Power Tools 1993 November - Disc 2/Power Tools Plus (Disc 2 of 2)(November 1993)(HP).iso/hotlines/cnhl/billfran.txt

Text File | 1992-08-10 | 20KB | 372 lines

BILL MURPHY and FRANZ NAWRATIL
Radio HP April 1992

BILL:   You know the last three Radio HP broadcasts we've had
interviews, with Wim and Lloyd Taylor and also with John Young. And I
must say that the feedback on these interviews have been outstanding.
What you've come back to us to say is that's the kind of information
you really want to hear and those are the kind of people that you want
to hear from. What's on their minds, and also you liked the format, the
interview format, and it does communicate the kind of information
you're interested in. Although I must tell you despite what John Young
had to say on the last broadcast,  I have no personal desire to be the
Larry King of Hewlett-Packard. Now for one thing, I hate suspenders. In
any event, we've had a number of requests for transcripts of both the
Lloyd Taylor and John Young interviews. People feeling that there was
really a number of "nuggets" that could really help in sales
situations.  Those transcripts are now available. They're on the
Current News Hotline, and I'm sure you know how to use that, so just
look for the Subjects: L. Taylor and Young, and you can get transcripts
of those interviews.

Now looking back over the last interviews, we've talked with Wim about
our product strategy direction, with Lloyd about the direction he's
taking as the Fortune 29 CIO and why he's taking that direction, and
with John Young with what's on the mind of a Fortune 29 CEO. From all
of this I think a very positive picture comes into focus for Hewlett-
Packard. The right products, the right strategy that really meet the
needs of large  global firms. Both from a CIO and a CEO perspective.

The question that may now come into your mind: "How are we positioned
in field to capitalize on these opportunities? Do we have the right
structure, the right focus, the right resources to really meet
our customers' expectations." And to answer these questions, we're very
proud and pleased to have with us today, the Vice President and General
Manager of Sales and Marketing for CSO, Franz Nawratil. Franz, thanks
for taking the time out of your busy schedule to join us.

FRANZ:  Pleasure to be here as always, Bill.

BILL:   Franz, why don't we get started with more of a general
direction. We've had a good 1991 and we're off to a good start in 1992.
Let's talk a little bit about business conditions on a worldwide basis.
What do you see?

FRANZ:  I think its more than a good start. For those of you who have
seen and I hope that you're a part of that, the Lew Platt tape of the
blow out quarter.  I hope its being seen as more than just a "good"
quarter.

That was exceptional performance and of course it was very much built
on the revenues and profits which has resulted out of what I would
consider to have been a very strong order generating last half '91.  So
when we talk about Q1 and a blowout quarter, we're talking more about
the past.  Orders, however, in Q1 were very strong and I think they're
going to give us a very good start into this next quarter into Q2
because as you know, we're shipping stuff now within 2-6 weeks of
receiving the orders. So if I look through the first quarter order
performance, that's going to be reflected in the Q2 performance.

The Americas, as you know, have had a very very strong performance. And
specifically I'm very pleased to see that the US has continued the very
strong over quota performance they already started out last year.
Europe had a bit slow start on the workstation business but knowing my
friends over there, I realize that they're working hard and they're
going to turn this around.  However, in Europe strong performance again
on 1X and 61. So two of our major product lines very strong.

Unfortunately, in Asia Pacific, which has been carrying very much of
the business over the last few years in growth performance, we have
seen some very disappointing numbers from Korea and specifically from
Japan.  I think Japan at this point in time, is hit by a recession
which is no comparison to what we see may be as a possible thing in
Europe. And certainly not here in the US.

BILL:   You see the economic situation in the US improving? The
recession bottoming out and things starting to get better?

