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Hewlett Packard Computer Systems Organization: Selling to Enterprise Customers XXXXXX

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HP: Overview of Current Approach HPs Computer Systems Organization was the market leader in manufactured computers, peripherals, system and application software and networking products. The USP of HPs positioning is price/performance, which is essentially competing on the basis of technological features. Over a period of time, CSO has responded to growing competition by redefining its competitive strategy and revamping its product lines. It entered into partnerships with customers to provide customer-oriented solutions, and pursued acquisitions to inorganically develop IT capability, and adopted RISC architecture to unify disparate product lines; thereby, easing the job of the marketing department CSOs customer were segmented into a) Large or Enterprise Customers: They had a budget of $0.5 to $200 Mn, and HP sales rep served them directly. b) Small-to-medium size Customers: They had a budget less than a quarter of a million dollars. They are served by a combination of sales reps and channel partners. Occasionally, there are cases of migration into the enterprise customer segment. c) Individual Customers: Customer served exclusively by indirect retail channels. However, buying patterns of customers forced CSO to shift its distribution strategy to increasingly include VARs, OEMs, and distributors. This resulted in lower HPs average selling prices and increased cost of sales. Given that 20% of CSO customers account for 80% sales, HPs decision was to focus on top forty to fifty customers. Sales Force and Account Management HPs current sales force strategy has served it well. However, future calls for the need to make the sales force more effective The analysis of the sales force shows that HP treats its sales force as a cost centre as the focus is on achieving sales targets, which is the measure of their performance assessment. However, given profitability is not the adopted measure, the sales cost per order is as high as 30 cents per order $. This forces the sales force to strive for as many orders as possible without adding any tangible value to the business. Further, in an effort to increase the top line there is over-investment in marketing expenditure. Such transactional nature of HPs way of conducting business resulted in customers IT department to screen HP sales reps from partnering in innovation projects (long-term partnerships). Also, growing demand from the customer had begun to stretch the sales teams capacity to further increase the top line through more selling. Given that reps are spending 30%-50% of their time with the customers, the overall sales force effectiveness has taken a severe hit. With changing market needs and intense competition there is an added pressure on the sales force to drive sales. Further, for Repurchase, Replacement and Expansion projects there was no proper screening and evaluation of sales opportunities that was carried out. Large amount of time drains in non-productive activities such as developing customer quotes etc. Due to increasing sales targets, the current sales team had added capacity by working more hours. This left HP in difficulty to respond to customers needs in face of increasing demands on price and delivery terms.

Current Vs Future Transformation of Account Management Strategy

Current Strategy

Future Strategy

However, the new strategy may yet result in a failure if proper training is not provided to the sales force to meet with new challenges. FINAL RECOMMENDATIONS HP would be able to compete more effectively in the market if the focus of the sales force changes to identifying and managing profitable and more valuable opportunities rather than only focusing on top-line growth Sales and marketing activities could be reformed to target the three customer segments Individual Customers, Resellers and Enterprise accounts Enterprise Accounts sales force should partner effectively with channel partners and other support services organizations to provide end-to-end solutions to large enterprise customers HP should focus on capturing potential market share in the midstream and the upstream segment. This could be addressed by developing attractive value-proposition for both the segments. HP-CSO should aim at internalizing its positioning with respect to target customer segments such that both management and sales force are aware of their relationship dynamics when approaching a client. This should be a precursor to adopting the portfolio management strategy. This involves prioritization of sales opportunities and ensuring a proper formal training structure for the sales force. Given that HP is not known to be savvy at marketing, not only its customers but also its employees will find it difficult to make the transition.