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Jump Starting the Quest for New Customers

Sometimes it takes an outsider’s viewpoint to help you see your own prosperity – and your potential. The HP 3000 division gained a fresh viewpoint late this summer when Roy Breslawski joined CSY as its latest marketing manager, arriving with more than a decade of marketing and product management experience inside HP’s handheld computer operations. The background in HP’s handheld business looks like it will offer some pertinent HP 3000 lessons to Breslawski, who started with HP in 1984 as an electrical engineer working on the groundbreaking HP 110 Portable. After Japanese firms drove down portable pricing with more favorable labor structures, more than a few US-based companies exited the business. HP was one of them.

Breslawski hung on in PR and merchandising, and eventually came back to the calculator division as a first-level manager in product marketing. He had a tough assignment: get HP back into the portable computer game after being benched for years. The end result was the Omnibook, a solution that stole market share from better-heeled and more established portable vendors. More recently Breslawski was responsible for moving Microsoft’s Windows CE onto the 320 palmtops, with a resulting spike in sales. He spent the last three years in Singapore, transferring the calculator and palmtop business to the Pacific Rim, working as a product marketing manager, development manager and technical manager. The organization had to be built to division strength in five months, and Breslawski was starting with two marketing people, a support engineer and a secretary. He waded in to do whatever jobs needed to be done.

Breslawski faces similar marketing challenges in CSY, a division whose managers were virtually out of the market for new customers during the last several years. CSY had suffered in HP’s shadows before the company’s Unix fanatics fled in the face of the NT juggernaut. Fortunately, the customers’ willingness to keep their minds open about operating environments yielded two surprising years of success for CSY, success that attracted Breslawski’s attention when the division’s marketing manager post came open this summer. The division’s first marketing manager hand-picked by GM Harry Sterling, Breslawski said when he arrived at CSY in August that he was moving to another durable post – both CSY and HP’s calculator businesses turned 25 years old this year. “They’re both mature businesses, highly successful with a huge, loyal customer base,” he explained when we first met him at HP World. “The parallels are just amazing.” Since then Breslawski has reminded HP’s sales force that the 3000 product line was one of HP’s most successful in fiscal 1997, something that’s earned CSY resources to reach for new customers. We asked him how he plans to push the HP 3000 into new businesses.

Do you see evangelism for the 3000 platform as part of your position’s mission statement?

Yes, and personally I think it’s part of every single person’s position in CSY. If somebody doesn’t believe strong enough that they’re out evangelizing it, then they probably don’t belong in the division. From what I’ve seen, that’s pretty much the makeup of the people in CSY. I’ve never seen an organization where almost every single R&D engineer is out talking to customers every year.

How do you define evangelism?

Getting the story out about what you have. It’s enthusiastically showing people why your product is the best solution to their problem, every chance you get. The other part of it is more passive. It’s going out to make sure I clearly understand what problems our customers are trying to solve. At the end of the day, most computers that are available in the market don’t have people behind them who are trying to figure out what the business problem is that somebody’s trying to solve. By doing that, we’re evangelizing the HP 3000 platform.

If you evangelize by telling people why the 3000 is the best solution for their problem, do you go as far as to say the 3000 is a better solution for the problem than an NT system or a Unix system?

It isn’t always. We do a disservice to our customers if we sell them something that isn’t the best solution to their problem. I’ll stop short of recommending products from other companies, but the reality is that sometimes there are solutions better than a 3000. But there are also times when a customer hears about an NT box when a 3000 would be a better solution. That’s why it’s so important to me that everybody has evangelism as part of their job definition at CSY.

That kind of growth in awareness of the 3000 is obviously important to CSY this year. Many in the 3000 community were thrilled to see the influx of national 3000 ads in the national computer trade press in October. What gave you the elbow room to make such a big splash in print?

Basically our customers, and what they bought from us in 1997. It’s pretty generally known by now that we had a pretty good year for fiscal 1997. In HP, every division pays its own way. When we have a really good year, that generates more money and gives us a chance to go out and create more awareness. That’s how we have a better year the next year.

