Hewlett-Packard’s Commercial Systems Division (CSY) last month named a single company to handle duties of sourcing HP 3000s for authorized resellers, awarding distribution authority to Client Systems, LLC of Denver, Colo.

As part of its Channel 2000 reorganization, HP had evaluated its two existing North American HP 3000 distributors this year to select a single source for systems delivered through resellers in the US and Canada. Client Systems already served more than half of the 3000 resellers in the two countries, stocking, configuring and shipping HP 3000s and providing marketing support and HP liaison to client companies.

The HP move returns the 3000 channel to an organization it last saw in 1994, when Client Systems was also the sole 3000 distributor. Later that year HP authorized Integration Alliance as a second sourcing point for 3000 resellers. Integration Alliance became part of the General Electric IT Distribution group last year, retaining its authorization to distribute HP 3000s, HP 9000s and HP NetServers. Client Systems took a more focused route for its business model, dropping its 9000 and NT authorizations to concentrate on its HP 3000 business.

CSY general manager Harry Sterling said at HP World that his division chose a single distributor partner for North America to simplify the channel.

“Although there are a number of advantages to this simplification, first and foremost this will improve the effectiveness of our reseller channel,” Sterling said. “We believe the reseller community will benefit from the increased focus that a single partner will provide. Moreover, we believe this change will reduce the supply chain inventory and simplify all supply chain processes.”

CSY marketing manager Christine Martino said choosing between Integration Alliance and Client Systems was a difficult process, and one she’s glad to have behind her.

“We’ve gone through this process for months, and I’m thrilled to be at the point of being able to talk about it,” she said. “There are high points to both, and we made our decision based on a number of factors. Everyone recommended that we separate the 3000 processes, because the business is just so different [from other HP lines].

“At Client Systems, the 3000 is all they do and all they know. They offer excellent technical support to the resellers and turnaround and stocking strategies that match the complexities of our system. They are completely focused, and there’s tremendous benefit to that.”

“Client Systems is pleased at this vote of confidence in our 100 percent focus on the HP 3000 product,” said the company’s CEO Pat Maley. “We will continue to be the link between HP and HP 3000 users served by resellers.” Maley said the exclusive distribution arrangement will lower costs for both HP and customers, “while together we will provide optimal products and services to the HP 3000 community.”

Martino said eliminating Integration Alliance from the 3000 channel was not an easy move.

“There are benefits to being able to go [there] for a number of [HP] lines, to gain economies of scale,” she said. “GE is also a fulfillment machine, with processes and procedures and quality controls that I challenge any company to match in fulfillment. We were very impressed with that.”

Integration Alliance remains in the HP NetServer business, and may retain relationships with 3000 resellers which need to stock that line, since Client Systems doesn’t deliver HP’s NT servers. “We at Integration Alliance fully support this decision,” said VP Ross Duncan, “even though it means saying goodbye to an old friend.”

But the HP choice means the Integration Alliance resellers must begin to do business with Client Systems in order to continue to offer the HP 3000. Two notable solution resellers making the shift are McKessonHBOC, selling the Amisys healthcare software, and Summit Information Systems, makers of the Spectrum credit union solution. Horizontal integrator Advizex Technologies, formerly Infoworld, is also making the transition.

The CSY decision doesn’t affect customers’ choices for used HP 3000 systems purchased from brokers — unless customers want to buy authorized used 3000s. This new category of purchases, which come with a certificate of HP supportability and a verified user license, will be sourced only though Phoenix 3000, the subsidiary of Client Systems which launched operations in June (see the Page 1 story in our June issue). Customers are still free to buy 3000 systems from used hardware brokers. But now all of the authorized 3000 resellers in North America will have the Phoenix 3000 used hardware inventory to offer as a competitive alternative to broker sales.

Martino estimated that nearly 80 percent of the new HP 3000s sold in Canada and the US flow through the reseller channel. “We put such a huge amount of our sales through the channel that this relationship is critical to the HP 3000,” Martino said. HP sells the remainder of new systems direct to its largest 3000 customers, such as State Farm Insurance.

She added that one benefit of going with a single distributor would be better attention to verifying that the HP 3000 has productive resellers. “Moving forward with Client Systems, we’ll be able to take the next step — and go out and look at our reseller part of the channel, and make things work better there,” she said. “There are lots of things that can be done there to make life better for our resellers and clear up conflict issues. Working with one distributor is going to make that a lot simpler.”

CSY will be working to eliminate resellers who don’t add value, said division R&D manager Winston Prather at the HP World 3000 Management Roundtable.

“If you’re not getting value from the reseller, then they shouldn’t be in the loop,” Prather said. “We want focused distributors and resellers that are adding value. We want to put criteria on them and say if they can’t provide consulting, sales service, and all those types of services, they will not resell the HP 3000. I think you’ll see us cleaning up the channel.