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Reg man grills HP Software big cheese

Youngjohns reveals plan to harden up software sales

HP CEO Meg Whitman

Traditionally HP Software was seen by many of its business partners on the hardware side of the house – and by default some of their customers – as a fragmented portfolio of specialist applications amassed via acquisition.

Evidence of this was on display at Global Partner knees-ups in recent years when the auditorium filled up for CEO Meg Whitman’s keynote and those of most of her generals but thinned out when software boss George Kadifa gave his presentation.

This appears to be a point not lost on Kadifa's replacement, Robert Youngjohns, who was initially hired by HP to replace Autonomy CEO Mike Lynch and more recently elevated to boss of the entire software unit.

“We've not done as good a job as we could do in terms of positioning where software fits in the HP portfolio," said Youngjohns in an interview with El Chan.

"This is so people, not just our partners but also our own good staff, understand that software is a fundamental differentiator for what we do in an increasingly commoditised world."

Youngjohns has cast three objectives for the team which all seem fairly fundamental: “focus on customers, fire up the innovation engine and leverage the rest of HP”.

The first two are fairly self explanatory, but the latter is about asking the sales reps within channel partners and the internal teams to cross-sell software.

For example, if a customer wants a quote for six petabytes of storage, “get the [storage] team to recognise that it is a symptom of a deeper problem in the customer – the deeper problem being ‘I am out of control, I seem to have no end to the amount of storage, I need help in managing it'."

Why hasn’t this happened before? “To be candid, HP has been a bit of a portfolio. I think George did a great job in sorting out aspects of that portfolio, and we are at the next stage [where we] say this is a coherent strategy.”

The plan he is speaking of will be built around Big Data, not just of the “esoteric analytics” flavour, but “every practical aspect of IT, whether it's as simple as how you back up [or] how you protect yourself in a world where putting a firewall around your enterprise is no longer adequate."

He adds: “We have a set of specific solutions built on a common platform that helps our customers address those issues. I think the value not only for us in terms of HP Software becomes more apparent, but I think the value we project to the rest of the business becomes more apparent.”

Despite Youngjohn’s kind words for his predecessor, the software division - IT Management, Application Development, Vertica, security and Autonomy - turned over $3.91bn in fiscal 2013 ended last November, down from $4.06bn in the previous year.

The start to fiscal ’14 wasn’t any better: in Q1 revenues fell four per cent year-on-year to $916m, and came in essentially flat in Q2 at $971m – versus $967m in the prior year.

At the time of the Q2 results filing, HP said it had had double-digit growth with Autonomy and Vertica, from which one can infer declines elsewhere.

Youngjohns tells El Chan: “These are late [to] mature [markets] and our challenge there is to breathe disruption and innovation back into those businesses, because there’s no doubt there is market growth there.”

We need to convince people selling hardware that software oughta be part of that proposition

The company often boasts it is nestled at number six among the world’s top 10 software makers, but this is out of sync with the story across the rest of the corporation, where it is number one or two in most of the major markets that it participates in.

So clearly, work internally has yet to be converted into cold hard sales, but HP wants us to believe this is changing. It lives or dies by the success of channel partners and is working to changing attitudes here.

“The biggest challenge for HP Software,” Youngjohns says, “is to get access to that broad range of HP partners and resellers, people selling systems and device solutions, to convince them software ought to be part of that proposition.”

HP Software has 670 certified partners in the PartnerOne programme. The software element was folded into the scheme in November last year as part of the HP One strategy to unify all parts of the organisation.

A UK partner lead for Autonomy has also been brought on board in the shape of Susan Ferguson.

Who's on board?

Some 215 of these software resellers/ integrators are also Enterprise Group (EG) partners, up 25 per cent year-on-year.

Among them is Marlow-based Softcat, which carries the Silver accreditation. Martin Hellawell, chairman at the reseller, told us his business is getting “more and more interested” in HP Software.

“The reason it was less attractive in the past is it targeted larger customers, didn’t have the price points or the offers or the channel to reach the mid-market where we operate, but that is changing,” he said.

He said the software was perceived as being specialist, “quite complicated stuff” and as a result software boutiques led with HP software and ignored the wider portfolio.

“There is a desire for HP to use more mainstream partners but they’ll need to go through accreditations. It is not a simple process and companies don’t have people sitting around waiting to go on these courses."

Hellawell added there isn’t necessarily the revenues streams to justify becoming certified across the portfolio, adding “You need to pick areas to focus on.” He said he expects bigger things from HP Software as the Big Data piece evolves.

Harry Gould, veep of worldwide alliances and channels at HP Software, reckons his unit now has a “seat at the table” helped by the integrated hardware and software plays - the converged systems for cloud, security, Vertica and Autonomy.

“When we talked to a hardware partners, we gave the generic HP Software pitch and at the end of the day it didn't really resonate, but what we've done through the creation of these four plays is help them sell more hardware by attaching software.”

But he admitted “not enough” Enterprise Group partners are selling software.

HP EG is profiling partners to ascertain which ones are able and willing to “expand their practices,” said Sue Barsamian, EG senior veep of the worldwide indirect sales.

“All of our hardware partners will need to evolve, all of them,” she tells us, “or [else] at some point 25 to 30 per cent will cease to exist in the future. Everybody has to evolve to the new world of hybrid cloud, mobility, big data, security and increase the mix of software and services.”

Barsamian is right, but the big question for those channel partners, and ultimately for HP, is whether more want to place the weight behind its software portfolio or do business with one of the five larger rivals in the market. ®

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