HP Unleashes Hefty PartnerOne Rebates To Drive Global Sales Growth

Hewlett-Packard is aiming to reshape the competitive landscape with lucrative new back-end rebates under a unified PartnerOne channel program aimed at driving global sales growth and market-share gains against competitors such as Cisco Systems and Dell.

Among the biggest HP PartnerOne changes, which will take effect at the start of HP's fiscal year 2014 beginning Nov. 1, are an 18 percent back-end rebate for top-tier U.S. Platinum converged infrastructure specialists selling HP networking and a 5.5 percent back-end rebate for U.S. Gold cloud builder/storage specialists selling an HP CloudSystem with 3Par storage.

HP also is providing new back-end rebates on its Printing and Personal Systems product line, including for the first time a printer supply sales growth bonus and a business group bonus and sales quota accelerator that could amount to as much as 11.5 percent in back-end rebates for an HP Officejet Pro X sale by a Gold partner.

[Related: 15 Questions For HP CEO Meg Whitman ]

Partners say HP is changing the economic rules with the new program, which relies heavily on highly profitable back-end rebates to drive sales growth. They say that the new PartnerOne program may well represent the biggest single investment in a fiscal year to drive sales growth in the history of the channel.

"The economic benefits for us are huge," said John Monahan, executive vice president of sales and co-owner of Convergent Technologies Group, an HP-exclusive partner based in Midlothian, Va., that is planning to add five to seven employees to make sure it achieves top-tier HP Platinum status. "The additional [rebate] income we are going to see from the program is pure profitability as long as we stay on pace with what we are currently doing. HP is doing wonders for an organization like ours. Other manufacturers are going to have to get creative and lower their prices to compete with HP."

HP is scheduled to formally launch the HP PartnerOne global contract terms and conditions Tuesday at the Canalys EMEA (Europe, Middle East, Africa) Channel Forum in Barcelona, Spain, with Latin American terms and conditions slated for release Nov. 1. The Canalys Channel Forum includes top vendors and distributors and will feature addresses by new Senior Vice President of Worldwide Indirect Sales, Enterprise Group Sue Barsamian and Senior Vice President of Worldwide Sales, Printing and Personal Systems Jos Brenkel.

HP, Palo Alto, Calif., said the new rebate terms for each of the four program tiers are available via the PartnerOne Compensation Matrix on the PartnerOne portal. Total PartnerOne compensation consists of three elements: core compensation with an accelerator for hitting sales growth targets; new business opportunity rewards; and strategic product bonuses fixed for a minimum of six months aimed at rewarding partners with back-end rebates for key products such as 3Par and HP wireless networking.

HP's top-tier Platinum partners have the potential to earn a whopping 25 percent more in rebates than Gold-level partners, while profitability for HP partners selling the full HP portfolio is expected to increase as much as 20 percent, according to HP channel executives.

NEXT: Driving Sales Growth, Rewarding Partners

The new PartnerOne program is the culmination of a two-year overhaul by HP CEO Meg Whitman aimed at driving sales growth, rewarding partners from the first dollar sold with no cap on how much they can earn in rebate incentives.

Convergent Technologies Group's Monahan, for his part, expects his company's HP sales to increase by 10 percent to 15 percent and profitability to shoot up by as much as 20 percent. The new program has given him the confidence to move forward with additional investments in the end-to-end HP portfolio, he said.

"We see those investments distinguishing us as an HP partner," he said, noting his commitment to add big data software and cloud builder offerings to his HP portfolio. "This program is going to move us ahead five years. It's going to take us to a different level than partners that do not invest exclusively in HP."

Partners achieving HP's top-tier Platinum converged specialist certification selling wireless networking can earn 18 percent (base compensation of 6 percent; accelerator for hitting 100 percent of target 7 percent; and business group bonus of 5 percent for wireless) back-end rebates if they hit sales quotas and strategic bonuses with a total compensation including new business opportunity at 28 percent. That could hit Cisco -- whose renowned Value Incentive Program celebrated its 11th anniversary this year -- hard.

For HP Gold cloud builder specialists selling an HP CloudSystem with 3Par storage, the back-end rebates could amount to as much as 5.5 percent (base compensation 1 percent; accelerator after hitting 100 percent sales target 2.5 percent; and business group bonus for 3Par 2 percent) with total compensation including other incentives at 17 percent. That's a program that could hit Dell -- which has aggressively priced its hyperscale cloud-based server products to gain share from HP -- hard.

