As part of the May 1 shake-up at Hewlett-Packard, Dave Frederickson was appointed vice-president of HP Canada’s new solution partner organization. We recently asked him what the changes will mean.
Dave Frederickson: Canada is a great test bed for pilots. There are things we can do
here, keep control of and solicit more immediate feedback on the U.S. And there’s also cost advantages of doing some of the infrastructure elements in Canada versus the U.S.
What I mean is that if you’re going to test a [channel] program and it’s not successful it won’t have a severe impact. So Canada is a great place to test a program or a product.
CDN: Are there any new channel programs that you can let us know about that are being piloted?
DF: We’re looking at something around the SMB space. In that marketplace Canada is primarily an SMB country, so it makes sense. They’re rolling out something in the U.S. and we’re going to try and do something different here in Canada this fall.
CDN: HP lauchned a CanBuild facilty (in Mississauga, Ont.) late last year. Is that part of the cost advantage?
DF: That was a cost advantage to the local market — flexibility to have configure-to-order products in a more timely fashion. Clearly from a cost perspective . . . you have to understand the scale differences. If we had the same scale, if we put through a hundred thousand [PCs] it could be a lower cost. It was done for cost-neutral and all of the other associated benefits, and the reason it was only cost-neutral is because of the fact its not running at the same scale as the U.S. But there are reasons why we did it in Canada beyond pure cost, and it has to do with flexibility and the ability to configure product quickly. Advantages, frankly, we found Dell didn’t have in Canada.
CDN: But I see from comments from the company that direct revenues are increasing.
DF: We’ve done direct at HP for some time. Whether the percentage goes back and forth, for the most part over a long period of time we’ve been consistent. The important thing to focus on is you take a look at us compared to our next four competitors in pretty much any market, add them together and they’re still not as big as our channel business.
CDN: But [vendors] selling direct scares resellers, and you don’t have plans to cut back.
DF: I wouldn’t say HP wants to increase direct sales. HP wants to make sure, No. 1, we are competitive and we are addressing competitive pressures in the marketplace. But we want to make our channel organization, our support organization the most cost-effective route to market within HP. That’s my objective, anyway.
There are other demands. You look at the addressable direct marketplace in Canada. That is there. There are a group of customers that made a decision that is the only way they are going to buy. We can’t afford not to play in that space, because we’d lose scale.
To a certain degree we’re at a disadvantage because we have such a huge amount of business that goes through the channel and a relatively small percentage that goes direct. Any slight swing will cause a fair amount of pressure, whereas other competitors have more balanced approach between direct and indirect and if they shift some business back to the indirect channel they look the other way.
CDN: In the latest Evans Research channel study 18 per cent of resellers said their preferred supplier is HP. But 15 per cent chose Dell. Do you find that surprising?
DF: It’s driven by a number of things. Dell did a very good job of selling the supply chain and driving out the middleman. It’s a great marketing machine. So I’m not surprised. I think one of the things we need to do with our partner community is do a better job of articulating the value of partners.
CDN: How many new partners do you have?
DF: I think that we’re being very careful not to add any net new partners unless they provide something unique, from a geographic perspective, from a solutions perspective. In fact we recently did a change relative to our own authorization process across Canada. So we’ve tried to make sure we are very prudent in adding any resellers.
Is further consolidation going to happen? Sure, I think it will. I think it’s natural. At the same time we’re always interested in somebody [new]. It’s amazing how many times I turn a corner and find a new partner that’s got something unique that they’re bringing to market and is a great fit for us. Those are the players we want on board.
CDN: What lesson have you learned about management?
DF: Take care of your people. Everything else will fall into place.