FRANZ:  Well, of course, the US is all excited about the election year,
Bill. And with all the great big hopes, being put up and the stock
market reacting like a yo-yo. You don't know what it means and people
do believe in indicators and so do I.  If I take my own internal
indicators, I think that the US is showing some recovery because we see
good strength in the US through the workstation business, 1X business,
the 61 business.  I believe all over our CSO product line we see some
very good performance.  Now, alot of this of course, comes from a
strong product offering and the price performance criteria. But on the
other hand there has to be a market, there has to be somebody out there
who buys these things. And we see much more activity then we've ever
seen before.

BILL:   I think suffice to say we've had an excellent first quarter.
Orders look strong, and we're doing better than our major competitors.
Certainly DEC, IBM, Sun.

FRANZ:  Well, I do feel sorry for all those competitors who are out
there suffering these days.

BILL:   I'm sure you do.... OK lets get a little bit more specific.
Lets talk about the directions of the Field Organization.  Again, we've
painted a very positive picture about HP and our potential in today's
marketplace.  What directions do you see the field going?

FRANZ:  Well, as you know, Bill, over the last year we have been very
busy helping the field to find the right organization, get the right
resources into place and to also go through a very, very tough resizing
of the organization. Now, you know that this has not  been an easy
thing, and if I look at my own personal career with HP, now over the
last 26 years, it was one of the toughest parts we had to go through.
I'm very pleased that the outcome of taking the big hit in the fourth
quarter last year has really turned out to be now at the level where we
have an organization in which can clearly live up to the expectations
that we have in the field. So by taking the big financial hit in Q4 I
think that we are very well set for this fiscal year as far as the
financial and targeting situation concerns.

BILL:   OK. What about the direction we talked alot about... moving
toward an industry focused activity with a real specific emphasis on
certain accounts?

FRANZ:  Now you realize that with the resources available, we had to do
some very tough decision making on what I always call, "Not being able
to dance on every wedding" and what that means is that we had to put a
resource plan together which allowed  us to take opportunity into our
consideration by looking at the major accounts on one side, building
our direct business with an account program, and with an industry focus
program. And to look at the other side, of available channels which
would bring us additional volume.

BILL:   OK, so having the field structured along industry and account
lines on one side, that's more the direct sales force, and an indirect
selling activity that would ensure that we have the right channel to
deliver the product.  That's a sales force 38 and 39 sector.

FRANZ:  That's the 38, 39 split, but also the 38, 39 corporation
because I believe that the work we have put into the channel task force
which is trying to help us to see how the channels can co-operate
rather than compete against each other is a very important element in
our balancing act.

BILL:   Yeah!  I think also as you look at some of our accounts, you
used the term quite often, channels of acquisition, and that
accounts/customers sometimes prefer to acquire their products from a
variety of channel distribution. That's their choice, not ours.

FRANZ:  Customers have clearly wanted to purchase for example,
LaserJets through the Dealer Channel. They're buying their PCs
primarily through dealers or resellers. Customers today are much more
in a choice environment where they can define over what channels they
want to purchase what equipment, so I think that when we talk about
channels of distribution, we're talking about the way HP looks into the
marketplace.  When we talk about channel of acquisition, it's the
customer's choice and we have to respect that.

BILL:   Given the multi-channel strategy, which we clearly have and are
going to further develop in the future, I know a question on the minds
of alot of sales reps, "what is the role of the sales rep in that kind
of environment?"

FRANZ:  Well you can imagine the moment you start focusing the sales
organization on to the major accounts, the sales  rep is becoming much
more a "partner" in the context of bringing HP and the potential
account closer together. Now partnership is a word which has been mis-
used in the past. So I'd be very careful in making it too much of a
centerpiece here.  What I'd like to point out is that the consultative
role of the sales rep. To be able to consult the customer, and what is
best for them in re-engineering their processes, in being able to bring
client/server computing, open systems, standards, to their world. I
believe is a role which is far beyond what they have been doing in the
past.  Selling technical specs, alone, is not going to get you the
order anymore, because technical specs are now becoming a prerequisite
to come to the party.  We need to offer much, much more today to be the
partner to those companies, because we're dealing now, with their main
bloodstream of business definitions.