We hear you’re pushing for a major increase in the number of new HP 3000 customers over the coming year. How much increase do you want to see, and what will need to happen for HP and its partners to accomplish it?
There’s no limit to what I’d like to see; however there are some things we would like to do. As far as what we’re going to get in new customers, I don’t know exactly what will happen. What I’d love to see is somewhere around 30 percent of our sales in fiscal 1998 come from new business.

Can we get to that number? I’m not sure. To be perfectly honest, I don’t have a good measure for where we’re at today. That’s a hard thing to track. There are a lot of people around the world selling HP 3000s every day of the year. We don’t always know when that sale goes to a customer who’s never owned an HP business computer before. We’re working right now to put better systems in place to more accurately track that. When we can clearly identify every new customer we have, we can take a more active role in making them feel part of the 3000 community.

Some of what needs to happen is already going on. The most important thing is a process we’re going through in the division today. We’re clearly segmenting the total available business computing market, identifying the areas where the 3000 has a clear advantage in the market and where we have good solutions, and then putting our marketing programs together around those focused areas. As we move through 1998 we’ll move from a promotion of the 3000 as a high-reliability technology to a solution to very specific business problems. It’s the most important thing we have to do today. Identify where those opportunities are and show people how we’re going to benefit their business.

How do you hope to illustrate that?
A lot of the industry today sells pure technology. There’s a huge universe out there of people who need good computing solutions and they don’t care what the technology is. They need somebody to show them that if you install this, it will take care of your problem. That’s what we have to do: develop an extraordinary understanding of business issues our customers face. What it means to gain 10 percent more efficiency in order-taking in a mail order company. What it means to be able to schedule production at 10 percent lower cost or 10 percent higher throughput.

You want to go beyond the “feeds and speeds” discussions of which platform is faster or cheaper, right?
We think there’s a large opportunity in the market where NT is not quite ready today to solve the mission critical problems. And there are lots of environments where Unix may not be the right answer. Unix is a little larger and more sophisticated system than people really need to apply to the problem. A 3000 is a great fit in between those two.

What have you identified as targets where NT is not the best solution?
There’s a wide range of things we’re investigating today. We don’t have any final answers. We’re looking a great deal at small and midsize discrete manufacturing operations, managed healthcare solutions, a fair number of things in the finance community, mail order businesses, travel reservations. An awful lot of that runs on a 3000 today, and we’re trying to identify why those customers had an advantage with the 3000, and then apply it to rest of the world.

Those solutions obviously serve many users. On the other end of the scale is the prospect for growing the 3000 base as a PC LAN application alternative. What do you think of a four-user, lower-cost HP 3000?
That’s something I don’t have a complete understanding of at this point. I do have some people researching that to understand what the opportunity is and how the 3000 can fit. We don’t just want to go head to head with the message that if you’re a small company, you can do a 3000 instead of a PC LAN. One thing I’ve learned over the years in marketing is when you go head to head with a 900-pound gorilla and punch him on the nose, you’re going to lose. If you can find out a way to run around his feet and nip him on the ankles, that’s how you win. Even if there’s a small, four-user license system opportunity there, we need to find out what the opportunities are to nip them on the ankles: what specific applications or types of businesses will that win in and focus our resources there.

Tell me about the biggest marketing challenge you’ve faced before arriving in CSY. What can a marketing failure teach you?
My biggest lesson came early in my marketing career, and it was probably my biggest failure. I was involved in a new start-up within HP that was going after a new market segment that HP did not participate in. It failed miserably, and it did not fail because of product technology, it did not fail because of time to market, it did not fail because of pricing issues. It failed very simply because the HP sales force at the time was not appropriate for that market. Very simply, we did not have a channel of distribution for the product. My key lesson out of all that is marketing is all a market basket. You have to address every element, every piece of that market basket to win. You cannot let any single element fall by the wayside.

