VARs Rejoice: HP Delays PRI Program Actions

Hewlett-Packard is delaying any action regarding solution providers' Authorized Service Provider status as it relates to low scores in the company's Penetration Rate Index program, according to a letter from HP.

Stephen DiFranco, vice president and general manager of HP's Americas Solution Partners Organization, sent an e-mail sent Wednesday afternoon to a small group of solution providers explaining that HP won't take any action until it examines the PRI program further.

"We have been working with partners to address questions and concerns that have come our way. As with any new program, there is a period of learning and adjustment -- both for HP and partners -- to gain a better understanding of the program and how it can achieve its intended goals and benefits for everyone," wrote DiFranco. "We have heard that PRI can be too complicated to understand, too time intensive to manage and too black-and-white on exceptions. We are working to address these concerns."

The PRI program was initiated last November as a means to get solution providers to sell more HP-branded services. Under the program, solution providers had to sell HP-branded services at 75 percent of the average HP partner or risk losing their authorized service provider status. Many partners felt the design of the program made it difficult for them to sell their own services and that it did not properly account for opportunities, such as RFPs, where it is difficult to include services.

"Based on your input, we have made a decision to delay any impact to partners’ Authorized Service Provider (ASP) status due to low PRI scores," DiFranco wrote in the e-mail. "It is important for everyone to understand that partners who sell $50K of hardware and $10K of services will not lose their services authorization in the near term, regardless of their current PRI score. Rather, HP plans to work with these partners to help them move their PRI scores up. Those who succeed in increasing their scores will continue to be a part of this valuable program."

HP's response was received as good news from some VARs.

"It's a good thing. It shows that HP is taking this seriously," said Gary Ellis, president of BPI Information Systems, a Brecksville, Ohio-based solution provider. "It seems like [DiFranco] is going to figure this mess out and not less this destroy top revenue [for HP] because of it."

Rick Chernick, president of Camera Corner/Connecting Point, a Green Bay, Wis.-based solution provider who was given an extension to meet the services index quota, said he views the letter as a ’victory’ for partners. The letter from DiFranco shows that HP Is not going to "destroy what they have worked so very hard to build which is loyalty among the resellers. The last thing this program was designed to do was to alienate us," DiFranco said.

Chernick said he is optimistic that HP will make changes to the program aimed at "paying those resellers that wish to sell services handsomely, but not cutting off the services arm that cares for the customer base."

Next: Program Not Going Away

"It's not that tough," said Chernick. "I think that we have made them aware that the program has merit but it is not perfect. They need to reassess how they are going to do this thing. We all get that we have to sell service contracts. We want to sell services contracts. At the end of day if you want to get any kind of back-end rewards yuou have to raise your PRI Scores. But I don't think they will cut anyone off for not hitting the PRI scores."

Ellis said his company was told that the delay in any action regarding the loss of an authorized service provider status would last until July 2011. "They said for six months (from January) don't worry, just get out there and keep on selling," Ellis said. "You're not going to know for sure what happens until they come out with the end game of all this, but this shows they value us. They've been really working with us. This whole thing has been exhausting. Now it's get back to work and start selling."

Indeed, DiFranco's letter indicates that the PRI program is not going away, consistent with statements he has made in the past. HP executives could not be reached for immediate comment to clarify whether the delay in PRI action was in effect for all of its solution providers.

"It’s worth noting that we also have received positive feedback from partners, who like the consistency of monthly PRI reporting and the 'more for more' approach. PRI is helping partners attach HP-branded services more frequently while increasing their revenue per deal, customer satisfaction and retention, and compensation from HP," DiFranco wrote in the e-mail. "Our goal is to continue to make PRI work better for a greater number of partners."

Mary Stazi, president of The Computing Center, an Ithaca, N.Y.-based solution provider who also sits on HP's SMB Reseller Council, said she had many conversations with DiFranco and other HP executives about the PRI program and is happy that the vendor responded to resellers' complaints.

"I think we won a mini battle. I think resellers didn't understand the PRI program and that there's a lot of education that needs to be done," Stazi said. "They're clear that they're willing to work with any reseller. They're going to review resellers PRI [scores] and reach out but some of the onus is back on resellers. If you have an issue, give these guys a call and ask them to talk you through what needs to be done. They are not going to do away with PRI, but they realize the whole methodology behind it was flawed. I'm very pleased. It was a good outcome as far as I'm concerned."

The letter also notes changes to two further partner program initiatives that took effect Nov. 1: first, The Authorized Professional Services Program will see a 10 percent increase in labor reimbursement rates, and second, HP will now offer rebates to level-one Partner Sell & Deliver (PS&D) partners who were ineligible to receive them last fiscal year.

Steve Burke contributed to this article.