BILL:   Right, so a consultative selling kind of role leads you to
several other conclusions: calling high, for example, also being able
to talk the language of the customer not just technology, but also the
language of the customer in the problems that the customer has at a
high level.

FRANZ:  First of all, you have to understand the customer's business
principles, what business they are in, why are they in this business,
and how are they competing in their own business.  The second, I
believe, which has changed, Bill, over the last few years is that while
in the past, we have been quite successful in working with large
companies almost behind the back of the MIS director because operations
managers have become very tired of waiting for the large MIS operations
to provide them with the data that they needed. Today we're much more
in the mainstream of the IT technology for those companies and the MIS
director, the chief financial officer, are becoming much more our
partners in our business of the future.  So we have to call high and we
have to go even beyond that, we have to talk to the board and we have
to talk, in some cases, even to the shareholders.

BILL:   Right, OK. Now, in this consultative selling role, as we re-
engineer business processes, and implement open client/server
computing, there's obviously a significant sales role, but theres
obviously a very major role for the professional services organization.
They've got to be part of this overall process.

FRANZ:  Well, Bill, your pointing out a particular area of major change
in HP. Let me, however, before I talk about PSO, make one more comment
about the sales role.

BILL:   OK

FRANZ: I don't want to have this misunderstood, and this is that the
sales rep, while he has to become a partner to the customer at the very
high level, can however, not loose his speciality knowledge about a
particular environment. We have to have sales reps who are highly
specialized in being able to compete against very focused types of
companies. We have to have sales reps who are specialized to deal with
a workstation environment against Sun. We have to have sales reps who
understand very well their 1X open system, open client/server
environment, and can compete against other Unix vendors. We have to
have people who understand the 3000, the product line 61, inside out,
so they can compete for their business in the marketplace.

When we talk about the PSO, we need to go a step further in
specialization. And the reason I made this point is that I'm not going
to propose the PSO to become the technical backup to a non- technical
sales force anymore. So the sales rep has to be specialized. The
"center of expertise" concept which we have been promoting in the PSO,
however is going to give an additional level of expertise and of
knowledge which will add to the sales reps in those areas where you're
talking about major change of re-engineering processes and bringing
information technology in at a much higher level.  There the PSO has to
provide professional consulting, the ability to do project management,
and last but not least, in many cases customers are asking us to take
responsibility for systems integration. Now, I'd like to make a point
here, editorial comment...

BILL:   You actually used the SI word...

FRANZ:  I used the SI word, but I'm going to do away with this here
because System Integration, I believe is causing different reactions in
different people and some people think Systems Integration is what we
need to do to put a CPU together with some peripherals while other
people think Systems Integration is what EDS does.

BILL:   Yeah, facilities management.

FRANZ:  Facilities management, etc. I'd like to call it for us, in HP,
prime contracting responsibility. In other words to be able to accept
the request from a customer saying, "HP will you put this all together
for me and will you guarantee that this thing works"... I'd like to
answer this with a "yes"  Now this of course, has to be in the chosen
area of industry specialization, it has to be with the chosen accounts,
it cannot be everywhere because this is a very tricky way of running
the business and we've got to make sure that we're not losing the
momentum we have in our profitability by getting into some deals where
we could expose ourselves.

BILL:   Sure.  Yeah

FRANZ:  So this is an area where we have to learn a lot.

BILL:   I think that a large number of sales reps are going to hear
that and say, "yes that's what I need for my accounts." There's another
issue that's going to creep into the process in this particular point
in time, saying, "Gee that's exactly what I need for this set of
accounts but I don't get paid to sell this particular stuff" I hear
that alot and I imagine you do to, what's your thought on that?

FRANZ:  Well, what role are you playing, here, Bill?

BILL:   Right now, I'm the sales rep.

FRANZ:  Are you the interviewer or are you running our global account
program...

BILL:   Well, a little bit of both there, Franz...

FRANZ:  A little bit of both... because you know yourself, a loaded
question here... that the program which we have today on the 20
accounts under the global account program for this year for the first
time is being given the credit and commission on the sale of ...

