Case Study of HP:CSO

SUBMITTED BY,
AKHILESH KR.UPADHYAY (X007-17)
Sales & Distribution Management
COURSE INSTRUCTOR:
DR. SHIBASHISH CHAKRABORTY
Assignment on Case Study
Hewlett Packard – Computer System Organization: Selling of Enterprise Customers

HP ’s CSO are market leader in computer’s production
Price/performance factor is a USP
Early success in the 1980’s s was followed by a decline in industry business
HP responded by redefining competitive strategy and revamping its product lines
Adoption of common RISC architecture, aimed at easing (low -Reputed marketing departments
job
Buying patterns shift to increasingly including OEMs, VARs and distributors
Consequence: lowered HP ’s average prices and increase in cost of sales
Decision to focus on top forty to fifty customers
UNIX workstation➢ ’s demand growing ͠ 40% per year
application of Pareto➢ 20/80 rule
20✓ % of CSO customers account for 80% sales
Situation analysis
Course Instructor:
Dr. Shibashish Chakraborty
Submitted by,
Akhilesh kr.upadhyay (x007-17)Sales & Distribution Management PGEXP 2017-19 IIMR

Particulars ENTERPRISE (LARGE) SMALL/MEDIUM SIZE INDIVIDUAL
Turn Over (2500 Firms) $0.5 - $200m each
Daily orders
Below $0.25m each
Monthly/quarterly
orders
Not defined
% of Turn-Over Top 5% of customers
accounted for 40% of
HP’s total sales
Not defined Not defined
Channel Used Direct Sales by HP Sales
Representative
Combination of sales
reps and channel
partners
Exclusive sales by
indirect retail
channels
HP’s CSO customers
Course Instructor:
Submitted by,

Issue at hand
Identify market and
organizational opportunities to
grow and reduce operational
costs (i.e. Sales, support) from
30% to 10%
Redefinition of industry
focused approach to
selling to large/enterprise
customers
✓ solving the issue could yield another structural change in the sales
organisation department (first change:1992)
✓ Robert Dudley from Leap Consulting commissioned to audit HP’s enterprise
customer management approach
Course Instructor:
Submitted by,

Two cells sampled for the audit:
Goals:
Illustrate how current HP sales actions aligned with buyer requirements
Suggest ways to optimize current approach to enhance return on productive selling time
Commissioned LEAP Consulting’s Robert Dudley
1. Largest HP Customer (see next slide)
2. Industry in which HP was strong
Planning the next step: The sales process audit
Course Instructor:
Submitted by,

Planning the next step: Typology of sales opportunity
Type Repurchase Replacement Expansion Innovation
DESCRIPTION • Customer initiated
• Influenced by IT
•Assigned budget
•4 stages
•HP initiated
• not influenced by IT
• budget to be created
• 5 stages
PROJECT
SPECS
•The three would generate 80% of the sales to the large
customer (5 sales reps)
•Project average length: 6 months =>4-stage process
• 53 hours per week or 2400 hours per year (per sales rep)
•Turnover: $60m sales + $59m hardware + $1m
consulting = $120m total sales
•Generate 20% of sales from lead
(1sales rep)
•Length: 1year (for 4 stages) + 1 or 2
years for last stage
•Turnover: $22m
✓ similar results are achieved with industry sample
Course Instructor:
Submitted by,

The next steps
 Regrouping:
 Repurchase opportunities as downstream
 Replacement/expansion opportunities as mid-stream
 Innovation opportunities as upstream
 Next step, migration strategy: up to IT infrastructure and enterprise-wide solutions (HP is doing well
downstream and mid-stream)
TYPE Downstream Mid-stream Upstream
CRITICAL SUCCESS
FACTORS
• improving operational
efficiency
selection of accounts, i.e.
not pursuing each
Opportunity
• sell concepts and instill delivery
ability to customers
Course Instructor:
Submitted by,

• Alternate model: portfolio management
➢ Entering an account at multiple levels
➢ Tailored to the dynamics of different sales opportunities
Penetrate other constituencies
to sell upstream solutions
Move up and get into
midstream business
Entering an account at the
downstream business
Current migration strategy
Course Instructor:
Submitted by,

It’s about time for HP’s CSO to institute some changes to the current
architecture:
✓ Avoidance of numerous time drains due to sales rep “running in a treadmill” to do
everything for their accounts, e.g. Developing quotes, configuring systems
✓ Need to prioritize the accounts and institute a support team specialized on understanding
the accounts’ needs further reducing wasted time
✓ The latter point will reflect a better conversion rate in sales
opportunities, focusing not solely on repurchase opportunities
✓ In general give more specifications as to which procedures to
follow in deciding to serve an account and at which conditions
Questions
1) Is this the time for HP’s CSO to institute more changes?
Course Instructor:
Dr. Sibashish Chakraborty
Submitted by,

 it differs in that HP “evolved from a manufacturer of ‘hot boxes’ into a global
supplier of information appliances and solutions”
 HP treats its sales force as a cost Centre because they are focused on
additional profits, thus making the salesforce strive to close as many orders as
possible, not being able to
add value to any business
➢ also due to the transactional nature of the businesses HP serves; no customer
seems interested in partnering up in the long term with HP so that to mutually
benefit and add value
➢ Emphasised by the (almost) lack of innovative projects
2) How is selling instruments (HP’s traditional business) different
from selling computer systems? Why does HP treat its sales force
as a cost centre? What are the implications of such a structure?
Course Instructor:
Submitted by,

 HP serves this segment directly
 HP sales rep invested time and effort from an early stage in learning their
customers’ businesses both identifying problems and solutions to save money
and increase efficiency.
➢ salespeople transformed in consultants
 Strengths: develop long-term relationship with customers, adding value to
both businesses through customization of offerings
 Weaknesses: need for optimization in providing such kind of customised
“consultant” service. In fact sales people are used by the customers to solve any
problem they may have. Also, there is a need to prioritise accounts: skip that
and you’ll lose business
3) What is HP’s CSO approach to building relationships with
enterprise customers? What are its strengths and weaknesses?
Course Instructor:
Submitted by,

4) Do you agree with the findings of the two audits? What about the consultant’s recommendations?
How is the new approach different from the HP-CSO’s current approach to managing enterprise
customers?
5) Are you comfortable with the conclusions of the audit? What are your recommendations to Diaz?
 The recommendations by the consultant are consistent with the
critical success factors of the three new categories (down, mid and up stream) and with the
findings
 However HP needs to resolve its internal and external issues (e.g. being positioned only as a
hardware supplier) before moving on to a portfolio management strategy.
➢ That means focusing on training more salespeople in forging relationships with large enterprises; it also
involves prioritization procedure for mid-stream and up-stream opportunities.
➢ Currently, HP salespeople are not prepared for such a switch (HP is not well known for its marketing
savvy)
 In the new approach HP would enter an account at multiple levels instead of entering it at the
downstream level and then trying to tackle the rest of the organization's needs
Course Instructor:
Submitted by,

THANK YOU
Course Instructor:
Submitted by,

Case Study of HP:CSO

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