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HP channel chief wants more efficient supply chain to raise VAR profits

After three weeks as HP channel chief, Adrian Jones sees more efficient supply chain and a focus on printers, storage and blades as key to channel profitability.

This week at Hewlett-Packard Corp.'s Editor's Day in Houston, Texas, journalists got a chance for the first time to meet Adrian Jones in his new role as HP's vice president and general manager of the solutions partners organization - Americas.

The British-born executive, who started his new job three weeks ago, admitted he would rather be playing soccer for his favorite British team, Arsenal, than spending his time learning HP acronyms.

Still, speaking with a clipped but engaging British accent, Jones talked with's Nicole Lewis to convey his thoughts about his job, his expectations of channel partners and what he thinks will be the challenges ahead for HP and its channel program.

NL: When you began your new job earlier this month, you said your first task was to meet with HP's partners. How many partners have you met and talked to since you started the job and what are they telling you?

AJ: I've met face to face with about 15 and I've talked to 45 over the phone. Most of the partners I've spoken to are pro-HP, and I've been to challenging customers, not just ones that think HP's products are great.

I think there's a constant theme; that we need to continue to look at how we grow in the servers and storage group. That piece of the business, servers and storage, we need to continue to get a focus in that area, and I think in general we are seeing heavier competition in the printer space. (See HP tweaks partner program to boost storage, printer sales.)

We have to look at profitability: making sure that we have the right structure and the right pricing is key in the printer space as well.

I think everyone's pretty happy with the personal systems group (PSG) and overall our PC business is going very well. But we are very conscious of our competitive threats with Dell and everybody else.

"I also think there are areas where more regional resellers -- the small guy under revenues of $15 million -- can potentially generate more business for HP."
Adrian Jones
Vice President and General Manager of the Solutions Partners Organization - AmericasHewlett-Packard Corp.

NL: Recent IDC figures showed that HP lost market share in worldwide disk storage systems. What are your thoughts on improving storage sales?

AJ: I think it's about creating a more regional focus. The question is how can we penetrate more into the midmarket space with different resellers.

There are plenty of enterprise resellers out there that we may not be touching today, and so we need to go after new resellers and look at how we grow those partners. I also think there are areas where more regional resellers -- the small guys under revenues of $15 million type of resellers -- are definitely an area of focus that we need to have. Those resellers can potentially generate more business for HP.

NL: What's your ideal channel program?

AJ: An ideal channel program for me is making it as simple as possible for channel partners. The rewards and the benefits that go along with that are key. Resellers are all about making an impact on their business from a margin and a profitability perspective and how we make it simple for them to make money on selling our products -- that's really in a nutshell making sure that we have a good program.

NL: Do you think one of the keys to bumping up sales of storage is piggybacking storage sales on the other HP products that are selling very well?

AJ: Of course we want to do that, but some of the resellers don't always have the expertise in the entire broad portfolio of products that we sell, so selling a value play that is a volume play is different.

It's like selling blade servers today. People are telling me that blade servers are now a volume play. Well that's true, but you know what? It's a value play, too. So when you go into sale day one, and you sell your number one blade, that's the value piece because actually implementing a blade server in some of those data center environments is not that easy. It's very much a high-end, high-touch sale and then once you've established it then you can sell more and more volume because it's easy to just drop in a new blade.

But the beginning is very much a value play. So you get more of a hybrid model. You've got to pick the right resellers that know how to sell value and know how to sell volume. Particularly in storage in the data center environment, you've got to have value resellers so not all resellers are going to be able to be capable or want to have that high-touch model as well, they may just want to sell PCs or printers.

NL: You said this morning in your opening remarks, "The questions we have to ask is how we can get our key partners to be more profitable? How do we get them to sell across the whole broad mix of portfolio of our products? What are your thoughts on how you can do this?

AJ: On the broad base of profitability every month we are reviewing where partners are in their mix of products.

If they are a distributor, they are pretty granular in telling us where they are making money, where they need more margin etc., and where their model is from a sales, general and administrative (SG&A) perspective of what they need to have to make profitability. We go through that in pretty rigorous detail with them, and then we are taking actions internally to make sure that we are doing the right things, whether it's the printer business or the Technology Solutions Group (TSG) business etc.

I think generally with some of the things that we are doing in the PartnerONE program, we need to continue to make partners become more profitable.

I think there are ways, whether it's a PC we are shipping, a desktop or notebook, there's other ways from an operational supply chain efficiency perspective that we can give partners more margin. And I think we are looking at all of those elements too. (See: Baird survey shows optimistic Q1, VAR kudos for HP, Sun.)

You've got to look at it not just from how much their core product cost is; it's really supply chain because we're talking in volume. Whether we sea freight the product or we transport a product by air there's a difference in cost, but there's a time to market so there are a lot of things from a supply-chain efficiency perspective that we have to look at and have to go through. And so we are looking at all those elements to making our partners more profitable, too.

NL: What are your expectations for the channel for the rest of the year?

AJ: In the theme of HP and the theme of us as a company, growth is the first thing out of my mouth. We want to hit and exceed revenue targets. We want double-digit growth. We have to look at every area, whether its channel, the imaging and printing group (IPG), or PSG etc. Hitting and exceeding revenue goals are a key thing for me and my team. I also think a year from now we'll be more focused on the regional plays and how do we go after and get greater acceptance for our storage and server business.

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