By Andrew Seymour
HP's networking business ProCurve to become part of Technology Solutions Group
HP’s enterprise sales organisation is to earn compensation for selling ProCurve equipment as part of a wider structural change that will see the vendor’s networking division operate under the umbrella of its Technology Solutions Group (TSG) from November.
The new arrangement means ProCurve products will be added to the TSG portfolio, making it more compelling for HP’s enterprise sales staff to sell ProCurve in an enterprise solution than alternative equipment from competing vendors such as Cisco.
The move, which HP has already announced internally, will see ProCurve’s brand and divisional autonomy retained, but at the highest level ProCurve boss Marius Haas will now report into TSG head Anne Livermore. Previously, Haas reported into chief strategy and technology officer Shane Robison.
Jack Gauthreaux, general manager of emerging markets EMEA at HP ProCurve, believes the unit is set to prosper from the availability of a new sales force and route-to-market. “We will now have TSG sales people interested in carrying our product that weren’t interested in carrying it before because of the way the compensation was working,” he explained. “The big benefit is that we have access to a sales force that can open doors for us in some very large accounts.”
Gauthreaux is confident that it will also offer TSG sales staff another entry point into the customer and potentially lead to the network being used as the foundation to add other exhibits from HP’s portfolio to a project, such as PCs or servers.
It is understood that the restructuring is happening now because HP has been waiting for ProCurve to gain enough momentum and goodwill in the market.
“Networking is a growth engine for HP,” said Gauthreaux. “If you look at the size of the business we had to establish ourselves as a viable networking vendor in the market, which we have been doing over the past few years. In the third quarter of 2006 we overtook Nortel as the number two in revenue and we have been growing that since then. HP has been watching us and waiting until the timing was right to make the investment.”
HP reports ProCurve results under its ‘Corporate Investments’ operating segment, which last year posted revenues of US$762m. ProCurve accounted for the majority of that figure as sales of network infrastructure products increased 33% year-on-year.
Although the segment suffered a US$57m loss it was largely due to expenses associated with corporate development, global alliances and HP Labs, which are also contained under the same heading.
Channel partners pondering the implications of the TSG-ProCurve changes should not be afraid as the firm’s two-tier channel strategy will remain unchanged, according to Gauthreaux. “By working with HP we actually expect to increase the value of the business, the size of the projects and the opportunity for the channel,” he said. “So as much as we see this as a new sales force for us, it is the same for the channel.”
In the Middle East, HP employs around 80 enterprise account managers although all fulfilment is carried out by partners except in cases where specific named accounts demand direct HP services.