Partners are making significant investments in additional HP ExpertOne certification-based sales and technical talent focused on cloud computing, big data and security.

Norbert Wojcik, president of American Digital, an Elk Gove Village, Ill.-based solution provider that recently acquired Southern California MSP Helixstorm, said he is planning to add sales and technical talent to ensure HP Platinum status. He said American Digital will move from one solution architect for every $8 million in HP sales to one solution architect for every $6.5 million to $7 million in sales.

"This is going to be lucrative for us and for HP because we are going to reinvest in selling more HP," he said. "What I really like is HP is rewarding resellers like me that sell the entire portfolio. It looks to me like HP has listened to their top partners."

Wojcik said he sees the program paying off for partners that sell a full HP converged infrastructure solution against partners that may have brought a deal piecemeal to the table with offerings from HP competitors. "Some partners were picking and choosing," he said. "This program is going to reward me for being loyal and selling the entire portfolio. The program is easier to understand and more predictable. I don't have to guess at compensation."

American Digital also is looking forward to benefiting from a multimillion-dollar HP advertising program aimed at talking up HP Platinum partners. "The Platinum status differentiates us, especially going into big corporations," said Wojcik.

NEXT: New Partner Specializations

The new Platinum status requires two software specializations and a Platinum designation for the existing converged infrastructure specialization.

The new Gold specializations include cloud builder, Vertica big data software, ServiceOne Enterprise services, and ServiceOne printing and computing.

The new Silver specializations include Autonomy, Vertica and ServiceOne Enterprise.

"These specializations are around emerging market growth opportunities," said Doug Oathout, HP's vice president of global marketing, channel partner alliances and OEM, enterprise marketing. "This is where HP is investing our [$3.4 billion in annual] research and development and we want our partners to be able to leverage that and be first to market in areas like big data solutions around Vertica and Autonomy and ServiceOne enterprise consulting."

Oathout said he already is seeing partners expanding their HP portfolio to reach Platinum status. "We are really excited because our partners are coming to us with growth opportunities," he said. "Partners are adding more of our portfolio to their current sales kit."

Among the specializations in the third-tier Gold classification are security offerings including a new TippingPoint specialization along with ArcSight and Fortify security offerings.

Specializations in the second-tier Silver category include a new networking specialization along with a new IT management software category alongside security offerings TippingPoint, ArcSight and Fortify and an Autonomy big data specialization.

"We are vectoring partners to areas where we see market growth and where they can make more money," said Page Murray, HP vice president of worldwide channel marketing of the specializations.

Under the new PartnerOne, partners can earn incremental rebates by stacking various incentives and focusing on high-growth areas including IT operations software and cloud services automation. "It's rebates on your rebates," said Murray. "The more you sell, the more you earn. It's a fantastic multiplier."

It's fitting that HP is rolling out the final updates to the program in Barcelona, given its global scope. Just two years ago, HP had 18 different partner programs in different countries. The new program makes it easy for partners selling cross-border, and for the first time they will be able to benefit from a single PartnerOne compensation model.

"This makes it simple for partners to understand the model and they can build their business around it," said Oathout. "The model is predictable now. Partners know what they can make and when they invest what they can get back in return. This is a very, very big change."

Brandon Harris, vice president of HP solutions for Logicalis, a $1.4 billion IT services giant ranked No. 29 on CRN’s Solution Provider 500 list, said the revamped PartnerOne is a breakthrough in terms of simplifying partner compensation. "From a simplicity perspective, they nailed it," he said. "It's much simpler than before with HP paying across the entire portfolio. I feel very positive. It's a good time to be an HP partner. The portfolio is strong. Meg and [HP Enterprise Group Executive Vice President] Bill [Veghte] are doing a good job sending a strong channel message. Everything is in alignment: the [product] portfolio is strong and the PartnerOne program continues to be strong."

The new program represents a watershed moment for the company, said HP's Murray. "I don't think you are going to find anybody that has invested as much in partners as HP," he said. "We now have a program that lives up to the PartnerOne name. In the past, HP has behaved and worked with our partners as a lot of little companies. This is about us pulling it all together and stepping forward as the market leader in the channel. This isn't about innovating with product lines. This is about innovating with our lifeblood -- the partners. With our product lines linked together, with our compensation linked together and partners lined up to sell the portfolio, we are stepping up as one single company. How much partners earn is up to them. We have set the table for their success. We would like nothing more than to be shocked and awed by fantastic [partner] sales growth that forces us to shell out more money. That's a wonderful problem to have."

PUBLISHED Oct. 1, 2013