HP’s Unmet Challenges

Things

are yet to settle down for the New HP in the channel space. It has several unmet

or partially met challenges and partners are eager to see stable policies from

the New HP.

The unveiling of the integrated channel policy by the New HP is indeed good

news. That it has integrated two sets of credit terms, cash discount sales,

stock protection and transportation norms of HP and Compaq into one, should

bring major relief to its distributors and partners.

And yet, in the whole integration process of HP and Compaq, channel partners

happened to be the proverbial last straw, so to say! Hence, integrating partners

from the two companies as per the new policy, gains significance. To make this

happen, the New HP will have to make some compromises to give that ‘comfort’

feeling, particularly to erstwhile Compaq partners.

The New HP has to admit the fact that the erstwhile Compaq partners enjoyed

better margins than what its own partners used to earn. The Compaq partners were

not used to discount their products as much as the HP partners.

So, the New HP will have to give adequate importance to provide back-end

incentives to its partners. The measures taken in this regard will go a long way

in providing the feeling to partners that their interests are being taken care

of well by the New HP.

The next challenge for the New HP is to remove prevalent confusion by

effectively implementing its new integrated policy. Currently, new schemes are

being announced too frequently, the time duration of these schemes is being

suddenly reduced and product offerings are curtailed without notice.

These happenings are creating uncertainty among partners. This uncertainty

does very little to lift their morale, In fact, it has the capacity to kill

their very spirit when demand is still at a low ebb.

What the New HP needs to immediately do is to remove fear from their

partners. Many of these have lifted material to show performance before the new

financial year begins for the New HP from 1st November. Partners are frightened

that only the performers will survive.

No doubt, without having a recourse to a measure like performance, the New HP

cannot separate the chaff from the grain. But should the performance be at the

cost of instilling fear among partners and bleed them on the margin front? To

show performance, partners have tended to close deals even below the cost price.

Also, adding commercial PC numbers to the retail target can put undue

pressure on partners and genuine performers can suffer in the bargain. Perhaps

executives in the New HP are keen to show their performance to their bosses as

the financial year comes to a close. But they cannot do this at the cost of

distancing partners from them.

Finally, there are service issues that need to be sorted out. The New HP has

to face the challenge of fulfilling the hopes of partners that stable service

policies too will be implemented beginning with the new financial year.

Sylvester Lobo