HP isn’t just driving more business through the channel, but is also making changes in how it interacts with it, something which it is better able to do as a more focused company.
LAS VEGAS – HP Inc., in its brief existence, has always had a strong channel focus. HP before the split also had a strong channel, and in more recent years had beefed up the channel commitment in its go-to-market, opening up the comparatively few direct-only areas to partners, and generally providing more resources to the channel. HP emphasized this week at its Executive Forum event for over 400 top regional partners that the new company had nonetheless made a stronger focus on partners than the legacy company. HP Canada specifically emphasized that partners are treated differently than in the past, and that this has been a key reason for the company’s strong performance north of the border.
HP executives stressed the company’s overall positive numbers for 2017, including double digit revenue growth, and reclaiming market share leadership in both commercial and consumer PCs shipped. In Canada, however, the numbers were even better.
“We’ve had blockbuster quarters in Canada, in commercial, in the public sector, and in consumer,” said Mary Ann Yule, President and CEO of HP Canada. “That growth is all thanks to the channel. While 87 per cent of HP’s global business is channel, in Canada, it is in the 90s.” In print, it’s in the very high 90s, and in PCs, it’s around 90 per cent. The direct business in Canada is mainly large enterprises.
HP says that the change in the channel’s role is about more than the numbers, however.
“Since HP Inc. was formed, in a general sense we have been much more inclusive as a company and much more interested in opinions from the channel community, regardless of who they are,” said John Cammalleri, HP Canada’s channel chief. “With the new company, partners in Canada have had meetings with our executive team. That was NOT common before in the old HP. We have had partners have one-on-ones with Dion [Weisler, HP’s CEO].
“We used to be very focused around Toronto,” Yule said. “If you weren’t in Toronto, then when we met with you, it was an online meeting. That has now changed as well. Now we travel out to the smaller towns, and to areas far from Toronto. The meetings are very different when they are face to face. That kind of meeting makes it easier to proactively solicit input from partners.”
Cammalleri gave an example which related to a partner in a small town outside of Fredericton, New Brunswick.
“He has been doing some innovative things and carved out a unique niche for himself, which extends well outside of his community,” he said. “He made a suggestion about something that we needed to improve. We agreed and within a 48-hour period, we had changed the program as he had suggested.”
Yule said that the channel upsurge has been with the base of the same partners who were in the old HP, with some additions in specific areas.
“We have brought in new ones, especially in printing around A3, and managed hosting partners who were not traditional partners for us,” she said. “3D print is also new for most partners. It’s a different kind of workflow for them, even for more manufacturing-oriented partners. We have been spending a lot of effort there. It’s still early days for 3D print, but there are environments who have significant interest. CEOs of large manufacturers are interested. The C-suite level understands it, and that’s very important.”
Yule said that the messaging for partners from this event was straight-forward.
“We are doing everything that we said we would do,” she stressed. We have reinvented our brand, our technology, our go-to-market strategy. We have been able to delight our customers with better technologies. At this event, we look to inspire partners to come along the journey with us, and join us in adopting a new mindset of the art of the possible.”
Patrick Moorhead, Principal Analyst at Moor Insights and Strategy, also believes that HP has pulled off the very difficult task of reinventing itself.
“HP is no longer having to apologize and having to explain poor performance,” he said. “We’ve gotten into a new era, where they are really on top of their game. It’s hard to pick any area right now that they aren’t doing well in. In addition to their base increased numbers, they are picking up in higher margin areas. They are gaining share in premium, and gaining share in gaming.”
Moorhead was also impressed with how HP had improved its channel management processes.
“With success, I think the channel trusts what HP says more,” he said. “Having had success together – it’s like a marriage. It got rocky, but they stayed through it, and it made the relationship stronger. HP has done things like clean up the printer and supplies mess in the channel. They used to have way too many programs, way too many people in the channel selling it. They used to have too much channel inventory in the wrong places. So they took their lumps and went to more of a sales-out model than a sales-in model. They became more disciplined. They didn’t use the channel to stuff numbers to make quarterly targets.”
Cammalleri said those who were skeptical of HP’s chances of success as a smaller company overlooked a key advantage of being smaller.
“When you have ONLY print and PCs, you MUST be more innovative with them,” he said. “It’s not an option. You also must rely on the channel and leverage it to its fullest extent.”
“They are much less tempted to resort to unhealthy practices to make their quarterly numbers as a smaller company,” he said. “As a larger company, they could move demand so much quicker, and put more channel inventory out there, without it having a huge impact on overall liquidity and assets. But when that’s the only business you are in, you just can’t run a business like that.”
Moorhead also commented on HP soliciting more input from partners.
“The channel is always the most vocal,” he said. ”Dion Weisler was joking with the audience in his keynote, and he gave them his email address, but channel partners WILL actually email him.”