What was the product?
I can’t say. This was an HP market failure, and they don’t go public with that. There have been flip sides, too. In my recent history I was involved in the handheld business in Singapore. We went to market and moved from a very small set of competitors that were pioneering the handheld PC market for a number of years to suddenly a bigger universe that had some very large consumer electronics companies in it. In some cases our competitors were outspending us by enormous factors, 6 to 1 in dollars spent.

How did you leverage back against that?
It’s one of the things I’m driving at with the HP 3000. We focused very carefully on specifically how people could apply handheld technology to increase productivity in a company. We designed around very specific needs to meet that. We sold a benefit based on specific business problems people had, and our competitors were throwing very large dollars at telling people ‘isn’t this slick, we built a small computer.’ That was meaningless to the guy who needed to buy 3,000 of them. Showing him we solved a problem – that people who are mobile want to have their information to have the same format as it does on their PC. That made a big difference, and it had nothing to do with advanced technology.

Do you do that in some cases by finding a pilot customer who has been successful, and then publicizing that?
In this case we had an advantage, in that HP had been in the handheld market for 5 years already when Windows CE came along. We had a lot of users to learn from, and our new competitors did not. It’s that good old evangelism. We had some very dedicated people who put a lot of time and effort into helping HP get this handheld business going. We spent a lot of time buying plane tickets and getting out and talking to people, building enthusiasm for it.

How do you make that work when the majority of your product is being sold indirect, like the HP 3000? Are those the people who have to be getting on the planes?
They do part of it. That handheld business was as indirect as you get. The calculator business that it was born out of was the first indirect distribution HP ever did as a company. One way to get your distribution partners enthusiastic is by getting end users to call them and ask to buy product. That’s a lot of what we do with the HP 3000 already. That’s one of the benefits of having an entire division that’s comfortable with going out and talking to customers. Those customers call up our distribution partners.

There’s evidence they have been calling. We heard the HP 3000 product line was one of HP’s most successful in the year that just ended. Is that true, and how do you measure success of a product that’s been around for 25 years?
Absolutely it’s true. The way HP measures success is pretty straightforward; if you look at our corporate objectives, profit is at the top of the list. If we don’t make profit, we can’t do anything else we care about. We made money. One way you make money is by selling a lot more than you planned on, and that’s what happened in ’97. HP has a process of setting a quota every year for every product line, and that’s the expectation from the management group both within the division and in the field sales force for how much we sold in a product line. The objective is to go out and beat that. In ’97 we beat that by a large margin.

Did that earn you the dubious honor of having the expectations raised for the next year?
Where it sets the expectations for the next year is really immaterial. What’s most important is that it builds a very high level of enthusiasm and gets more effort out of everybody involved for the next year. That’s what we’re seeing happen right now.

Did it help raise the mindshare of HP’s own sales force about the product?
That’s a tough one to answer. I’m not sure the mindshare has changed as much as the mindshare has become more positive. We are certainly getting a lot of enthusiastic support out of the sales force right now. They are doing a lot of good things for us going into ‘98.

What’s changing inside HP to ease marketing the 3000 to HP itself?
I don’t know that there’s anything really changing inside of HP.

Is there something changing inside of CSY, then?
CSY has been very successful for a number of years now. I joined a highly successful organization; that’s was a very attractive aspect of coming to this position. There is some shift within CSY, a more aggressive stance toward the future and a stronger belief there are new customers out there waiting for us to get ’em – rather than we’re only here to serve the installed base customers. It was never totally that, but certainly our focus has been on the installed base.

Doing the right thing for the people who already own a 3000 has been eating up virtually everybody’s time for a few years now. Now there’s a belief that one of the right things we can do for a current owner is to go get a new customer into the 3000 community. We’re putting some effort into that. The other is that we’re getting incredible support from our upper level managers. The people that we report to are very strong supporters of the HP 3000 and have been a big help to us. One of the ways we make our customers successful is by getting new customers.

