HP Chief Commercial Officer: COVID-19 Crisis Has Led To A ‘More Pronounced Interest In Services’

For services such as Device as a Service, ‘there’s a lot more growth momentum’ than for transactional deals right now, HP Chief Commercial Officer Christoph Schell tells CRN.

As HP Inc. gears up to launch its new Amplify partner program on Nov. 1, the company is urging partners to expand their efforts around Device as a Service and managed print services as demand soars for the contractual offerings.

The COVID-19 pandemic has helped to accelerate the shift to contractual models, and partners that respond to this demand will be rewarded well under Amplify, said Christoph Schell, chief commercial officer at HP, in an interview with CRN.

“What I see happening overall is a more pronounced interest in services,” Schell said.

[Related: 4 Things To Know About HP’s New Business Boost Platform]

HP Amplify will feature a revamped compensation structure and a bigger focus on rewarding partners that can offer services, collaborate around data and bring a strong digital presence.

The company is emphasizing the key themes of the program this week during its virtual Reinvent 2020 partner conference, which is featuring services announcements such as the new HP Business Boost offering. The subscription offering includes a wide range of solutions bundled together, from devices to supplies to support.

Ultimately, “there’s a lot more growth momentum [in services] than in transactional,” Schell said.

What follows is an edited portion of the interview with Schell.

After announcing Amplify, were there any pieces of feedback from partners that surprised you?

Some partners were inquisitive about this third pillar that we added for [data] collaboration. On that collaboration level, it’s a question of give and take. Are you also sharing [data]? Are you also going to tell us how we can do our engagement with customers better based on the knowledge that you have? And again, obviously our customers have to opt in. We’re making sure that they understand that this is a partnership, and there have been some questions on that and some discussion points—which I think is absolutely expected and normal. We need to own the trust of our customers for them to opt in, but we also obviously need to own the trust of our partners that we are not going to use the data to, for example, go direct. We want to continue to have a partner-led engagement. So that is a really healthy and good discussion that I’m involved in with some of our partners.

What specifically have you been discussing with partners around data sharing?

In a weird way, I think COVID-19 has helped this discussion. Because so much of our partners’ business, so much of HP’s business, has gone online—whether it’s an HP store or a partner store or marketplace, it’s really a global phenomenon, if you look at that shift of business. The person on my team who manages omnichannel basically said, ‘Look, we got what we expected in five years happening in five months.’ And I think that’s absolutely how we’re looking at that. So we have a lot of partners that completely understand what it is that we’re doing from an omnichannel management point of view. Some of them are eager to learn. Some of them really haven’t made the investments that are necessary. It’s really partner by partner.

This is where the heart of the discussion is. It’s also interesting to look at this from a customer segment point of view. You have a lot of retailers, a lot of consumer partners, who are very firm on their omnichannel strategy. And on the commercial side, this is where I see more partners that have been hesitant prior to COVID. And now, some of them are in catch-up mode. And they are very grateful for any resources, any training, any coaching, that we can give them to move faster.

You mentioned previously that even partners on the lower Synergy track in Amplify will probably need some level of services capabilities. Is that still true?

Yes. And the reason is that, another thing that has been accelerated by COVID is that services are absolutely top of the list for our customers, regardless of what segment they’re in. There’s also business model implications. They want to move away from transactional engagements—they want to move to outcome-based business models. I think that’s something we know well from the enterprise side. But it’s now happening also in small to medium-size businesses, and it’s also happening in consumer.

I really like what the team has [done] with HP Business Boost. It’s about moving into a work-from-home environment, a small-business environment, and enabling customers to get the best of HP. They can choose solutions, but in a very simplistic way, and make that a monthly engagement from a payment point of view—and then really go beyond the hardware and go into the services, go into workflows.

I think we’re creating a platform with HP Business Boost. Over time we will deploy more services capabilities on that—some of them from HP, and some of them from partners. I think the value proposition for partners is, we have an opportunity here with work-from-home and learn-from-home. And let’s make that an annuity response in how we how we go after this. And let’s tie our partners into this, and let them participate.

Do you think HP will be able to reach more SMBs now with Business Boost?

[Up until now] we reached them with a product offering. You want to buy an HP printer, display, notebook, desktop? Great. We didn’t reach them for an outcome-based point of view.

We thought that we have to shift the discussion from a product-led discussion to an outcome-led discussion. You want to run this business at a certain cost, how do we do that? How do we make this simple?

This is why we looked at the different assets of HP. And rather than having product-based engagements with these customers, we said, ‘Let’s take all these assets together—from a hardware point of view, from a services point of view, also from a financial point of view. And that’s what we’ve done in a very simple way. We really keep it simple. You can choose from three packs—good, better, best. You have in there printing components, personal systems components, workflow components, and then leasing and financing components that you can choose. It makes your performance very predictable. It also makes your cost management very predictable and if you are a small business, that is important. ...

Traditionally at HP we always differentiated between, ‘This is a consumer go-to-market, this is a commercial go-to-market.’ And what we’re doing here is serving this new segment of prosumer. All of this is coming together in this melting pot of prosumer.

On Device as a Service, do you see that becoming the predominant way that PCs are deployed at some point in the future?

Let me put it differently. What I see happening overall is a more pronounced interest in services. And that means that the hardware component of the system is still very important but it’s taking a little bit of a backseat because we have more engagements with customers on services.

If I look into what is happening in the world right now as a response to COVID, we have a lot of enterprise companies that are looking into cost-effective ways to innovate their infrastructure. And that is true for personal systems, that is true for print—it’s true for any IT infrastructure. And of course, when you start talking about services, then ultimately you move very quickly away from transactional engagements and you go into services-led engagements, annuity-led engagements, outcome-based engagements. For a customer, that means you are moving from a Capex to an Opex discussion. There is a clear preference right now with some of our accounts to have that discussion. It’s good for us because I think we understand it well from the printing side of the business, and also we have invested early on the DaaS [Device-as-a-Service] side. Whether that means that the engagement is going to be a DaaS engagement, or a subscription engagement, or a financing engagement—that I think we define account by account, together with our partners. But I overall believe it’s going to be more than just a transactional engagement. There’s a lot more growth momentum [in services] than in transactional, in particular in the enterprise and commercial segments.

In terms of your device announcements at Reinvent, many of the new PCs feature AMD processors. Is AMD a bigger part of your strategy now than a year ago?

AMD has been a strategic partner of HP’s for a long time. And they have co-existed with Intel. I will tell you that Intel is a very strategic and very key partner of HP as well. Now, what is interesting is that prior to mobility products becoming essential products, AMD has really invested in their technology. And so the lineup that they have, I think, is strong—in particular on the high-end side of the portfolio. We’ve obviously been working closely with AMD on that portfolio. And the way we work together is we try to maximize the impact of their components into our systems. And I think that the result is quite strong. It has already been quite strong, but now with these products that we’re announcing, I think we’re taking this to another level.