Exclusive: HP's New Channel Chief, Stephen DiFranco, Outlines His Vision

Stephen DiFranco, the newly named vice president and general manager of Hewlett-Packard's Solution Partners Organization (SPO) - Americas, sat down Friday for a telephone interview with Channelweb.com to discuss this latest chapter in a career that has included stints in the channel organizations of Lenovo, Advanced Micro Devices, Sony and Maxtor.

HP late last week named DiFranco to lead the SPO and guide its flagship PartnerONE program, making the 23-year channel veteran the permanent successor to Adrian Jones, who departed his channel chief post for a job in HP's Asia-Pacific operation last November.

DiFranco's new duties include the overseeing of "all aspects of channel sales, marketing and account management for the HP Client Computing and Printing businesses, focusing on driving continued growth for HP partners throughout Canada, the United States and Latin America," according to a statement from the Palo Alto, Calif.-based computing giant.

Also on the call was Stephen DeWitt, senior vice president and general manager of HP's Personal Systems Group (PSG) - Americas, who served as interim channel chief following Jones' departure, alongside Tom LaRocca, vice president of marketing in the SPO " Americas.

There was much to discuss with DiFranco and DeWitt, from the continued challenges for HP partners in a tough economic climate to new SMB and managed services initiatives. One topic the pair weren't as ready to address was the brewing data center war between HP and networking giant Cisco -- but as that conflict escalates in real terms for partners of both vendors, we hope to hear from HP's new channel boss on the subject.

So we've got both Stephen DiFranco and Stephen DeWitt on the line and the first question that springs to mind, I think, is let me ask you both -- when Mark Hurd shouts out, "Hey, Stevie D" across the room, how are you guys going to deal with the confusion there?

DIFRANCO: That's actually ... heh.

DEWITT: We've got to figure out which one of us is going to be called "Larry," and which one is going to be

DIFRANCO: We're going to have to figure this one out. The other thing is that the energy level between the two of us just becomes extraordinary because we both run 100 miles an hour.

Okay, in all seriousness. Stephen DiFranco, we know you bring a great deal of channel experience to the table from your time at Lenovo and AMD. Now, as you settle into your new role at arguably the strongest channel organization in the IT industry, what's the learning curve going to be like for you going forward?

DIFRANCO: It's going to be extraordinary. I started in the channel at 22 years old ago working for a reseller right out of college. And in 20 years of working at Sony and Maxtor and AMD, a variety of companies that use the channel in a variety of different roles, and now to get the responsibility of running the biggest channel organization in the Americas -- I am honored. I am honored to have been selected and humbled by the size of the responsibility.

Part of this job includes the stewardship of PartnerONE, which is fundamentally the most important channel program that exists today. It's critical for the success of a lot of channel partners. You have to be very serious about that, that's a tremendous responsibility that goes along with this job.

The other thing that goes along with this job, which I think is important -- two things that are very important, one is that HP is an incredibly broad company, we offer a lot of products to the channel. We offer them in a lot of different ways. And it is important that we keep offering that through the different business units that we have, and in the best way for each others' business units to touch the channel.

The challenge for us is, what channel partners are asking for, is, you know, "Help make that better coordinated. Help streamline communications. And help make this all fit together a little bit easier because we want to make it easier to do business with HP, because HP's critical for us."

And I think that's one of the big challenges, that's kind of something I'm going to work on. I think my predecessor did a phenomenal job in building the relationship between the HP executive team and the executives in the channel. I don't think HP has ever had as strong a set of relationships with the channel as they have today, and I think [former Americas channel chief] Adrian [Jones] deserves the credit for that.

We have a CEO who wants to be out with channel partners and we have business unit executives who spend a lot of time out on the road. That's a great thing, there's nothing better in the world than having this job and having CEOs and executives who want to meet the channel.

We have some back office things we've got to make better. Channel partners will tell you, you know, "It's a little confusing. It's a little bit difficult. It's a little bit complex." And I think this is the time now for us to go work on that backend and make sure that we are operating internally like a channel company, where decisions are being made for the channel to make it easier for channel partners to work with HP.

Next: Streamlining The Back Office

So do you have a directive to fix some of those things on the backend? Do you have a timeline? Can you get a little deeper into that?

DEWITT: I can touch a little bit on that. Yeah, he's got a directive. I'm not going to share all the specifics in the press. But yeah, you know at HP, we've got a very intense and focused culture these days on operational efficiency, and that's the foundation upon which your competitiveness can bloom.

There are a lot of backend systems and processes with our channel engagement that we can optimize. That involves everything from our B-to-B platform, to the integration of our IT systems broadly, the account engagement model ... we're all getting a heck of a lot better at how we account manage jointly, because that's part of being an HP partner -- you work hand-in-hand together. And that requires a lot of systemic investment.

We're going to close the deal this year to get a lot of the things fixed that have historically kind of hung out there. There's a lot brewing. We could spend an hour talking to you about all these initiatives. And I think you'll see some firmer details coming out of our partner conference in a month or so.

Let's shift gears a little bit and talk about something that is probably near and dear to your heart, Stephen DeWitt, and has been something that HP has really been pushing forward lately, and that's the development of an SMB strategy. Can you get a little bit into what the plans are going forward, maybe touch on financing a little bit.

DEWITT: Yeah, I can at any level on that. I'm really fired up. We're doing a lot of cool things across a lot of market segments and motions. I'm probably most proud, most bullish, most "proud papa" for the great work that's going on in the SMB space.

