Terry Richardson is vice president of U.S. channel sales in Hewlett Packard’s Enterprise Group. In this interview with ChannelPro-SMB, excerpted from a longer conversation, Richardson discusses partner reaction to the company’s new direction, growth markets in the SMB segment, cloud computing, and more.
Q: What feedback have you been getting from SMB partners, or partners generally, about the strategy and direction you folks have been outlining here?
A: First off, [SMB is] kind of a segment of the market that I’m passionate about because of the size and the capability and the fact that it represents a lot of growth opportunity for HP. I think the feedback I’ve gotten from partners kind of before the conference and here is in a couple of categories. One is they’re pleased to see that as we’ve expanded our portfolio, now we have new and innovative products that are relevant for that market segment, and that hasn’t always been the case…
Partners have an ability to make more money. It’s a segment of the business that is 100 percent indirect, so they don’t have any issues worrying about, ‘hey, if I find the deal is HP going to work with me’? So it’s 100 percent indirect model and it’s the only part of the market that we’ve added resources. So we have a field team…We added resources and their mission is to work in the field with partners to transact business…
We have a Conway, Arkansas, call center where we’ve kind of shifted the focus of that organization to be largely oriented and metriced around demand generation for partners, so driving opportunities to the channel, you know, in a lot of market segments, but certainly the midmarket is the broadest where we see the most activity…There’s some additional market development dollars that are going into campaigns to kind of leverage some of the new portfolio solutions to help drive HP’s visibility and awareness in that market. So I think partners are kind of sensing all of that. So I’m getting pretty positive feedback.
Q: What comments have you heard from SMB partners in the past that motivated those changes?
A: You get a couple. One of them is ‘make sure your teams are selling with us,’ right? So [our U.S. SMB channel sales team] is about 100 in size, somewhere in that neighborhood. Each one of [those] reps has to take on a minimum of 10 sales reps from partners in their local geography where they develop a personal mentoring ‘this is how we’re going to cover this geographic territory together’ [relationship]. Because depending on how you size SMB, it’s tens of thousands of potential accounts, right? And no one person could cover that effectively. So the only way to cover it is with the channel. So kind of formalizing a mentoring program, partners really like that…
There’s some large-volume partners that cover SMB and there’s a series of small partners that may not be on the radar, yet they still want to have attention from HP. So we’ve kind of got to cater to and affect both go-to-market motions. So a lot of it is around ‘enable us to be successful,’ whether that’s training or programs or other things. So we’re doing that kind of mentoring. That was specific feedback.
The other one was, ‘hey, we want a lot more clarity from your call center on, like, where the leads are going and how they’re getting apportioned and all that.’ So we’re being a lot more transparent around how we do that and how we’re covering a particular geography.
Q: What are the big growth opportunities or market opportunities in the SMB space right now?
A: I think you kind of have traditional market segments, right? So, you know, infrastructure consolidation is still a good opportunity. Some of it’s driven by virtualization, and the move towards virtualization for their business. Some of the activities we’ve seen are kind of line of business specific…We see some interesting things happing at a local government, education level…Depending on how you size the health and life sciences market, there’s a segment that could generally be described as SMB or midmarket. We’re seeing a big movement in the healthcare vertical that’s really positive.
That’s kind of traditional IT, and then I think the new thing is what does the cloud mean to the SMB, right? And in its simplest form it provides end customers another way to think about leveraging and consuming IT without having to just buy everything, right? So I think that opens up a whole other new set of opportunities that we’re just really trying to figure out … and attack through the channel.
Q: How much traction are your cloud offerings getting in the SMB space right now and how does that compare to enterprise?
A: I think it depends. [We have a product called CloudSystem]. That’s a private cloud offering. That is kind of architected and designed for more midmarket and up than small SMB. So probably market adoption of true private cloud is probably happening in the upper segments of the pyramid sooner. But as it relates to leveraging our public cloud assets or working with service providers that serve that market in kind of a hybrid model, I think you’re seeing a lot of activity in SMB. So it kind of depends upon how you define cloud.
Q: There are a lot of SMB partners who are of two minds about the cloud. Do you run into resistance to the cloud from partners?
A: I haven’t heard as much resistance, but I’ve heard a little bit more around confusion, uncertainty. You know, ‘I hear about cloud. I read about cloud. I’m not really sure what that means to me’ and trying to understand…I think for some SMB customers a private cloud implementation might sound overwhelming with some of the core IT skill sets that you have, right? [That’s a] great opportunity for the channel to bring those services, consulting resources, to the end customer, because a lot of the end customers may not have the IT skills to do it. So that could be daunting.
Or others may want to go the route of more of a public cloud, but then I think the hurdle to get over there probably is in the line around security…One is more of a skills [concern]. ‘If I’m going to do it myself can I really pull it off? Sounds like a big project.’ Or you go the other way and [there are] just a lot of new uncertainties.
Q: You mentioned virtualization before. How much of a market do you think there is in SMB for desktop virtualization?
A: I think it’s been talked about for a long time…Meg [Whitman, HP’s president and CEO] made the comment that she actually has seen data and taken a lot of input from customers that they actually think 2013 is the year that we finally see a big pop in desktop virtualization. So we’ve done some very successful VDI projects. I think it’s a really good market depending upon the line of business and what the use model is.
Q: What are the two or three things you’d really like the SMB channel to be focus on in the year ahead?
A: Ideally, I’d like them to think of HP first when they’re deciding on what products and solutions to bring to their customers. I think our portfolio, as I said earlier, is stronger than ever and there’s a lot of very, very relevant innovative products that are available to the SMB segment. You know, surrounding that with a services offering for the channel community to add margin to the business opportunity I think is compelling…If they haven’t looked at HP in a while, I think they’d be really pleased with what they see now.
Q: How has some of the turmoil surrounding HP impacted your SMB channel?
A: You know, [it’s] hard to quantify. You’d have to assume it was not helpful, but I don’t know to what degree. It’s probably kind of relative, and each SMB customer I’m sure forms their own opinion. Maybe some are paying close attention to the headlines and maybe some of the drama, [while others] were focused on other things than what was happening in the office of the CEO or other places. So our focus now is kind of rewriting the headlines….You’ve heard throughout this conference our commitment to the channel, right? HP wants to leverage the channel exclusively to reach this market. So we have an awful lot of focus on the things we can do to take our story, take our strategy, take our offerings to the end customer through the channel partners.
