HP To Public Sector VARs: We Want You

Mark Hurd has targeted the public-sector market as an underserved vertical for Hewlett-Packard Co., and he wants solution providers to help grow the company's government business.

The HP chairman and CEO made his channel-centric public-sector strategy clear in a private meeting with the public-sector VARs in Boston. Executives from five solution-provider organizations met with Hurd, and those attending said he asked for their help in capturing a greater share of the public-sector market, pegged this year at $180 billion.

Mike Humke, vice president, public sector for HP's Solution Partners Organization (SPO) and the winner of the GovernmentVAR Channel Executive of the Year award at the recent XChange Government Integrator conference, helped coordinate the meeting between Hurd and the HP public-sector solution providers.

"Mark told the partners that HP needs to grow the [public-sector] market; we need greater share; we need expanded coverage and we're not going to hire more badged HP people to do it," Humke said. "He told the partners HP can't be successful without you."

Humke said the five partners who attended the meeting were all focused on state and local government and education [SLED] markets and that Hurd held a similar meeting earlier in the year with federal government solution providers. Humke also noted that Hurd gave the solution providers his personal e-mail and told them to contact him if they had any problems, concerns or suggestions about their HP public-sector business.

"He [Hurd] reiterated his commitment to make sure the North American business is successful because it impacts the rest of the company in a big way," said Ryan Yu, president of Daly Computers, a Clarksburg, Md., solution provider who attended the meeting. "The SLED business, which most of us [who attended the meeting] are in, is a huge part of that growth and there is still a lot of growing room to be had for HP in this space."

Henry Fleches, president and CEO of United Data Technologies, a public-sector solution provider in Miami who also attended the meeting, said HP could grow its share in the SLED market, notably in higher education. "HP has a real opportunity in higher education because they have a tremendous footprint in the K-12 market and just the opposite of that in the higher ed," he said.

Fleches said Hurd asked each of the solution providers what he could do to help grow their businesses. "The comments we heard were that if he continues to align the public-sector strategy with his overall commercial channel strategy, his field sales strategy and SPO, he'll be able to get a bigger bang for his buck," he said.

Fleches said that despite budget shortfalls at state and local governments, Hurd and the public-sector VARs believe they can gain share by taking business away from rival vendors.

"When you look at the breadth of products HP offers and the segments that they build solutions around, from mobile response units to RFID, there's share that they can win away from Dell, IBM and EMC," he said. "When Dell has been suffering from service concerns and now from credibility issues in the state of New York, that's only going to benefit HP and its channel partners in doing business with state and local governments."

Yu said Hurd's commitment to the public-sector market is encouraging. "Hurd is really down to earth and knows the operations well and he knows where the pain points are and where the problems are," Yu said. "Since he's been at the helm, he's empowered the SPO organization and there are less conflicts."

Yu noted that the budgetary crunch caused by the slowing economy has impacted his SLED business but that he's starting to see a turnaround. "In the first calendar quarter, a lot of deals that were supposed to come through got tied up," he said. "People put the brakes on. There are a lot of budget shortfalls out there. But folks have to find a way to acquire the technology they need to be more efficient. This quarter, things have really picked up."

Next: Public-Sector

When speaking of Humke, solution providers say he, too, has re-energized HP's public-sector channel. He is the first vice president dedicated to the public-sector market within SPO. During his 18-month tenure, HP has seen its public-sector sales increase 20 percent and he has tripled SPO public-sector resources over the period.

In his keynote address at the XChange Government Integrator conference, Humke said HP is on a mission to keep growing its public-sector market share and that the gains will come through selling solutions, not point products.

"Customers don't want another box, they want solutions," he said. "I don't want our partners to be the preferred hardware supplier; I want them to be viewed as a strategic partner."

Humke said the change is necessary because while public-sector IT spending is up, the money allocated to IT is to improve and maintain existing services and not through budget increases. To illustrate his point, Humke asked the audience to raise their hands if their public-sector clients planned budget increases this year, and no one did.

"IT budgets aren't increasing," he said. "How do you sell into that environment? You've got to find a way to make money someplace."

Humke noted that even though governmental agencies don't have the IT budgets they once had, they still have to meet the demands of their constituents.

Instead, Humke urged solution providers to think out of the box when going after public-sector IT spending. "Do your customers know what they are spending on printing costs?" he asked. "Document management can save them millions of dollars each year."

He added that the explosion in record-keeping related to compliance contributes to a big demand for storage. He predicted that storage requirements worldwide would increase by sixfold in the next two years alone.

"Disaster recovery is another opportunity," he said. "State and local governments and schools don't even think about that."

Humke also said there are big opportunities for solution providers in green technology with solutions that include energy conservation and recycling. Humke noted that solution providers could frame consolidation and virtualization as green technology because of proven energy savings. What's more, consolidation and virtualization save government agencies significant infrastructure costs.

Terry Calloway, president of Data Technique, a public-sector solution provider in Pittsburg, Kan., agreed with Humke's public-sector market assessment. He said he's seeing growth in his business because he focuses on data compliance solutions related to student-ID issues.

Humke also said HP plans to do a better job in facilitating cooperation between its various partners so they can jointly pursue public-sector business. "Systems integrators don't understand hardware. We have to figure out how we can marry our partners," he said.

HP wants its diversity partners to move upstream and qualify for more enterprise authorizations, such as Storage Elite or Blade Center Elite, so that they can pursue more public-sector solutions opportunities, Humke added.

"We want to increase the quality of a diversity network," he said.

The partnering issue is even more crucial as government agencies at all levels adopt the practice of bundling numerous, sometimes disparate, smaller IT contracts into a single, large contract.

But Humke said HP's goal is to have skilled public-sector solution providers of all stripes who understand how the government works and what it needs to be more efficient. "Everybody migrates to the public sector when times are bad," he said. "But we can't have partners waiting around for the RFP bell to ring."