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Sameer Mathur
Head,
Solutions Partner Organization,
HP India
 What’s the new code of partner engagement?
We have titled it the Rules of Engagement. It’s a policy framework to ensure clarity and consistency in the way HP interacts with its partners across all business units—IPG, PSG and TSG. It’s aimed at eliminating any confusion or doubt within our internal teams and partners about what business will happen directly and indirectly.
So you are admitting that there exists a conflict between partners and your direct sales?
We listen to partners, they have reported issues, and hence we decided to look into the matter and came up with the new policy. I must mention that as much as the policy is externally focused on engaging more closely with partners, it also applies to our internal organization, the channel and customer managers.
Could you highlight how the new code is going to make life easier for channels?
First of all, we will clearly communicate our named accounts to our partners. As you know, within named accounts, we have three classifications. The first is HP Direct, where HP deals directly with the customer. This list constitutes very large Indian enterprises and our large global customers. The second set of named accounts are HP-led partner-managed accounts, which means that the billing is done directly by HP but partners manage customers by providing solutions and services. They also get ORC on the bill of material even though it’s billed directly by HP. Mostly, this set includes dollar-billing accounts. The third type is partner-led and partner-managed, i.e. customers who are managed totally by partners. Even if they wish to buy directly from us, we insist they buy from partners. Beyond these named accounts, all customers are exclusively for channels to manage.
Now that’s bit confusing. The general impression is that named accounts are customers you sell directly to.
Named accounts are essentially customers that HP engages with, not necessarily sells directly to. These are customers who we believe are investing substantially in IT, and as a company we need to have direct engagement with them. For instance, for PSG we have 2,000 named accounts, of which only 50 are HP direct accounts. The remaining fall under the other two categories which have partner involvement.
So how many named accounts does HP have?
For PSG I have already mentioned the figure. For IPG it’s a little over 800. As for TSG, I don’t have the figure right now, but it is less than IPG.
4On the ground we hear a different story from HP partners. They say that over the last two years your direct business has increased substantially. There are far too many incidences of HP Direct poaching accounts assigned to them, and your account managers have been quite erratic and opaque in transferring customers from incumbent partners to their favored partners, causing much anguish and loss of business.
These are some of the issues that partners spoke to us about. I admit that there have been a few inconsistencies in managing named accounts by our internal organization. There was lack of transparency in the way certain accounts were transferred. These inconsistencies led to a false perception that we were selling more directly to customers.
But isn’t it true? It’s a well-known fact that HP’s direct business has increased substantially over the last couple of years, and is today in excess of 60 percent. Many partners allege that in some product segments like PSG and IPG, it’s even more.
This is a completely false perception. For instance, 70 percent of our IPG and PSG sales are billed through distributors. Of the 30 percent that is directly billed by HP, nearly 80 percent of the volumes are sold to customers that are HP-led but partner-managed. Effectively, in 90 percent of our business, there is partner play. Due to lack of transparency and consistency in managing partner expectations, such false perceptions are bound to be created even though they are far from reality.
But there have been instances where many of your partners have complained of HP poaching customers they have an existing relationship with.
There have been a few such exceptions. But it’s not as regular as partners suggest. However, I can understand the anguish of partners when they lose an account. The Rules of Engagement will eliminate such conflicts in future.
A couple of skeptical partners claim that the new engagement policy has come about because you have burnt your hands selling direct to customers and have huge account receivables. They say that it could be as much as $100 million. That’s a substantial figure. So have you really shot yourself in your own foot as a few partners suggest?
Like any company we have our share of account receivable issues, but nothing as acute as suggested by you. As mentioned earlier, the new named account policy has been in the making for almost a year now.
Okay, now take us through the highlights of the new policy.
Under the new Rules of Engagement, all named accounts will be clearly categorized as per the classification given above. Once the account is mapped by category, it will have a lock-in for six months. This means that HP will not change the status of this account for at least six months. For instance, if an account is HP-led partner-managed, HP will not convert it to HP Direct or transfer it to another partner for six months.
Second, the decision relating to change of status of an account will be taken at the highest level and not by channel or account managers. Only the BU heads will have the power to alter the categorization of any account. When I say BU head it’s Ravi Swaminathan for PSG, Ravi Agrawal for IPG, and so forth.
Third, we will be transparent in communicating why a certain account needs to be reclassified, and partners will be taken into confidence.
What will be the terms and conditions for transferring or reclassifying an account?
Honestly, we haven’t laid down the terms and conditions for that yet, and that’s why we have the BU heads involved in the decision-making. But over the next few months, based on partner feedback, we will come out with a clear list of conditions.
There is also a lot of discontent among partners about the lead generation and management program at HP. Many allege that despite registering the deal with the company first, HP staffers often take a biased approach toward their favorite partners.
Even that aspect is covered by the policy. Once a partner generates a lead, logs it with us, and gets our approval to proceed with it, we will not support any other partner who intervenes or poses a conflict to the approved partner. Parts of these lead management rules have been in place for some time, and partner feedback suggests they’re working well.
The policy seems fine on paper, but what matters is the execution. The problem with a process or system is always the human element. In this case, you will have your mid- and entry-level managers taking certain critical calls related to lead management, etc.
That’s true. But as mentioned earlier, the Rules of Engagement apply to our internal organization as much as they do to our partners. The policy will require changes in internal processes. We have effected a change in the way qualitative and quantitative goals are set for our managers.
Interestingly, not all your authorized business partners are aware of the new policy. I spoke to a few partners in the north and south, and they seemed unaware.
All our key partners know that we have been working on the new policy for named accounts. We completed the draft only in November. Our partner communication process has already begun, but it’s likely that due to the holidays not all partners may have been contacted by their respective channel managers.
Over the next 15 days, every partner will be provided a clear brief by his channel manager about the new policy. We will be explicit in sharing the named account list with them, following which my team will be holding regional meets with 150 of our key partners to clear any doubts, and more importantly, take their feedback on the first draft. A national meet is scheduled for April, where we will get back to channels with revisions, if required. Please remember that it’s not a one-off event, it’s an ongoing process aimed at resolving partner conflict and bringing more transparency and predictability to their business. |