Can you explain how the changes in HP’s sales force reorganization impacted the 3000’s opportunities?
It had an impact on every product line in HP. It’s been very beneficial. The whole purpose of the reorganization was so that sales reps would go to a customer and represent Hewlett-Packard as a company, and sell the best solution to that customer for their problem. This is exactly what we’re trying to do from our product lines already. That’s the key here. Sales reps in the past were responsible to a product only, and their job was to go in and sell that product to everybody they called on.
Now we have a huge number of people whose responsibility is to the customer and to HP, to do the right thing for the customer through the products that HP makes.

So have the opportunities opened up because you now have more people you can influence within the sales force?
I believe so. The other part of it is that we’re doing a lot to build up our reseller channel. At the end of the day when you have several tens of thousands of active customers around the world, you can’t call on all of those customers with HP people. As much as the customer would like it, it’s impossible. As a company we’d be broke if we had that many sales reps out there. We’re very active now in strengthening our reseller channels, structuring things differently, developing new training for resellers. We’re coming up with different levels of resellers and in the process of designing programs that will benefit the top resellers – the ones that are the most knowledgeable, most capable of marketing and selling versus just taking orders and delivering a box.

Right now the HP 3000 division has just one level of reseller?
In fact we do. Our distributors do offer different levels of discounts depending on the level of business a reseller is doing.

How will the new levels of resellers have an impact on the mission of expanding the customer base?
We’re not going to focus just on business size. What’s very important to us is who is able to bring the technical expertise to the table that’s required to make a sale, and who is able to deliver the marketing and sales resources necessary versus just being able to take an order when somebody else has done the work. If we’re going to bring new customers in, we have to have competent people out there finding the new customers.

So what you find is that being on the menu of a very large distributor, for example like a Gates/Arrow, doesn’t bring you many new sales?
Right, and in a worse situation, people just go around shopping for the lowest possible price – which means that you get no new customers. You only get repeat business from people who already know what they’re buying. That’s not a market growth scenario at all.

So shopping strictly on price is a situation that doesn’t earn you new customers as quickly as shopping on benefits or shopping on solving business problems?
I believe so. If we were a PC group, that might be different. Price would be much more important, because people have a much higher understanding of the benefits of a PC. Furthermore, most of the value is simply the application that runs on the PC. In a market with the HP 3000, the hardware is a pretty large contributing factor. Certainly the operating system is an even bigger factor. That’s the differentiator between us and any other choice that could be made.

So that means you have to focus on selling the differentiating factors of your operating system?
Yes. People need to understand why MPE is a benefit, what does it do for the customer. How does it solve their problem and give them a lower total investment over a number of years versus the up-front purchase.

The accepted wisdom in the market is that NT has made some room for different, non Unix operating systems. Do you agree?
Maybe there’s a little of that going on. Certainly there are some people who have tried NT installations and they didn’t work out, and they went back to something else. The flip side is that there are people who have tried NT installations, and they’ve worked out just fine. For whatever reason, people are much more open to taking a look at alternatives than they were a year or two ago. Back then it was the peak of this mad rush of there has to be one way to do things. More people are accepting there may never be one way to do things.

What’s the most significant change in the 3000 market over the past six months?
In a six-month period I don’t think there’s significant change. What may happen in six months is significant awareness. Changes in the market take a lot longer than we ever perceive they will take.

Some things have changed. Two key driving factors are one, a growing acceptance or willingness to consider there’s more than one solution to computing problems in the future. The second is the Year 2000, finally getting close enough that the people who are ignoring it up to now are suddenly realizing that they have to wake up and do something. People are looking at the timeline and even if they were considering going to a new system for mission-critical applications, they’re reconsidering based on how close the Year 2000 is and whether that’s possible. So now it’s time to go look at upgrading what they already have.

What kinds of motivations and incentives do you want to offer to the channel partners who were once very active in the 3000 community but have fallen away?
I don’t know we want to do anything different for them than for anybody else. What’s most important to me is not necessarily what they might have done five or 10 years ago, but what they can do going forward. That’s what we’re going to structure our programs around. We’re going to build off of the strengths people can bring to party, rather than trying to resurrect something that might have worked in the past. The environment always changes, and what was a formula for success in the past is probably not a formula for success in the future.

