HP's Personal Systems Group (PSG) vice president of US channel cales Mike Parrottino sat down with CRN to discuss the company's commitment to partners, PSG channel sales growth, possible new incentives aimed at getting partners to sell the full HP portfolio, and the HP mobility road map for 2012. Below are excerpts from the interview.
There is some fear about cutbacks in the wake of HP's recent quarterly results. What kind of investments are you making in 2012 to make sure HP maintains its strong channel legacy?
We grow our channel investments in direct proportion to the revenue and the mix that we have with our products. We have grown our business. In PSG we grew at 23 percent last year. We are on pace to grow at 10 percent this year. And our channel investments quite frankly follow that. When you are driving a particular revenue number and your gross margin is decent you can afford to reinvest.
We are investing because we have grown year over year over year. As a percentage of our revenue, our investments have increased and are going to continue to increase. We are not pulling back on anything. We are not pulling back on a single thing. If you listen to the leadership team about how important the channel is driven from (HP CEO) Meg (Whitman) on down, I just don't see us stopping. I think the channel is going to grow faster. We have proven that out over the course of many, many years.
What is your message to partners concerned about the state of HP?
Listen, the year before last was a tough year for everybody with the economy. During those tough times, we actually doubled our resources focused on partners. That is headcount, op-ex (operating expenses) for HP. We didn't reduce. We saw an opportunity to reinvest in our channel. And we doubled our field sales organisation that works with partners to drive more revenue in markets where we were underpenetrated, like SMB.
We grew SMB (sales) 32 percent year over year (at that time) and it was because we took the opportunity to invest in HP headcount co-selling with our partners. We did hundreds of events with partners in rooms like this to talk about HP and the partner's ability to deliver value to the customer.
We acquired a heckuva lot of net new customers and we did it because we co-invested with our channel partners. The other thing we did was co-fund (HP) Champions within our partners. The headcount belongs to the partner, but they are focused on HP. That is one single point of contact into a partner to manage everything from notebooks all the way to servers and storage. Now when the partner has questions about HP, they can go to their Champion and get answer across the full portfolio so you have a single point of contact.
We made huge co-investments with our channel partners. All of those things are indicative of our continued support and commitment to the channel. Those aren't signs that we are pulling back.
Tell us about U.S. PSG channel sales growth versus direct sales growth?
We grew our indirect business 10 percent faster (last year) than we grew our direct business. Some of that was by focusing in areas where we couldn't get the reach so we invested with our partners to go after, for example, SMB, health-care or managed print services.
We co-invested with our partners to go after a particular market and we saw phenomenal 30 plus percent growth in those areas.
Talk about your role driving channel sales for PSG?
Anything that has channel assets attached to them is now part of a single organization for PSG. I manage that business today for PSG. Whether you are distributor or a major national partner like NWN Corp. or a midsize or small size VAR or a DRC (Direct Response Channel), all of those assets now sit under my organisation.
What that provides us is a holistic view of our go-to-market and the entirety of our investments. A lot of partners bring us plans for growth and we can take a look at those all under one lens now versus having multiple lenses in different areas of the company.
Now we have got one message to the channel partners. We are going to continue with our leadership position in the marketplace both from a people and products perspective. We are going to continue to innovate across the entire breadth and depth of our product portfolio and we are going to do it with channel partners.
Does that mean we are going to see more cross portfolio incentives and rewards for partners?
A lot of our channel partners have asked us for a single point of entry into HP which is our PartnerOne program, the component of our route to market with all of the marketing and support information material. Inside of that you can pull stuff from marketing depot which is now inclusive of all our products. That is our partner's single entry point into Hewlett-Packard.
From a field perspective we have different organizations because with the breadth of HP a $US127 billion company it is hard to have one single point of contact for all of that and be an expert on it.
We think we can provide our channel partners better coverage, better information, better demand generation programs when we have somebody specifically focused on a particular product set.
We do have a channel leadership team that meets on a quarterly basis to talk about the broader picture on how do we pull all this together and have one voice to the channel, but be individual and very focused in our particular business units.
There are a number of things on the table that I am not at liberty to chat with you about today that are rewards and programs that would be very inclusive of all of those things inside of PartnerOne, but make it very focused when it comes to selling that full portfolio.
Do you think we will see in the future more incentives to sell the full portfolio?
We are going to continue to integrate and make efforts to integrate our entire portfolio. That is the beauty of HP. Why wouldn't we put effort into doing that. That is the message we want to continue to deliver: it is the depth and breadth of our portfolio that makes us unique in the marketplace.
It is the amount of business that we do through our channel partners. Every quarter we make hundreds of millions of dollars of investment in our channel partners. I think that is signficiant. I am not sure we have done a great job of articulating it.
I spoke at NWN, TIG (Technology Integration Group), En Pointe, Insight and I am here at XChange. We have got partner roundtables. (HP CEO) Meg (Whitman) is doing a partner roundtable in Minneapolis. I have (Ingram Micro) VTN and (Synnex) VARnex coming up.
What is your advice to solution providers looking to tap into the HP full portfolio opportunity?
There are two areas where we are putting a lot of effort. We are putting a lot of effort into partners that may not have a signed BDA (business development agreement) with HP. So it is an ad-hoc relationship. And then there are partners that do have a BDA and are focused in one particular area like imaging and printing or storage or networking or PCs. The advantage of HP is we have such a broad portfolio.
So our efforts have been to go talk to those partners and say: 'Listen, there is a great opportunity across the entire portfolio. Let's go grow that business together.' We worked with NWN, for example, to build out a call center to focus on PSG and we are co-investing in that. (NWN CEO) Mont (Phelps) sees the strength in having a great footprint in the data center but as you follow the wire back out into the organisation, there are notebooks, desktops and thin clients.
As someone who has been in the channel for nearly 25 years, how critical is that for PSG?
When I look over the course of the last 25 years, I think about all the things that have transpired. One of the things that has been a constant is that the channel keeps reinventing themselves to be relevant to customers. With the technology that we have and offer to customers our channel continues to play an extremely critical role.
How important is HP's channel legacy, particularly when you look at competitors that don't have the channel legacy of HP?
It's extremely important. The channel is fundamentally part of our DNA. And it has been for 30 years. I can't speak for others that don't have that channel legacy, but my perception is it is an awfully tough road to go down versus us being here with 30 years channel experience understanding what makes a partner extremely profitable, how to grow their business and execute a plan. That is the key here.
What I find fascinating is our partners almost 100 percent of the time hold themselves accountable for their investment dollars with HP. They really want to succeed with us. It is just a great environment to be in and it is part of the legacy.
You recently had an opportunity to sit down with HP's Mobility team and got an overview of the product road map for 2012. How did you feel after seeing that road map?
It is incredible to see the advancements in technology and the results of our R&D. You are going to see, as we have in years past, new technology that is better, faster, lighter with mobility. HP Folio (ultrabook) is a great example of that. Our consumer group got best in show at CES with the Spectre product. It is a sexy, elegant product. You are just going to see more and more of that throughout the year.
What kind of year is HP PSG going to have in 2012?
It is going to be an absolutely great year. It is going to be a year where we see partners growing along with HP. It is going to be a year where we will see partners continue to expand their HP portfolio across their business.
We have seen a phenomenal number of partners who have traditionally not engaged with HP express a need and want to engage with HP with a full business development agreement across the entire portfolio. It is exciting. It is going to be a great year.