HP-CSO Case Study

Group : Alok Saha (XPGDM 06) Vijay Gopal (XPGDM 53) Abhay Sharma( XPGDM 01) Pradyut Roy (XPGDM 33) Krishnendu Paitandy (XPGDM 16) Soubhik Ghosh (XPGDM 49)

Manuel Diaz. He has to figure out if the organization is ready for more change. 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. . and whether the benefits outweigh the costs of implementation. head of Worldwide Sales for HewlettPackard's (HP) Computer Systems Organization (CSO). HP's current customer management approach. although successful.Case Overview • In late 1996. 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. Diaz does not want to put the sales organization through another round of changes unless he is sure they are necessary.

Is this the time for HP-CSO to make more changes? • Considering the opportunities which lay in the area of repurchase. Therefore. it has become apparent for HP-CSO to make some early & strategic changes in its sales force to target the high potential segments. it is critical for HP-CSO to make structural changes in its sales force . 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. Moreover. Another problem was the customers desire to consolidate its supplier base. • I light of the above facts. the sales generated in these segments was initiated from customers. it was difficult for it to enter the innovative projects segment where customers doubted its ability to deliver the goods. HP being a preferred vendor & strong in repurchase.

Why does HP treat its salesforc as a cost center • The structure of HP was grouped into three main divisions i. This type of mechanism ensured that sales force was kept as a cost center. 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. Each had its own sales force & others support departments. • HP allocated field personnel & capital expenditures among the divisions under the promise of additional profits. computer products & computer systems.e measurement systems. .

• 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 sales force to cut down its numbers & increase pressure on individuals.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. .

Freed from the constrained of a drawn our approval process. 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. oil & gas. . To capitalize on the new market position. one focused on financial service such as banking & supply chain companies in retail. media.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. The second focused on the federal government & discrete manufacturing industries such as aerospace & the third focused on telecommunications. HPs business was growing at 40% annually. By 1994. CSO henceforth could draw on the HPs resources while operating in a more entrepreneurial fashion. & utilities. sales force was redesigned. CSO began to race the market with new computers built around RICS chips.

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. . • In depth knowledge about this big ticket market would help HP to erect barriers for its competitors by delivering superior value. • Sales force would be able to nurture the relationships developed over time with enterprise customers.

• To transform salesperson from order takers to consultants required specifically designed training programs to de-emphasize on traditional focus. They also resented being relegated to the channel partners or telephone reps.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. .

. However.Do you agree with the findings of the two audits? We agree with the finding of the first audit. All these factors tells us that a lot areas which were perfect with this customer & may not be perfect with others with have been obscured in the audit. the second audit does not give us a lot confidence in the true depth of findings due the methodology adopted. HP had good relationship with the client. industry of the client was HPs strong point & only one region was chosen for the study. The customer selected was largest.

The same goes for section on innovative projects which is filled with some great insights. 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 recommendations however provide deep insights about the strong & weak links in the sales strategy of HP-CSO. This anomaly might also be due to the way case is written & not the complete report of the consultant.What about the consultants recommendations? • The recommendations of the consultant are not properly structured. • The section on repurchase. • The consultants recommendations does not have a strong action plan to effectively materialize the entire plan. .

The time lost to climb barriers may put HP-CSO way behind the competition & it may never reach its podium.How is the new approach to managing enterprise customers? • 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 new approach is high risk & time consuming . • 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.

Are you comfortable with the conclusions of the audit? We are not comfortable with the conclusions of the second audit. Also the conclusions are weak & are not in line with HP-CSO long term strategy. structured action plan is missing. . The conclusions are devoid of any future projections on numbers.

• Eliminate time drains of sales reps.Recommendations to Diaz • Need to develop competence in midstream & especially upstream segment of the market to capture the true potential market share for HPCSO. • Develop as value proposition to target the upstream market. • Increase conversion rate of downstream & midstream segment. .

Thank You .

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