HP's Whitman Lays Down The Channel Law

Hewlett-Packard CEO Meg Whitman left no stone unturned this week at the company's Global Partner Conference in her mission to make sure HP's top management, sales reps and partner business managers understand just how important HP's channel commitment is to growing sales.

Whitman met at 7 A.M. on the first day of the conference with HP's top vice presidents with a no-nonsense endorsement of the channel and then again at 7 A.M. on day two with HP partner business managers giving them strict deadlines on coming up with business plans to drive partner sales growth.

Behind the scenes, Whitman also met with solution providers, including a dinner with a select group of partners, hammering home the company's commitment to drive a simplified compensation and account engagement strategy aimed at ensuring that partners make more money selling HP's full portfolio than any and all competitive offerings.

[Related: Whitman's Partner Profitability Pledge Has HP Partners Literally Cheering ]

If that wasn't enough, Whitman laid down the law on a strict new rule that prohibits HP direct sales reps from poaching customers from HP partners. That new initiative was one of several items that drew thunderous applause at a general session Tuesday during Whitman's keynote.

"Importantly -- and I want you to hear this from me -- we now have a very clear policy about taking business away from our channel and going direct," she said. "My message to you is this simply will not be tolerated. Everyone in the HP organization is crystal clear on the behavior we expect. And I am holding myself and our senior executives accountable for behavior that is befitting of HP and recognizes the value you have brought to this company over many years."

Doug Oathout, vice president, channel and alliance marketing for the HP Enterprise Group and a four-year HP veteran, said the difference at this year's partner conference versus previous years is "the [channel] commitment from the top from Meg, and she is personally enforcing it."

Partners that attended the conference see the changes in HP's partner model as a sign of reinvigorated channel charge. They praised Whitman's channel commitment as the key to driving dramatic increases in partner profitability and sales in 2013, but also stressed that they will be watching closely to see if Whitman's channel commitment leads to long-lasting changes in the sales trenches.

Rich Baldwin, co-founder and chief strategy officer of Nth Generation Computing Inc., a San Diego, Calif.,-based HP enterprise partner with $50 million in annual sales, said he was heartened to learn that Whitman is taking the channel message into the sales trenches.

"It feels like Meg is laying down a new channel law within HP," said Baldwin, who believes his HP business could double from $40 million to $80 million this year if the channel charge takes root with HP reps in the field. "She means business about engaging the channel. The message I have heard loud and clear here is they can't do it without us. Meg is going to hold her team accountable for driving more business through the channel. It's the new HP. They get the channel and want to work with us. It's a huge change. The pendulum has swung 180 degrees from what I can tell."

NEXT: Partners Praise Whitman's Channel Charge

Baldwin expects HP to push more commercial accounts to partners and begin more aggressively rewarding partners that sell the full HP portfolio. He also sees HP getting more aggressive against competitors like Cisco in networking and EMC in storage. "They have teams of people ready to help us win business," he said.

Baldwin credits the changes to Whitman's ability to "figure out what was wrong" during her first year on the job and now moving aggressively to put fixes in place. "She has changed the way the PBMs [Partner Business Managers] work with us," he said. "It is really invigorating to see the attention we are getting and the processes they are putting in place to make sure our teams are working one on one at the field level. It's one thing to hear it at the top but if it doesn't get down to the street, nothing happens."

Mont Phelps, the CEO of NWN, a national HP enterprise partner with $279 million in annual sales, said he feels much better about the HP partnership after this year's partner conference. "Last year was full of expectations and promise," he said. "This year they laid out some interesting and committed programs and support for the channel."

Phelps said his concern going forward is the "depth and constancy" of the HP channel commitment. "A change and culture shift like this is something that takes time," he said. "They have laid out a long-term view. The real challenge is can they stick to it? You have to stick to it. I think Meg has the starch to do just that."

Bruce Geier, president and CEO of Technology Integration Group, No. 69 on the SP500 with $341 million in sales, said the biggest challenge is whether Whitman's channel message is embraced in the field. "We like what we hear," he said. "The message is really good. But what starts at the top doesn't always make it to the bottom. We have to see if it flows down into the organization. If they can pull this off, it is great stuff."

One CEO for a large enterprise partner, who did not want to be identified, said he was "jazzed up" by the changes that HP is making to work more closely with partners, but is also concerned that it might not "filter through the management team all the way down into the field."

"There is still a lot of management, VPs and sales reps that want to go direct and bypass the channel," he said. "The proof is in the pudding on whether they can change the behavior of rogue sales reps."

Rick Chernick, the CEO of Camera Corner Connecting Point, a Green Bay, Wisc., HP partner, believes Whitman's channel stand is a turning point that will lead to sales growth for partners teaming tightly with HP. "Meg has made her stand, and it is for the reseller," said Chernick. "She has made it clear that HP cares about resellers and that HP employees need to take care of the reseller. If they don't, they are out."

PUBLISHED FEB. 21, 2013