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HP-CSO Case Study

Group :
Alok Saha (XPGDM 06)
Vijay Gopal(XPGDM 53)
AbhaySharma( XPGDM 01)
Pradyut Roy (XPGDM 33)
Case Overview
• In late 1996, Manuel Diaz, head of Worldwide Sales
for Hewlett-Packard's (HP) Computer Systems
Organization (CSO), is reviewing the results of an
audit of HP's enterprise customer management
approach with the objective of identifying market and
organizational opportunities that might provide HP
the next wave of growth while further reducing sales
and support costs. HP's current customer
management approach, although successful, had
involved structural changes that had forced a deep-
rooted overhaul of HP's traditional regional sales
approach. The new recommendations would
necessitate another round of drastic changes in the
way HP manages relationships with its large
enterprise customers. Diaz does not want to put the
sales organization through another round of changes
Is this the time for HP-CSO to make
more changes?

• Considering the opportunities which lay in the


area of repurchase, expansion & innovation
segments it is critical for HP-CSO to make the
right changes in the organization of its sales force
to capture these three segments. Another
problem was the customers desire to consolidate
its supplier base. Moreover, the sales generated
in these segments was initiated from customers.
HP being a preferred vendor & strong in
repurchase, it was difficult for it to enter the
innovative projects segment where customers
doubted its ability to deliver the goods.
• I light of the above facts, it has become apparent
Why does HP treat its
salesforc as a cost center
• The structure of HP was grouped into three main
divisions i.emeasurement systems, computer
products & computer systems. Each had its own
sales force & others support departments.
Manufacturing possessed significant possessed
significant wordwide product line charters & were
measured as profit centers. The divisions
captured profits through transfer price
mechanisms when they shipped products to HPs
sales regions. Transfer between divisions & sales
regions were mostly made at market price less
allowances for subsequent manufacturing and/or
marketing cost.
What are the implications
of such a sales structure?

• Major implications of this structure are below


metioned
• Sales force can concentrate on the achieving
sales target without having to worry about
making profits for itself & spend time in non core
activities.
• The sales force does not need to employ much
additional non sales staff to manage its overall
functions. Appointments can made on the basis of
minimum requirement needed
• Cost cutting measures can put pressure on total
What is HP-CSO’s approach to building
relationships with enterprise customers &
what are its strength & weaknesses ?
• HP-CSO reorganized its sales approach by way of providing
greater autonomy to its divisions. CSO henceforth could
draw on the HPs resources while operating in a more
entrepreneurial fashion. Freed from the constrained of a
drawn our approval process, CSO began to race the market
with new computers built around RICS chips. By 1994, HPs
business was growing at 40% annually. To capitalize on the
new market position, sales force was redesigned. Red sales
force team was created which constituted of sales reps
specializing in industries HP had decided to target & to one
of the 3 business units HP decided to target, one focused on
financial service such as banking & supply chain
companies in retail, oil & gas. The second focused on the
federal government & discrete manufacturing industries
such as aerospace & the third focused on
Cont…
Strengths of the approach
• This domain specific approach would
enabled HP to focus on big ticket customer
more seriously & attentively.
• Generate more sales because of over
specialization of the sales force.
• Sales force would be able to nurture the
relationships developed over time with
enterprise customers.
• In depth knowledge about this big ticket
Contnd…
Weakness of the approach
• As we saw in the case, sales force
was resistant to change & did not
wanted to lose power over their
regional fiefdoms & lose their smaller
customers. They also resented being
relegated to the channel partners or
telephone reps.
• To transform salesperson from order
Do you agree with the findings of the
two audits?

We agree with the finding of the first audit.


However, the second audit does not give
us a lot confidence in the true depth of
findings due the methodology adopted.
The customer selected was largest, HP had
good relationship with the client, industry
of the client was HPs strong point & only
one region was chosen for the study. All
these factors tells us that a lot areas which
were perfect with this customer & may not
be perfect with others with have been
What about the
consultants
• The recommendations of the consultant are not
properly structured. This anomaly might also be
due to the way case is written & not the complete
report of the consultant.
• The recommendations however provide deep
insights about the strong & weak links in the
sales strategy of HP-CSO.
• The section on repurchase, replacement &
expansion projects provide great insight on the
weakness of HPs sales force but does not provide
methods of how to overcome those weaknesses.
The same goes for section on innovative projects
How is the new approach
to managing enterprise
• The new approach to managing enterprise
customers may not bear fruit as long as
the sales force does not get proper
training to come up with upcoming
change.
• The approach of entering the bottom &
slowly making way up the ladder may be
time consuming & entail climbing a lot
barriers put up by competitors. The time
lost to climb barriers may put HP-CSO way
behind the competition & it may never
Are you comfortable with
the conclusions of the
We are not comfortable with the
conclusions of the second audit. The
conclusions are devoid of any future
projections on numbers, structured
action plan is missing. Also the
conclusions are weak & are not in
line with HP-CSO long term strategy.
Recommendations to
Diaz
• Need to develop competence in
midstream & especially upstream
segment of the market to capture
the true potential market share for
HP-CSO.
• Develop as value proposition to
target the upstream market.
• Increase conversion rate of
downstream & midstream segment.
Thank You