calls, number of unsolicited proposals, number of call blitzes.

What is the reward for partners that step up to sell the full portfolio?

They will get more time with everybody involved. Therefore they will get more accounts. They will get more leads. They will get more of the MDF dollars, etc.

How much do you see the cost of sales going down and the sales cycle improving?

I think the channel historically has been focused on margin percentage. What we are doing right now is we are infusing absolute margin dollars into the channel. We are creating new customer buying points. We are strengthening the (HP product) portfolio sell. We are getting more dollars out of existing customers and we are pointing them to new customers.

Therefore going back to my original point, there are two ways to drive gross margin: You can either expand a percentage on a deal or you can get more deals. We are focused right now on getting more deals.

What will partners who step up with the full HP portfolio under the new model be saying one year from now?

HP delivered on the promise and out executed the competition.