HP Needs to Realize Peregrines Value

Opinion: Elliot Markowitz hopes that Hewlett-Packard sees that channel relationships are the real gain with its planned acquistion of Peregine Systems.

Hewlett-Packard is touting its planned acquisition of Peregrine Systems as a major step forward in its overall business software evolution strategy, which will strengthen its OpenView offering and add configuration management database technology to its arsenal.

If HP executives really keep their eye on the ball, however, one of the most important components of this deal could be bringing on Peregrines channel relationships and adopting its channel mantra.

/zimages/7/28571.gifClick here to read more about HPs plan to acquire Peregrine Systems.

It is no secret that HP solution providers are up in arms over many things the company has done in the past few months.

First, there was the changing of the guard from former Chairman and CEO Carly Fiorina to current CEO and President Mark Hurd. Any changing of the guard is always looked at with uncertainty, but HP resellers eagerly awaited word on how Hurd would embrace the channel. Immediately following this high-level move, HP changed the terms and conditions for its PartnerOne program, leaving less rebate money in the channels pockets. Strike one!

Then, just a few months later, Hurd took center stage and told the world and its channel partners that its time for solution providers to shape up or ship out, in a manner of speaking. What Hurd was really getting at is that HP is going to reward those VARs that are tying more of their business to HP and alienate those that dont.

I support the vendors move to entice its channel partners to do more HP business and to reward them for such a commitment. But the ultimatum to those that are on the fence came a little too soon in Hurds rookie year for many in the channel to swallow. Many VARs are still trying to figure out if Hurd really does support the channel, and his statements have isolated what could have been very valuable and productive business partners over time. Strike two!

/zimages/7/28571.gifRead more here about HPs recent massive restructuring.

At the same time, I have heard from many of my channel sources—as well as from some perplexed HP executives—that Hurd also said the company plans to beef up its direct initiatives. Now, any VAR that hasnt been living under a rock for the last 10 years knows that there is a certain amount of business a vendor will want to take direct. That is just the world they live in and most are OK with that. What they are not OK with is when a vendor stresses direct selling while de-emphasizing its channel business.

Although Hurd did not say that specifically, VARs are very nervous. Foul ball!

So now here we sit. HP and its channel partners are at a crossroads. And on this rocky road is this acquisition of Peregrine. While everyone is dissecting the technology fits, complements and overlaps, I am looking at the channel opportunity or potential disaster.

While Peregrine had a blended strategy of direct sales, consultants, ISVs and VARs, the last conversation I had with company executives centered on its channel focus. "We are emphasizing our partner programs," Peregrine Senior Vice President of Strategic Initiatives Russ Mann told me a few months back. "This year, our focus is on investing in our partners. We will only recruit new channel partners that fill a select skill gap. We value those that have stuck with us. They stuck with us, and we are sticking with them," Mann said.

Mann went on to say the channel will be the biggest growth vehicle for the company. In my view, Peregrine executives realize it was the companys relationships with its partners that helped it turn the corner, and they were acknowledging that publicly. This goes a long way to building VAR loyalty. My hope is that HP realizes this hidden gem it has in Peregrine and shines it up to strengthen not only its technology portfolio but its channel strategy as well.

Elliot Markowitz is editor-at-large of The Channel Insider. He is also Editorial Director of Ziff Davis Internets eSeminars. You can reach him at elliot_markowitz@ziffdavis.com.

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