HP Enterprise Shifts Thousands Of Accounts To Partners, Will Not Pay Direct Sales Force For SMB-Midmarket Deals

Hewlett Packard Enterprise is stepping up its channel game by refusing to pay its direct sales force for any SMB and midmarket deals effective Nov. 1 as it moves thousands of accounts to partners.

The blockbuster policy shift was announced by Hewlett Packard Enterprise Group Vice President and General Manager of Americas Sales Scott Dunsire in an XChange 2015 conference session on the HP split hosted by Robert Faletra, CEO of The Channel Company, the publisher of CRN.

Under the channel sales shift, Hewlett Packard Enterprise has reclassified its SMB and Commercial Two midmarket segment as a 100 percent channel business, said Dunsire.

"That is a significant amount of revenue [for the channel]," said Dunsire. "When I say significant, I mean significant. We actually are not going to pay our end-user sales teams if they don't have a partner attached to those deals. We are putting our money where our mouth is."

The shift comes as Hewlett Packard Enterprise moves aggressively to increase the percentage of sales it moves through the channel from about 70 percent to 80 percent, said Dunsire.

Dunsire said the change represents a "huge" opportunity for Hewlett Packard Enterprise partners. "This gives us an opportunity to work more closely with you," Dunsire told several hundred partners in a packed room. "This is a lot of revenue we are moving from direct to indirect. That's a big deal for HP, and it should be a big deal for you as well."

The policy shift leaves Hewlett Packard Enterprise's direct sales force focused first and foremost on the top several hundred global accounts and those classified in Hewlett Packard Enterprise parlance as Commercial One -- about 300 primarily large enterprise customers. "Everything else is a channel play for HP," said Dunsire.

If that isn't enough, Dunsire told partners Hewlett Packard Enterprise is aggressively increasing channel investments in the U.S., effective Nov. 1, to drive more channel sales.

"We are adding a significant amount of resources to help our channel partners," he said. "We are making some significant investments in the Americas. Every [channel] dollar we invest in the U.S. pays off in $140 return in the TAM (total available market). We are very focused on driving more at bats. The only way to get there is through the partner community."

Dunsire said he expects the changes to drive even more rapid growth in Hewlett Packard Enterprise products likes its 3Par storage offering, which is growing at a triple digit rate. "We are winning 60 percent of the time when we get in front of a customer with 3Par," he said. "This is about helping our partners get more at bats with products like 3Par. We know we have a very good story."

Solution providers attending XChange 2015 said the stepped-up channel commitment from Hewlett Packard Enterprise is a game changer.

Michael Lomonaco, director of marketing for Open Systems Technologies, No. 126 on the CRN SP500 and one of HP's top enterprise partners, said he sees the change driving even more Hewlett Packard Enterprise sales growth for his company. "We are already growing our HP business significantly," he said. "This only helps. We see them being more focused on driving enterprise sales as they split. We are looking forward to this."

Carl Gersh, director of sales and marketing for Synergy, a Miramar, Fla., solution provider, said the change has him considering adding Hewlett Packard Enterprise as a strategic vendor. "To hear that HP Enterprise intends to fulfill 100 percent of their business from SMB and lower midmarket through the channel is very encouraging," he said. "It's great to hear that they recognize the value, influence and the relationships that solution providers have in this market segment."

The Hewlett Packard Enterprise change takes hold when HP officially splits into two new $55 billion independent companies on Nov. 1: Hewlett Packard Enterprise which will be comprised of all enterprise computing servers, storage, networking, software and services and HP Inc. which will house HP PC, notebooks and printers.

The XChange session also featured a no holds barred discussion between Faletra and HP Inc. Vice President and General Manager of Americas Commercial Channel Stephanie Dismore.

"We are very excited to be able to take this to the next level," said Dismore, speaking about the HP Inc. channel offensive. "We have a foundation of working with the channel for 30-plus years. We know how to work with you, and we know that our success is your success."

Dismore said partners can expect more product and channel innovation from HP Inc. as an independent company. She singled out the growth opportunities in existing product segments like HP's lightest and thinnest notebook ever, the EliteBook 1020, and the new HP Sprout immersive computer which redefines the 3D workspace for partners. "That's a brand new category that enables creation and collaboration for our customers," she said. "We are going to continue to be at the forefront of innovation."

Both Dismore and Dunsire said the new independent companies are charged up to drive increased channel share.

"We are ready to rock 'n' roll given the fact that we have just done this internally," said Dismore, speaking about the internal Aug. 1 split into two companies. "Our systems have passed the test and now we are ready to take off and move faster with you in a way that we never have before."

Dunsire, for his part, said it has never been a better time to partner with HP. "Our product portfolio is the strongest it has ever been," he said. "We are creating a sales culture in the Americas that I have never seen in my eight years at HP. It is about putting customers first with a 'refuse to lose' mentality. We are getting everybody lined up to feel the channel as part of our ecosystem. It couldn't be a better time to align yourself with HP as we move into fiscal year 2016."

PUBLISHED AUG. 10, 2015