What is HP’s greatest software asset? Is it HP-UX? OpenView Network Node Manager? OpenView ServiceDesk? The Tandem Nonstop kernel? What about HP TruClusters? The Zero Latency Engine, perhaps?
All of the above are valuable assets. But HP’sOpenView channel of systems integrators, VARs and ISVs
is perhaps more important. Combined with the legion of mid-sized VARs experienced in rolling out networks of Compaq hardware managed using Insight Manager, the OpenView channel can become even stronger. This is HP’s competitive advantage to lose. Or leverage.
Every major IT vendor is currently wooing the channel. IBM and Microsoft both realize that whoever owns the mid-market has an incredible advantage over its competitors, because volume allows for the kind of economies of scale the IT industry thrives on. IBM has little experience supporting small and medium sized businesses but is learning fast. Microsoft is too willing to compete with its software ISV partners for them to feel completely comfortable, but unlike IBM doesn’t have potential conflicts between middle tier SIs and a vast global services organization.
Oracle meanwhile is traditionally a strong channel player–hundreds of ISVs and thousands of resellers make a good living selling solutions based on the Oracle database; however, the firm’s entry into the applications business has unsettled many of these partners.
Enterprise application leviathans such as SAP and Siebel, see the channel as a path back to growth during tough times. Companies that grew via direct sales tend to be poor at channel management. At best they flip flop between channel friendly and channel stupid strategies that alienate potential partners. At worst they think they know best, that the channel should just do as it’s told. Then they are surprised when they don’t do much business with SMBs. But the thing is–the channel knows best. The channel talks to small and medium sized businesses every day. The channel is at the coal face, not upstairs in the mining office. It knows what tools are required to mine the seam. Miners carry canaries; they spot danger early. The channel, if listened to, can provide an early warning system about market trends (not if the vendor engages in channel stuffing, obviously!)
Managing channel conflict is the key to a successful channel. Oh yes–and a bunch of other stuff such as world class supply chain management and fulfillment processes. But all the efficiency in the world won’t win friends in the channel. The way to win friends and keep them is never to stab them in the back. If the VAR won the business then keep out of the engagement. HP’sHardDeck program enforced just that policy. Unfortunately Hard Deck has now been rolled into a new channel program called PartnerOne, which is less clear on the rules of engagement. Hard Deck was a profound and clear narrative. Two words said it all. It is a shame to see it go.
Channel players generally aren’t that loyal to big vendors. Their chains get yanked far too often to not maintain a healthy skepticism about OEM promises. The best and fastest way to keep the channel happy is to stay out of their backyard. Keeping the channel loyal still isn’t enough though; to really leverage the competitive advantage OEMs should listen to it. What is happening at the coal face?
If HP listens to the channel closely and acts on what it hears then it can maintain a strong competitive advantage in terms of the quality of its information. Why not give SMB customers around the world what they want, rather than what the folks in Palo Alto, Calif., think they want?
Another thing about listening is that people really appreciate it. Listening to a reseller’s problems and ideas is a good step to a better relationship. What can channel partners and influencers do? Start agitating. Let HP know what you want. You are a key asset to the company. What do your customers want from OpenView products? Better ease of use, easier and faster deployment. But what else?
HP is in a unique position. Infrastructures are getting more complex by the day, even in small businesses. HP and Compaq remain the only major vendors that have really cracked the mid-market in terms of systems management tools. CA’s acquired Cheyenne but failed to establish a systematically strong channel play based on its channel assets. BMC is concentrating on the high-end.
Tivoli is beginning to have some success selling storage and security management tools through the channel.
HP has some unique advantages in terms of reach and capability. It has a highly skilled channel aching to make money, even in a down economy. It’s time for the channel to start talking and HP to keep listening. It’s not that HP is doing a worse job than anyone else — but a sustained competitive advantage arises out of doing better than the opposition, not making the same mistakes.
James Governor is Principal Analyst and founder of RedMonk. He leads coverage in the enterprise applications space, assisting clients with application development, integration and systems management issues.
Before RedMonk he spent three years at Illuminata, Inc., where he led both the Application Strategies and Enterprise Management practices at the firm. He joined Illuminata from InformationWeek UK where he specialized in systems management, application middleware, and operating environments.
From his time with Information Week to his term at the helm of the Application Strategies Practice at Illuminata, Mr. Governor has been following and covering IBM for seven years. He’s one of the more quoted analysts in the industry, and has previously served as an industry expert for television and radio segments with media outlets like the BBC.
RedMonk is a new kind of industry analyst firm dedicated to understanding and building narratives that underpin product marketing and purchase. You can reach Mr. Governor by email at [email protected]