CEO Enrique Lores: HP’s Business Model Designed For ‘The Channel To Make Money With Us’

HP Inc. CEO Enrique Lores talks about why the channel remains a top priority for HP, why he wants partners to sell more from HP’s wider portfolio of products and services and why he’s optimistic about HP’s future with partners. ‘Different from other companies, we have stayed the course. Since I joined the company more than 30 years ago, we have been a channel company. We haven’t moved from that,’ he tells CRN.

It’s been more than three years since 33-year company veteran Enrique Lores ascended to become HP Inc.’s president and CEO. After fending off a failed takeover bid from Xerox in 2020, Lores is now focused on his original mandate as HP’s new leader: building and executing a growth plan for the company.

But while Lores had to make some difficult decisions last fall with a restructuring plan in the face of declining demand, he remains resolved in HP’s “long-term commitment” to channel partners, which drive most of the company’s revenue, and creating new opportunities for them.

“Different from other companies, we have stayed the course. Since I joined the company more than 30 years ago, we have been a channel company. We haven’t moved from that,” he said.

This is why HP is investing in growth areas like hybrid work solutions and peripherals, where the vendor’s recent acquisitions like videoconferencing hardware provider Poly will play a big role, as Lores outlined in CRN’s April cover story about his plan to turn HP into a hybrid work powerhouse. The company is also expanding its Amplify partner program and finding new ways to serve partners faster.

“We design our products, our services to be sold by the channel. We design our business model for the channel to make money with us. We design our processes for us to be efficient and to help our partners be efficient, so it’s really at the core of how we think about the company,” Lores said.

What follows are edited excerpts from a recent CRN interview with Lores, who talked about why the channel remains a top priority for HP, why he wants partners to sell more from HP’s wider portfolio of products and services, why he wants more partners to join the sustainability-focused Amplify Impact program and why he’s optimistic about HP’s future with partners.

Why should channel partners work with HP over its competitors?

I think, first of all, because of our long-term commitment to channel. Different from other companies, we have stayed the course. Since I joined the company more than 30 years ago, we have been a channel company. We haven’t moved from that.

And that, I think, should have a lot of value for partners because what this means is that we design our products, our services to be sold by the channel. We design our business model for the channel to make money with us. We design our processes for us to be efficient and to help our partners be efficient, so it’s really at the core of how we think about the company, at the core of how we design the strategy of the company, and this should be really important for partners.

And as important as that, because we have an ambition to grow, it’s not only that we want to do it with a partner but as a company, we want to grow. We want to offer and create technologies that will help our customers in the new hybrid way of working. And by doing that, we are going to be offering great opportunities for our partners to do business with us.

What are your main messages to partners this year?

[There are] multiple messages, so I’ll try to summarize all of them. One is about the need to stay optimistic because we don’t know when, but we know that there is going to be an economic recovery and therefore, we need to make sure that through this period we position ourselves in the strongest possible way, also because of the progress that we have made in the last years, which is a good indication of the type of progress that we will be able to continue to make as a recovery will happen.

Also, because of the many opportunities that we have to continue to grow the business, both by modernizing our core businesses, accelerating our joint businesses in services [whether it is for small business or for enterprises], expanding into adjacencies—all this is going to create multiple opportunities for us and for our partners to continue to grow.

[We’re also showing] our commitments to them [with] the investments that we are doing with Amplify in the program itself, in tools to make it make it more efficient to grow to do business with HP, which we know is something that they really want.

Finally, [we are recommitting] ourselves as a channel company. HP does 90-plus-plus-plus [percent] of the business through the channel. We think that the channel is a key asset for us, and whether this is for our transactional business, for our service business, we always think about our businesses, our business models [and] our portfolio, as a portfolio that we’ll have to sell through the channel, and that’s a very important commitment to our partners.

What does it mean to recommit to the channel?

I think it’s to show them that whether it is in the businesses where we lead today or in the businesses where we are going to be in the future, we are a channel company. Channel is at the core of how we build and design our plans. And that we want to continue to work with them to expand our business and to grow together. That’s the key message.

What is the ideal HP partner of the future in your mind?

It’s a partner that works with us across our full portfolio because I think from that perspective, they will be able to monetize more of what we do. Also, it’s a partner that works with us in the transition towards more service businesses that we’re trying to do. And in the same way, this means a lot of changes for us, we understand. These will require changes for many of our partners, and we are committed to helping them to do it. And honestly, it’s also a partner that will be making a lot of money with HP. And because if a partner makes a lot of money with HP, it will be a loyal partner that will continue to grow with HP.