BILL:   Professional Services...

FRANZ:  Professional Services... I wanted you to say that yourself.

BILL:   And, by the way, that does happen 300% of quota after the first
quarter.

FRANZ:  Well, the 300% of quota sounds, of course, very exciting and it
may turn out there is a gold mine which we have discovered. Now, a few
people have been telling this to us for many, many years.  I think the
program for this year with the top 20 accounts is looking very, very
good. And that means that we're going to go into next year with a much
better confidence level and broadening this program out and making sure
that we can tie the PSO activities and the sales activities much, much
closer together.

BILL: OK, I think that's excellent.  Let's see if we can wrap up now.
Briefly describe  your overall vision for the sales and marketing
program for CSO.  What are the key issues in your mind, where should
things be going?

FRANZ: Well, If you look at my last year and four months or five
months, that I have now held this particular job, I mentioned already
before, one of the toughest one was to go right sizing exercise.  I
believe that we have brought our organization to the level where we now
can think about consolidating and maybe even think about growing our
business again. And what I mean by this is that we have tremendous
products.  And you mentioned before that Wim was talking on HP Radio
about products we were coming out with.  I think we have a tremendous
opportunity in the marketplace, because you mentioned that Lloyd Taylor
was explaining how he, as CIO, was looking at the marketplace.  I think
we have a tremendous opportunity to grow our business.  Seeing the
difficulties we may have in some of the economies, I believe this is
now the time to really go out there and take business away from our
competitors.  IBM, Digital, are all in big restructuring modes. Lot of
the other companies, which you remembered having being in the computer
business today, are becoming OEMs or VARs for some of the large, large
organizations. I think we have a tremendous opportunity at this point
in time to take business away.  So even in an economic  weak
environment, I think that we can grow our business.  We have shown that
in the past, and I think we can show that in the next three quarters
and the years to come.

So what I'd like to see, is that we take advantage of this opportunity
that we have because growth is going to bring us profit on one side.
And profit is going to bring us the ability to invest.  And I would do
nothing more happily, then to go out there again, and start hiring
people who are going to bring us the expertise, which we need to go
after the industry focus programs and the expertise which we need to go
after the alternative channels.

BILL:   OK, so you're basically describing a scenario of growth, being
able to capture market share from the competitors, which is going to
result in opportunity within the field organization.

FRANZ:  I think no company in the computer business today has a better
opportunity than HP, to grow market share and to grow with position.
And I've always said that I want to make sure that we can beat Sun in
the workstation business. I believe we have a commanding lead in the
Unix multi-user business.  We have a very, very strong foot in the 61
product line, 3000 business.  I think we have everything going for
ourselves to become a much, much stronger contender.  And most
important, we have a market out there which is finally looking at HP as
a major player in the computer business.

BILL:   You're obviously very enthusiastic about our prospects. Any
final thoughts, messages for the field organization?

FRANZ:  Well, I guess my final message is we had a great quarter 1. The
forecast looks okay for Q2, and we had, unfortunately, a very
disappointing February.  I may call it.  However, I'm sure that March
is going to be good and I know that you're all going to make sure that
April is going to be a blow-out month for us so we can catch up again
with our goals.  I think that the programs are working, I think the
products are all out... the analyst and consultant meetings we just had
last week in San Diego has been a tremendous turn out of people coming
and listening to our story. So I think we have a great story to tell to
the marketplace. I think we have everything going for HP right now.
The HP sales force has been named number one last year, and I think
that the message which I'd like to leave here with the sales force is
that HP is the best sales force in the marketplace when you look at
computer business today.

BILL:   OK, Franz, thank you very much. I appreciate you taking time
out of your schedule to be with us. And thank you for joining us again
on Radio HP.  As always, we appreciate your feedback on the entire
program, as well as these interviews, and also thoughts on people that
you'd like to hear on Radio HP.  So with that I look forward to talking
to you again on next Radio HP.



RHP April '92 Transcript