You’ve had six months in the job. What are the main things you have tackled and what are the challenges you have faced?
Richard Bailey (RB): I came into this industry from a different perspective. I came from a career in finance and predominantly with GE, but also with my own business. I moved into HP to run the financial services business in Asia. Apart from being involved in that business, this meant I could be across the whole of HP sitting within the Asia-Pacific leadership council. So I got to see all the bits of the business. Coming into IPG [Imaging and Printing Group] from that financial services background was a good way to come in. I spent a lot of the first 100 days listening and getting opinions from our channel partners, from the rest of HP and the people that work for me. I had the luxury of being able to immerse myself in the business. While I was doing that, the economy was going into a different wave. What I found was that while there was a high level of engagement between HP and the channel, and I don’t think anybody really does it better than HP in terms of partnering, IPG wasn’t engaged at the level I would have liked us to be. That was particularly poignant for us because we are trying to move into more specialisation, away from the printer as just a device, and more into managed solutions. That requires partners to come on-board with a slightly different mind set.
What I found was we hadn’t necessarily gotten to the level we needed to achieve that. That meant the partners were very much into selling devices and less involved with selling the services that go with the device. In turn, they were missing out on the annuity of attaching services to devices. That is the journey we are trying to take them on.
So the recently launched certifications and program changes were to address this?
RB: Yes, I did two things. In December, we had a Premier Business Partners meeting. I signalled that there was a perception we were not serious in engaging and growing the channel, and we were going to do that in a tangible way. One illustration of that – in order to help the channel take that journey with specialisation – was to put resources onto it. So we actually restructured our enterprise sales force: People who were involved in more direct engagements, have become a mid-market sales force. Instead of working directly with customers in the enterprise space, they engage with the channel with their customers to help them get past the last three feet. We made a significant investment and it has been rolling out so that by the end of our second half, which is effectively May, it will be complete.
The product launch in Sydney recently was very much about what our value proposition was and why it resonates in this market. It is true that while the economy presents a multitude of challenges, it also presents opportunities. There are real cost savings to a proper printer deployment in a business, and an upgrade of equipment to lower energy usage devices. There are productivity opportunities and there is a level of innovation, whether that is around universal print driver or WebJet Admin.
For the channel, like everybody, the tide has been rising. Everybody has been able to run their business fairly successfully and perhaps they are very involved in infrastructure and selling HP servers and notebooks, and really just shipping out printer boxes. Now they are looking for other revenue streams. So we are offering them an annuity revenue stream.
In the existing climate, there has been a lot of talk around financing and annuity streams, but is there any chance we will go back to moving a lot of boxes?
RB: I don’t think so as the model has fundamentally changed and moved to a more managed environment; printing is part of the total IT infrastructure now. The green agenda of using less paper and being smarter is going to be there. I can’t predict the economy, so whether we are bottoming out or going down or up, it is a really good time for customers to take a look at their business models and see what they can do to make them more productive and create a lower cost environment.
Now that you have implemented these first steps, what comes next for you and IPG?
RB: The next step is for us is to have more specialised partners. The partner can choose from selling boxes, which they do now, and adding a minimum of supplies logistics, through to providing a full managed environment. They can literally choose where they want to be in that journey. At the top you have the Office Printing Specialist, which is where they have the certification and training. These are the people that can provide all the services and customise their own solutions within the HP product set.
What we want to do is have many more partners in the specialised areas. What has been going on in the background, in conjunction with restructuring the sales force – which in reality meant letting go of accounts that were in the enterprise space – is us working with partners that want to go that journey.