You’ve been talking about this push for services for a few years. How big of a push relative to the previous years would you like to see partners make with services in 2023, whether it’s managed print services, Device as a Service or other services?

We have been talking about these for several years, but we have been making very good progress. So we have in the consumer space our [Instant Ink] program, [which] has more than 12 million subscribers. And in this case, it’s more retailers that are part of it. But clearly, the countries where we do the best is the countries where our key retailers are part of the program.

And then on the commercial side, both with managed print services [and] Device as a Service for PCs, we have grown a lot, and we have [a] multibillion[-dollar] business in the combination of both. So yes, we have been working on this for [several] years, but we have seen progress clearly. And our partners have seen that progress as well. And I think what we need to do this year is not a radical change. It’s really continuing the progress that we have been making for some time.

From our perspective, the biggest change is that we are going to be managing these two service opportunities together. We have created a [Workforce Services and Solutions] organization that is going to be driving that as an integrated business. And we think there is a lot of value for our partners from that perspective. Because we are going to be integrating our tools [and] integrating our programs, helping them to manage the full portfolio in a much easier way, which will help them to reduce their costs, will help them to capture more business and eventually will help them make more money.

What made ex-Poly CEO Dave Shull (pictured) a good fit to lead HP’s new Workforce Services and Solutions group?

We want to manage the division as a business and [there’s] nobody better than a previous CEO to understand how to build a business end to end. And that was really important.

Also, as we had many conversations when he was running Poly, he had a very clear vision about how to grow the services and solutions business. At Poly, this was the direction they were taking with the company. That fits extremely well in what we’re trying to do.

So then, if you look at his background, he has worked in service-oriented businesses. He worked at The Weather Channel, for example. He drove that, and he brings a lot of expertise that we can leverage as we build other service businesses. So both his passion and his experience really made him a great candidate to lead this initiative for us.

This May, HP plans to introduce a new way to incentivize partners to join the Amplify Impact program, which helps partners build businesses around values like sustainability and social justice. The new incentive will give qualifying Amplify Impact members a point that can help them work toward joining the Power or Power Services tiers of the overall Amplify partner program. Why is it important for HP to get more partners into Amplify Impact?

When I think about the company, I look at it from two perspectives. First, we are a community, and we need to make sure that within our own community, we meet all our sustainability goals, and we improve how we do business to have a positive impact on the environment.

But we are also a big platform, and as a big platform, we can influence what our suppliers do, which is really important, but also what our partners do, and we can work with our partners to multiply the effect of anything we do.

And by joining Amplify Impact, it’s a great way for partners to really be part of this platform and really have an even bigger impact on the work that they will be doing. That’s the concept behind the program and this initiative: How can we really maximize the impact by working all together in the ecosystem?

Why are you optimistic about the future for HP and its partners?

For multiple reasons. One is, if I look at the multiple opportunities that we have to grow and where the world is going, I see that where the world is going really reinforces … the strategies and the plans that we have. We have talked about hybrid [work] and how hybrid is going to be working. We also have a big business in gaming, which is another business that is going to be growing. We see the need for sustainability and the fact that customers will be willing to buy more and more from companies that are doing the right things. So clearly lots of opportunities to grow.

Second is, even in this difficult period of time, even if headline is ‘crisis’ or whatever, underlying that there are always opportunities. And if you look for the opportunities, you’ll find them. And I think being optimistic helps you to really identify those opportunities and go after them.

And then third: I don’t know if the crisis is going to finish in six months or in a year, but one of the advantages of having gray hair is that I know that the crisis is going to be over. And what is really important is that we ... and our partners invest now to get our companies [positioned] in the strongest possible way for whenever the recovery will happen. And I think staying optimistic, making those investments, understanding that times could be tough now but there are going to be better times and they will be soon and being ready for that is super important.

You said you like to meet with executives of HP’s top partners. Why is that important to you?

It’s a great way for me to ground myself in reality. They are very close to our customers. They see what is happening. They can share what they see from the perspective customers are going. Also, for me, it’s very important to understand: How are we supporting our partners? What are we doing well? What are we not doing well? Where can we improve? And those conversations for me are invaluable. We need to make sure they have everything they need from us. Because if they win, HP wins. And that has been our goal, and we want our partners to win because then we will be winning with them.