NewsWire Q&A: Ivica Juresa
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Ivica Juresa: Leading MPE's Renaissance from Europe

NewsWire Q&A

It may be a big world, but Ivica Juresa makes new business opportunities for HP 3000s seem much closer than the miles between the US and Europe. Juresa is the European Regional Business Manager for HP's 3000 division (CSY), but his practical role involves advocacy for the 3000 in the dozen-plus countries on the east side of the Atlantic. He got our attention early last year by stating that the HP 3000 marketplace was in a renaissance, a belief that at the time was still many months ahead of HP's view of MPE business. That viewpoint of renaissance, a natural for the part of the world where the word was born, matches up well with the European HP market -- a place where Unix was adopted earlier than in the US. Thankfully, the small software partners who make up the complex quilt of MPE commerce in Europe didn't lose faith in the 3000 platform while the Unix craze raged through HP. The company once manufactured 3000 hardware and software in Boeblingen, a manufacturing-laden suburb of Stuttgart. Now HP makes MPE sales plans and marketing efforts through a lean group that Juresa heads from the five-building campus across the S-Bahn tracks from IBM. When we asked CSY General Manager Harry Sterling if there are any division resources in Europe, his answer was "Absolutely -- our marketing team is here." The 3000's rebound in the past two years has been a global phenomenon, so it may have been most appropriate for the biggest 25th birthday party to have been hosted in Juresa's backyard. On the morning after, we shook off the champagne's effects to find out what European customers can teach the rest of the 3000 market about a renaissance.

How does the European HP 3000 market differ from the market in the US?

The general difference is the US is one big market, so you can leverage resources. I have plenty of countries, so it's difficult to have the resources you need. In the US you can make one big district of HP 3000s. In Europe I cannot have a sales rep in Denmark selling to Sweden, or a sales rep in Germany selling in France.

Why is that true?

Cultural differences. Customers want to see somebody speaking the local languages, and the cultures even show differences in the sales cycles. In Nordic countries it's more straightforward and logical; in southern countries there's more relationship building before they come to business. A sales rep would not be successful without knowing what the differences are. In Europe have a pretty similar size to the US in terms of a total market, but I have to split it out into countries.

Does the requirement to have separate resources for each country also mean distinct resources for technical and pre-sales support?

The technical we can leverage, because it's accepted we talk in English when we do technical issues. The operating system talks English to the customer, so it's much easier then to understand the issues. We leverage the technical pre-sales people. Our [channel and business development managers] always need local people when it comes to closing a deal. The technical people are in more of a supporting and prodding role as well, but they cannot close the deal.

CSY General Manager Harry Sterling told me that HP's country managers are really important in the structure over here. So regardless of what you want to propose here from a division level, each country manager must agree to it?

That's true. We have a two-tier structure, HP management which is agreeing on guidelines coming from the US and then passing them to the countries. But the countries are pretty powerful in Europe, so if they have a good reason to do it differently and they are successful, they can. You have to get agreements country by country on what the sales model should look like and how many resources should be and how to address the HP 3000 market. There's much more travelling in Europe to get agreements every fiscal year than in the US.

Has Europe's earlier adoption of Unix led to an earlier understanding that it can co-exist with MPE, and where Unix won't be a suitable choice? CSY has begun to say that large 3000 customers have been the successful adopters of Unix technology.

I don't know about more suitable. Yes, while the US was saying that Unix wasn't mature enough, we were about one or two years ahead of the market from that perspective. One big difference I've seen is that in the US there are some really strong, large customers for the HP 3000. So [in the US HP] don't have to concentrate so much on the volume. In Europe I have plenty of partners who are very strong in the midsize markets, your typical manufacturing applications and financial applications. But we don't have the ones who compete against SAP or Baan or the high-end stuff where you need some time to implement it. They are solutions for midsize companies. It's a typical entry to mid-size machine we are selling, so we have a much higher volume from the numbers of machines we are selling compared to the US.

And we are much more dependent as well on the channel. We don't have some big partners, but we have plenty of small partners. The partners are all local, so you rarely find one partner, for example in Germany, who has any solution for France. All countries basically have a different partner structure: two-tier, one-tier, depending on the total volume. If you don't have enough revenues in a country, you cannot do two-tier, because the distributor is not interested in very low volumes.

Do those tiers describe the source of the HP 3000?

I'm talking about if you are directly buying from HP or buying through distribution. We try to leverage distribution as much as possible. The turnaround time for the sales cycle is much quicker when we distribute away from HP, because HP is just now rolling out its SAP-based system.