As you know, competitively we've been challenged here. And our partners have been challenged here. And we've competed very aggressively with our well-known competitors in Texas and their business model. I think we've done an unbelievable job in the last two years at getting a lot of things fixed.

First off, we've got a set of SMB Elite partners that share our vision, that know where the weaknesses are in the overall mix, are making changes in terms of their mix and their service offerings, how we price, how we go to market, how we support financing.

You know, the whole financing initiative that we launched last year when we came out with the zero-percent financing and brought the limit levels down, really has been just a crazy, runaway success. And we're going to continue to do that and extend that umbrella out there.

What we've done in Rio Rancho [New Mexico, site of a new dedicated HP sales team for SMB channel engagements], as you know, this is an enormous undertaking. I mean, show me anywhere in the United States where you're talking about the number of bodies, the investment that you're making, I mean, it's an enormous investment. And we're pushing leads to our partners, and we've co-located, in Rio Rancho, elements of our SPO organization with our account management team.

We're doing things that we've never been able to do before. So this is a perfect example of an area where historically together with our partners, we weren't hitting the mark. I'm not saying we're hitting the mark right now, but we're definitely moving from where we were to where we want to be, and that's pretty cool.

And you're certainly making the kinds of investments that are making waves out here in the press.

DEWITT: Yeah, you can't skimp on that. Show me an SMB strategy based on "hope."

Just wanted to get to one thing that obviously is making a lot of headlines lately, and it's going to be something that Stephen DiFranco is going to be coping with and HP is going to be coping with. What's going on with the Cisco situation, because you know, partners want to know ...

HP PR: I'm not sure that we have the best guys on the phone to talk to that right now ...

Okay, so we'll shift gears away from that. One big thing that HP has rolled out lately is managed print services, and I'd like to maybe get your thoughts on some other ways that HP is enabling partners to build up their service practices and how managed print services is going.

DEWITT: Well, managed print services is going very well. And the reason why it's going well is, it's one of those ... well, I know you're taping this so I'll stop from making the obnoxious comment that I was going to make, but this sort of ... oh, maybe I will -- this sort of passes the brain dead test.

Next: Managing A Mix Of Services

DEWITT (cont.): When you look at the implementation, when you look at the economics, when you look at the end-user value proposition, you're kind of like, "Well, why wouldn't somebody do this?" So again, it really involves the execution of our partners and, of course, our capabilities to manage it. It works.

I think there are going to be a slew of service wrappers around a lot of different areas in the quarters ahead. Things we're doing around retail solutions. Things we're doing in the health care area. Things we're doing in the education market.

What we're going to do is, is we're going to provide a lot of elegant packaging around solutions in those verticals. Health care solutions around [Emergency First Response], patient management. We're going to roll out solutions around retail point-of-sale, you know, there's a whole bunch of them, and we'll be announcing a lot of that in the quarters ahead.

All of these require our VARs and integrators and segment partners to take it that last mile. Implementation, life cycle management, asset management, support services and the list goes on and on and one. The key thing for us, and what we haven't done well in the past, I mean we really, really haven't done well at all in the past, if you'll excuse the relatively simple term -- "SKU it up" for our partners so that they can wrap their services around it in a more clean and profitable manner.

And just get that recurring revenue going in an economy that continues to be challenging.

DIFRANCO: Well, if you take a look at the economics of the last century, the downside of every single recession has had something to do with the major impact on the efficiency of working. And I think this one is going to be exactly the same way. I think what you're going to find that what's going to happen here is that our industry is about to become incredibly important, more than we've ever realized.

And our distributors and our integrators and our resellers are going to be driving that, because their customers need IT to be able to innovate and to take costs out. That's what this is all going to be about. The response to this recession is, how do I take costs out of my operation to get more efficient? And that's going to happen, this time, through IT.

Print managed services is simply one example of how this is going to happen throughout the industry. I believe you're going to see system integrators and resellers, our channel, becoming the IT backbone for all of their customers. Not just supplying them hardware and software and integration, but actually becoming their IT backbone.

I think you're going to see small businesses especially adopt this. It's very interesting -- 50 percent of the revenue billing today in managed services is because of small businesses. Not large enterprises, small businesses. Because small businesses can't afford their own IT person. Small businesses can't afford their own IT infrastructure. They want their channel partners to do it.

So I believe what you're going to see more and more and more of, is not just resellers going in and helping out someone figure out their IT solution, but also managing it. Managing the deployment of the PCs, management of the clients, managing service connections to the clients, taking care of all the patches and all the software upgrades remotely.

Theoretically, you could hire an employee today and your IT service provider could provide the PC. It gets delivered by the reseller, they manage that PC for the life cycle of that employee, manage the terms, manage the refreshes -- that's how resellers are going to evolve and change.

And a company like HP, when you can touch all those pieces, you become a very valuable supplier, an important supplier, a different type of supplier. And I think this consolidation issue is important because it shows that when you have the breadth that HP has, you can truly drive that change.

And that's why I came here. I believe this change is going to happen, and I believe that HP is the biggest channel player with the most significant channel program. So, for example, this SMB initiative isn't about, hey, there's a market over there and it's called SMB and let's go sell into it -- this SMB initiative is about, that's where the change is going to start, and I want to be on the forefront of that change.

On that note, Stephen and Stephen, thank you both for your time.