Partners: HP split plans must be well-communicated

Partners say 's split can be a positive move, but the vendor must carefully communicate with partners and customers to avoid market confusion.

Harry Zarek, president of Compugen (left), and Dave Frederickson, vice president of sales at Long View Systems (right).

, president of (left), and , vice president of sales at (right).

In the wake of HP’s blockbuster announcement that it will split into one business containing its PC and printer unit, and another business with its enterprise hardware, software, and services, the company’s partners are taking a cautiously optimistic stance.

Harry Zarek, president of Compugen, hailed the announced split as a bold declaration that “there are two business models in this industry – the device and the .”

“HP has in effect stated that they’d be better served by having it in two pieces,” Zarek said. “HP has a reputation for innovating, and if this allows them to get to market sooner with technology, be it their own or acquired, that will be good news for all of us.”

Dave Frederickson, vice president of sales at Long View Systems, has a very unique perspective on the issue, able to look at it both from his current role as a solution provider, and from his previous roles, which include stints as both channel chief and enterprise group boss at . He said while had no knowledge of the decision before it was announced, it did not come as a surprise.

“This is something that’s been bantered about in the market for quite some time, and is driven as much by the shareholder and board to unlock some potential value that may be there,” Frederickson said.

Both Frederickson and Zarek found it promising that some shared partner-facing infrastructure, such as its new Unison partner portal framework, will likely stay in place between the two HPs post-separation, as suggested by CEO in Monday morning’s conference call. But there are still questions to be answered about how the separate entities will engage the channel, ranging from questions of leadership to whether the existing structure will stay the same. Although the two sides of HP have been quite separate in terms of partner leadership and some parts of the for some time, they have also retained close ties in some aspects of their work with the channel, such as MDF and other activities that run across HP. Frederickson said he’ll be looking for HP to clarify how those kinds of benefits for pan-HP partners will work out.

Kevin Hiebert, consultant at The Print Package

, consultant at The Print Package

Kevin Hiebert, consultant at The Print Package and a longtime HP partner in the realm, also urged the company to very quickly engage its biggest partners that work with HP across both sides of the business. While it would appear that things won’t change too much for partners solely focused on one of today’s PPS or EG units, the split might be more tumultuous for partners who work across divisional boundaries.

“The need to have extra sensitivity for the partners that have made the commitment to be pan-HP today and spend a disproportionate amount of time with them to help them understand” the transition, Hiebert said.

HP has come out strong with the beginnings of a clear roadmap, and well thought-out reasoning for making the move, but Hiebert said communications will be key in moving forward both with partners and customers.

“They can’t leave it in the partners’ hands to defend or explain that it’s not 2011 all over again, and it’s not 20 years later,” Hiebert said. “The onus is on HP to provide partners the information, the tools, and the support that partners need to help them work with their customers.”

The information needs to be particularly clear around the business-to-business portion of what will be HP Inc., Hiebert noted, as media reports are already portraying the split as a clean case of one side being business-focused and the other side consumer-focused. If that narrative is not nipped in the bud and quickly refuted by HP, Hiebert said, that could represent “a real headwind” for HP partners who are focused on business solutions based on HP computers and printers.

Both Compugen and Long View fall into the category of pan-HP partners, alberit from different backgrounds. Compugen has long built solutions around HP printers and PCs and enteprrise group gear alike, whereas Long View has added a significant HP business around PPS products that largely came out of its background as an Enterprise Group partner.

“System-wise, it may not be a huge disruption,” Ferderickson said. “The two groups were already pretty separate, so I don’t see this as being a really difficult split for us. They just need to keep us updated, keep us informed, and give us time to digest any major changes that may be coming.”

All three of Frederickson, Hiebert, and Zarek said that Monday’s announcement was nothing like the ill-conceived attempt to communicate a then nascent notion that it may or may not have been looking to sell off its PC division, a bizarre non-announcement made by then-CEO that rocked the company and the industry when it was made. The big difference is that the split is much more clear now – it does not appear to be an effort to jettison the PC business with its comparatively low margins, but rather to position Enterprise for growth by acquisition, while allowing HP Inc. to innovate internally with a focus on increasing returns for investors. To Zarek’s way of thinking, having printers going to HP Inc. along with PCs is the big difference.

“The print business is a cash cow and it provides them with margins that are way beyond what you’d expect in a PC business,” Zarek said.

While the benefits to the Enterprise Group gong it alone may be obvious, including the stated goal of being able to acquire new technologies more quickly and easily, Frederickson said the PC and print businesses also stand to gain from the split, particularly when it comes to strategic oversight and long-term planning. “I’m sure PPS isn’t getting the same kind of airtime that EG is getting at the board,” he said, suggesting that an independent HP Inc. board will be able to ramp up innovation in the devices side of the business.

The announcement of the split comes as HP seemed to be enjoying its position as the disrupter, seeking to make gains while rivals like , IBM, and were occupied with their own business – Dell’s go-private transaction, and ’s purchase of Big Blue’s x86 server business, respectively. But with the actual transaction slated to play out over the next 13 months and inevitably taking up some internal resources at HP, could it find itself back to being disrupted? Frederickson, an HP employee at the time, harkens back to the purchase of Compaq, and the structure that was created at the time to make sure that those who needed to be focused on the merger were focused on the merger, and those who needed to be focused on customers were focused on customers.

“They have to have these things nailed down. I don’t see any huge customer disruptions coming, but they’ve got to be careful,” Frederickson said.

Zarek said there will inevitably be “some level of distraction” in any major transition or transformation such as the one HP is embarking upon, but said that can be mitigated by moving as quickly as possible, and then getting back to focusing on moving the businesses ahead quickly afterwards.

“I don’t see any rift in the business. I don’t see the situation that happened a few years ago happening again,” Zarek said.

Canadian partners are sure to find out a lot more this week, as many – Zarek and Frederickson included – are en route to the gathering of partner executives in Muskoka this week. Although the event was planned well before anyone at HP Canada knew they’d be having such a discussion, the topic of the impending split up – and what it will mean to its partners – is sure to loom large at the event.

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