Let's talk about SAP, a company based here. Germany is the only place in the world where SAP ever ran on HP 3000s. Do you think in the same way that CSY revisited Netscape to do a deal this year which it couldn't get earlier, that the division could now convince SAP to support the 3000 in its smaller and midrange heartlands?

I think by definition the SAP solution is just too big for the midsize and smaller customer. When you see an SAP installation, there's always plenty of machine available. It's not something you can just put on top of an HP 3000. You need new machines to make SAP work. I also don't think SAP believes it's worth it to do all this effort to maintain their system for all these operating systems. They stepped down not only from MPE, but from [Digital's] VMS. They wanted to shrink down, to go to NT as well as Unix. Having SAP is a "nice to have" on the 3000, but I don't think its critical. SAP is a very high end solution, months to implement. This is not our typical market for the 3000.

CSY is gambling that it can find an adequate number of applications for those midrange to smaller customers by nurturing smaller partners. It would seem you're already at that model here in Europe.

We've been at it for a long time. We're getting 70 to 80 percent of our revenues out of these kinds of partners. Our direct sales without partners are very low.

Would you say you're providing a significant amount of the revenue growth for the division out of Europe? A UK partner said the sales numbers from that country for the HP 3000 are below quota.

From the UK perspective, that country is not a big contributor at the moment. France and Germany are well above quota. This is another difference in Europe: there's always great-performing countries one year, and next year they're not so great and other countries pick up. The good thing is that you can leverage, and there's always enough countries to be so good that we're over quota each year.

The UK appears to have a lot of older HP 3000s installed.

I know. We're taking the UK as one of our focuses for the next year. We have assigned a new marketing responsibility for it to Jean-Paul [Ferouelle], so he will take care of implementing more of a channel model.

So a lot of what you must do now is sell the 3000 to HP itself?

That is true for all product lines in HP. As we have merged all the sales forces, now we are really not just unit anymore. Everybody is now screaming for attention from the sales force. Yes, it's a huge job now selling to HP.

Cathy Fitzgerald said last year that one of the best things to happen to the 3000 was NT. Has that been true here as much as in the US?

I agree fully. As long as it was MPE and Unix, it was clear that one day you would have to migrate to Unix. With NT, it's not clear anymore which operating system you should be on, so people are getting more pragmatic and less religious about it. If you ask our customers, most of them have an NT box and even more are getting around to using it for different purposes. They're not buying something anymore just because it's an operating system. People are really figuring out where to use NT and where to use MPE. I have NT on my Omnibook now, and the main reason is that it's more stable than what was on there. It's still crashing, but not as often as it used to.

How do the customers plan for business here as compared to what you've seen in North America? Some would argue that there aren't as many differences between the markets from a customer's perspective as, say, from HP's.

I don't think there's a big difference. Companies like Proctor & Gamble have a common IT strategy, so it's not like their countries are independent and choose whatever they want. In Europe we are a little bit late to the Internet, and again there's a big difference between our countries. The highest connection rate to the Internet is in Finland, and there it's higher than in the US. Now compare this to Germany, which is probably Number 100 worldwide. Adoption is very different. It shows the cultural preferences; the Nordic people are very high-technology oriented. These are people who always like to have something to try out, like mobile phones. Here a mobile phone is still a business tool.

What about business or IT planning for the midrange or small customer, a company that doesn't have North American operations? Do things operate differently when they figure which systems they'll deploy and where their applications will come from?

They follow the same processes as you see in North America. I haven't seen any differences so far.

Do you think the Internet has the potential to make these marketplaces more similar as time goes on, or does it have to get more pervasive in Europe before that happens?

It will make the market more global. You already find a lot of pages online where you can compare the products from different vendors -- pricing information hasn't been available before. Now you can configure IBM, Digital or HP machines online to see what is the price. It's changing the way you sell. In the old days you could afford a strong direct sales force, where margins included the sales force and the customer was willing to pay the price to get a direct contact. Today the margins are getting so slim you cannot afford a sales force. It puts much more responsibility on the customer. This is one of the reasons the consulting business is really booming.

Is consulting any stronger for the HP 3000 here than in North America?

I can't say, but in our client-server integrator program we have 46 partners all over Europe. What we see from them is that it's a really booming request for consulting. We have a stronger client-server program with much stronger linkage to HP than in North America. We have pretty tight control directly out of my department to our partners. This means direct communications to people, and after two years of qualification we do re qualification. We had about 60 partners a year ago. All the people who had the nice logo but aren't really doing stuff are basically out. The remaining 46 are very strong partners.

