If Hewlett-Packard thought its nascent effort to woo small and medium-sized businesses (SMBs) in partnership with CDW would pass without channel remark, it was mistaken. Instead, the effort, which the companies have yet to announce publicly, has sparked
HP "walked into a buzzsaw on this one," one longtime HP channel observer said.
According to a CDW memo cited in a recent CRN story, HP plans to work with CDW, famous for its catalog sales and aggressive pricing, to grow its SMB business. That news caused a furor among other HP partners, who see CDW as a competitor more than a colleague.
In fact, many partners view CDW, the Vernon Hills, Ill.-based channel giant, as a bigger competitor even than Dell, which they still view as a foe because of its direct-sales roots.
Oracle partners have long beefed that CDW gives away Oracle software at or even below cost to get a big hardware sale. That's no small issue, because even low-end Oracle databases list for upwards of $15,000 per CPU. And Oracle partners typically work long and hard on needs assessments in the presales process, only to see deals taken by CDW at the 11th hour based on price alone.
CRN reported that HP and CDW will jointly fund more than 100 CDW salespeople who are dedicated to HP sales into SMB accounts. And, HP will provide up to 500,000 new customer names for CDW to chase.
The HP-CDW partnership is naturally of acute interest to existing HP partners in the SMB and enterprise markets alike. Many of these partners view Dell as the anti-Christ, with CDW as a close second on the evil-doer scale.
And it's got to concern HP that even a few of these partners might consider adding Dell to their product lines.
Channel reacts to HP-CDW partnership
Tom Larocca, vice president of marketing and strategy for HP's Americas Solution Partners Organization, would not comment specifically on this CDW plan, but he said generally that the vendor will protect partner accounts from poaching by other partners.
"When we green-light any partner's plan, there are specific criteria that need to be hit," Larocca told SearchITchannel.com. "There can be no channel conflict. There can't be other partners participating in these accounts. It doesn't make any sense for a partner to drive business, if all they're doing is taking it from a partner that already has HP revenue. We have to manage conflict."
That means if a sales lead is already registered to one partner, another partner cannot go in and poach it.
Larocca also said that HP constantly reviews and modifies partner plans as needed.
Some HP partners said they understand the vendor's need to drive more SMB business, but they also noted the complexity of HP sales and lead reporting. Some partners report sales and leads directly into HP, and others funnel that information to HP through their distributors. There is often a time-lag and incomplete information. There is "simply no way that HP knows all the leads we have," said one longtime partner. His point is, if HP can't claim knowledge of a deal, it can't protect it.
The sheer number of leads that HP reportedly plans to drive to CDW also puts off partners. Even partners who counsel patience are hard pressed to put a good spin on the newest HP-CDW partnership.
"You've got to see how this plays out, but I can't view this as a positive," said Pete Busam, COO of Decisive Business Systems, a Pennsauken, N.J.-based solution provider. "My gut reaction is, this is not good."
HP has told solution providers for some time that they have to resolve their sales reporting systems.
"Now we know why," Busam said.
Brian Deeley, partner at Graymar Business Solutions, a Timonium, Md.-based HP solution provider partner, was somewhat resigned to the news.
"You can't stop a vendor from doing what it's going to do," he said. "Partner-wise, all of us battle CDW [already]. We do a lot of state and local government [work] and are constantly butting heads with them, but you have to differentiate yourself on services and support."
Deeley and others asserted that they understood HP's call for partner loyalty but said that road must run both ways.
Another HP partner, Dave Dadian, CEO of Powersolution.com, said this move could end up working against HP in the very accounts it covets.
If one of the HP customer accounts flowing to CDW ends up wanting another brand, what will stop the CDW rep from handing it off to a CDW salesman representing another hardware line?, he asked via email.
"This somehow in my book goes against [HP CEO] Mark Hurd's call for partner loyalty," Dadian said via email.
CDW is already going after these accounts, and HP wants to use it to garner more SMB business, Deeley said. One thing that makes the deal potentially palatable to him is that he's sure there are other programs that he and other partners can access that CDW cannot.
HP-CDW partnership could boost Dell's channel effort
Some partners will undoubtedly look at alternative vendors, if they don't field them already.
"You'd kind of be crazy not to at least look at Dell," said one HP partner who requested anonymity.
Busam said Decisive Business Systems has done some $300,000 to $500,000 in Dell business since December without even trying.
"We're not looking for that business, but it's come in," he said.
Still, he said his company is built primarily around HP sales and related services and will likely stay that way.
But when push comes to shove, solution providers that represent other hardware lines can always lead with another label. Graymar, for example, also sells IBM storage and servers.
Despite making more Dell sales this year, Deeley won't consider jumping onto Dell's latest channel bandwagon.
"I don't trust Dell," he said.
Deeley and some other HP partners said that, all things considered, the computing giant has done right by them. But they will all be watching what happens with CDW very carefully.