Hewlett-Packard is aiming to reshape the competitive landscape with lucrative new back-end rebates under a unified PartnerOne channel program aimed at driving global sales growth and market-share gains against competitors such as Cisco Systems and Dell.
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Acccording to Chris Spence, channel manager, Enterprise Group, HP South Pacific: "HP understands that in order for our partners to grow their business and remain competitive we need to evolve how we work together.
"We're making the PartnerOne program simpler, more profitable and more predictable with a predictable compensation model, a consistent membership structure as well as a streamlined certification process."
Among the biggest HP PartnerOne changes, which will take effect at the start of HP's fiscal 2014 year, beginning 1 November, are an 18 percent back-end rebate for top-tier Platinum converged infrastructure specialists selling HP networking and a 5.5 percent back-end rebate for Gold cloud builder/storage specialists selling an HP CloudSystem with 3Par storage.
HP also is providing new back-end rebates on its Printing and Personal Systems product line, including for the first time a printer supply sales growth bonus and a business group bonus and sales quota accelerator that could amount to as much as 11.5 percent in back-end rebates for an HP Officejet Pro X sale by a Gold partner.
HP disclosed news of the new PartnerOne program in the US overnight – giving exclusive details to CRN's US sister title.
US partners told CRN US that HP was changing the economic rules with the new program, which relies heavily on highly profitable back-end rebates to drive sales growth. They said that the new PartnerOne program may well represent the biggest single investment in a fiscal year to drive sales growth in the history of the channel.
"The economic benefits for us are huge," said John Monahan, executive vice president of sales and co-owner of Convergent Technologies Group, an HP-exclusive US partner that is planning to add five to seven employees to make sure it achieves top-tier HP Platinum status.
"The additional [rebate] income we are going to see from the program is pure profitability as long as we stay on pace with what we are currently doing. HP is doing wonders for an organisation like ours. Other manufacturers are going to have to get creative and lower their prices to compete with HP."
HP US said the new rebate terms for each of the four program tiers are available via the PartnerOne Compensation Matrix on the PartnerOne portal. Total PartnerOne compensation consists of three elements: core compensation with an accelerator for hitting sales growth targets; new business opportunity rewards; and strategic product bonuses fixed for a minimum of six months aimed at rewarding partners with back-end rebates for key products such as 3Par and HP wireless networking.
HP's top-tier Platinum partners have the potential to earn a whopping 25 percent more in rebates than Gold-level partners, while profitability for HP partners selling the full HP portfolio is expected to increase as much as 20 percent, according to HP channel executives.
The new PartnerOne program is the culmination of a two-year overhaul by HP chief executive Meg Whitman aimed at driving sales growth, rewarding partners from the first dollar sold with no cap on how much they can earn in rebate incentives.
Convergent Technologies Group’s Monahan, for his part, expects his company's HP sales to increase by 10 percent to 15 percent and profitability to shoot up by as much as 20 percent. The new program has given him the confidence to move forward with additional investments in the end-to-end HP portfolio, he said.
"We see those investments distinguishing us as an HP partner," he said, noting his commitment to add big data software and cloud builder offerings to his HP portfolio. "This program is going to move us ahead five years. It's going to take us to a different level than partners that do not invest exclusively in HP."
Partners achieving HP's top-tier Platinum converged specialist certification selling wireless networking can earn 18 percent (base compensation of 6 percent; accelerator for hitting 100 percent of target 7 percent; and business group bonus of 5 percent for wireless) back-end rebates if they hit sales quotas and strategic bonuses with a total compensation including new business opportunity at 28 percent. That could hit Cisco - whose renowned Value Incentive Program celebrated its 11th anniversary this year - hard.
For HP Gold cloud builder specialists selling an HP CloudSystem with 3Par storage, the back-end rebates could amount to as much as 5.5 percent (base compensation 1 percent; accelerator after hitting 100 percent sales target 2.5 percent; and business group bonus for 3Par 2 percent) with total compensation including other incentives at 17 percent. That's a program that could hit Dell - which has aggressively priced its hyperscale cloud-based server products to gain share from HP - hard.
Partners are making significant investments in additional HP ExpertOne certification-based sales and technical talent focused on cloud computing, big data and security.
HP's new Platinum status requires two software specialisations and a Platinum designation for the existing converged infrastructure specialization.
The new Gold specialisations include cloud builder, Vertica big data software, ServiceOne Enterprise services, and ServiceOne printing and computing.
The new Silver specialisations include Autonomy, Vertica and ServiceOne Enterprise.
The new program represents a watershed moment for the company, said HP’s Murray. "I don't think you are going to find anybody that has invested as much in partners as HP," he said.
"We now have a program that lives up to the PartnerOne name. In the past, HP has behaved and worked with our partners as a lot of little companies. This is about us pulling it all together and stepping forward as the market leader in the channel. This isn't about innovating with product lines.
"This is about innovating with our lifeblood - the partners. With our product lines linked together, with our compensation linked together and partners lined up to sell the portfolio, we are stepping up as one single company. How much partners earn is up to them. We have set the table for their success. We would like nothing more than to be shocked and awed by fantastic [partner] sales growth that forces us to shell out more money. That's a wonderful problem to have."
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