The program is in its third year, and people like CSL Solutions are people we never knew before, because they were not generating hardware sales directly. It's a different market they deal with, because HP is always concentrating on the Global 500. Our major markets in Europe are midsize companies, and there we needed an integrator network to support these people. Now there are new opportunities for them. When they started it was just client-server. The Internet is the next phase for them to make available to the 3000 customers.

Do you run a separate 3000 e-commerce integrator program here, as HP does in the US?

We have taken from the client-server integrators who can as well provide Internet consulting. It's a subset, but already about 70 percent of them have started to build Internet knowledge, because the opportunities are so attractive. Two years ago no integrators had e-mail or a Web page. Now everybody has e-mail and everybody has a Web page. This was one of the classifications: if you don't have a Web page you can't have Internet consulting status with HP.

Is the qualification bar rising from that initial "must have e-mail and a Web page" benchmark?

Next time we'll ask how many installations they have done on electronic commerce. We're telling them what we expect after one year or two so they have a chance of building that knowledge.

Is EDI stronger here than in North America?

It could be. Most of the standards come from here, and the first implementations are coming out of environments here in Europe. But it's in the very early stages. EDI itself is very common, even down to very small companies.

Does that give the e-commerce solutions in the 3000 market here a chance to be more robust when they get in place here?

One of the largest PC distributors in Germany is using the Internet for order management, so all the PC dealers can tie into the order system. It's being done in Speedware's Autobahn, and in the background is a 3000 processing the orders.

We have the impression that HP Europe hadn't really lost the faith in the HP 3000 the way it faded for a while in North America. True?

We had years where the answer was "it's already dead." Or people would ask "why do you have a 3000 department anymore?" For three or four years we were in a state where people wondered if the system would survive or not. We've gone through this valley and are now again in a very comfortable place. Yes, we lost the faith. Fortunately we had a lot of partners who didn't, and still believed in the 3000 even if HP lost the confidence in it's own product. Now, with HP backing them up, we got a lot of feedback from our partners.

What are some new ideas you want to try out in the near term to keep this momentum going? Harry Sterling says that he's looking forward to an exciting year because HP has given the division the room to do what it needs to do. Where do you see the implementation of that here in Europe?

To increase our new business dramatically compared to where it is today. I have some ideas on how we can use our partners to get new customers. My people are currently in the testing phase and discussions with our partners on what we can do.

Is there any significant lag in product availability between Europe and the rest of the HP 3000 marketplace?

It's the same availability for HP's software worldwide. The only difference is that we have to add one week for shipping.

There used to be a lag in software implementation because of the localization into languages other than English. Is there less now?

We are trying to do less localization because of its impact on the timing perspective. It's always a huge process to localize, and localized operating systems really aren't of value. Getting system messages in the local language is sometimes more confusing than helping. Localization of error messages can be lousy. It can be the proper translation, but it doesn't make sense from the computer side.

There still seems to be a pricing difference for the same HP products when purchased in the US and overseas. Why is that true?

We have a pricing in Europe compared to the US, some uplift here, to maintain the operations and my overhead. However, there is no difference between the European countries. On a monthly basis we are making sure there are no differences between currencies. There were a lot of price increases in many European countries just to keep up with the US dollar.

And all those HP quotas are based on revenues?

Yes, in US dollars. Just to compensate for the dollar here we had to make 7 to 8 percent more revenues in local currencies.

How do you feel about having such a separate outpost for marketing devoted to the HP 3000? Your group isn't focused on the world, like the other CSY marketing resources, but just on Europe. Do you feel like you have an opportunity to do something that would be harder to implement from a worldwide stance?

CSY in Europe is basically this marketing department. We don't have R&D here any more or training. Marketing is what can make the difference. We can do something outside of what's being done in the States market. The good thing about CSY is that we are such a small division compared to the other ones that our communications are very close. This operation is really a part of CSY worldwide team, and we are in day-to-day communications. This is much more complicated if the division is huge. If we say we need a different kind of machine, they are listening to us and implementing.

Would you say there was a turning point for the European HP 3000 market? We were pleasantly surprised to see your commentary last year identifying the HP 3000 as being in a renaissance.

Everybody expected that we would be dead, and it didn't happen. And then they saw our numbers improving and our customers were talking about us, and we got a lot of press attention -- a lot of articles, even in Europe. Our management inside HP got confidence in the product. The market taught us there is still a customer base for the 3000.

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