Do you have examples of what you’re going to do in the way of motivations and incentives?
We’re going to focus building the marketing capability of the resellers. One of the key ways we do that is through the marketing promotions and programs developed within the division and implemented through the HP sales force and the resellers. Today, promotions and programs are not developed just in the division. Everything we do in the marketing process is developed in partnership with resellers. We have a Distributor Marketing Council and Distributor Operations Council that meet to get a clear understanding of what’s important to our resellers. This just started within the last two months. This is a new way to do business and make the resellers part of the 3000 team rather than just somebody to move boxes.

Since it just started in the last two months, I’ll bet you had something to do with getting this started, since it covers your time in CSY.
I certainly did a little prodding in that effort.

What do you do to get the marketing efforts of the resellers ramped up?
The key thing is getting consistent marketing messages. When you develop a program in isolation, everybody runs with their own interpretation of what that means. Some people use it, some don’t. By doing things in partnership, you get all of those factors out of the way up front. It’s very similar to when you’re designing a hardware product and designing quality in from the beginning.

So are you applying the same kinds of processes to marketing that CSY has pioneered with its software and hardware products?
It’s exactly the same. Every link of the value chain we should have the exact same close relationship with our end customers.

Tell me how the chief marketing post in CSY relates to the HP sales force. The salespeople don’t work for you, right?
Yes and no. At the end of the day, they report to different people, but the reality is they make their money by selling products for divisions. They have a quota to achieve, and make money by achieving that quota. Quota is assigned to a product line, so indirectly, yes, they work for us. If they don’t go out and sell what they’ve been asked to sell for our product line, then they don’t make as much money.

How does CSY ensure it gets the necessary marketing mind-share from the sales force?
We market to the sales force in the same way we market to customers, resellers and distributors. We’re bringing a set of our dedicated US sales resources out to San Francisco for a day and a half to have them meet the functional management team, and have Harry [Sterling] talk about what we’re doing and what the strategic direction is. A lot of recognition and thank you's are going to the people who have contributed to the business in the past. We want to make sure everybody is completely aligned and has the exact same message in talking to the customer in the same way.

By dedicated sales team, do you mean salespeople dedicated to selling HP 3000s?
Some of them are, and some are salespeople and managers from various districts who are going to be the lead in their area for representing the 3000 within their team. We have to make sure there are champions everywhere, in every aspect of the organization.

Which dormant business sector in the 3000 would you like to help make more active over the coming year?
One of our focuses next year is in manufacturing. It’s been one of the long term strengths of the 3000, and it’s certainly something that has a lot of life in it for the 3000. We have an exceptional partner there in eXegeSys, who’s been investing in the [MM II] product, and I think there’s a lot of things we can do together.

It would be interesting to watch MM II begin to sell some new 3000s, wouldn’t it?
More than interesting – I’m counting on it.

What kind of a role can small applications suppliers, the kind that might become 918DX owners, play in the 3000’s renaissance?
Everybody is critical. One of the things we need to do here is to get very focused on our market segmentation. Rather than look at broad categories, we need to get down to specifics. When you do that, very often what you uncover are the small problems our customers have that large applications don’t take care of. That’s where the small software suppliers become a large strength. They have the ability to react quickly, or in some cases have very specialized applications to address those kinds of problems that the larger software suppliers don’t address. I don’t think it’s possible without all ranges of software suppliers.

Give me your thoughts on a small, focused conference for these kinds of channel partners with MPE solutions. Could it help build on the 918DX momentum? Could CSY help support such a meeting?
That’s one idea on a list of a lot of things we have to look at today. We have more ideas than we could ever implement. What we have to do is figure out where we could get our best return. I honestly couldn’t say one way or another if that could be effective for us or not at this point.

What’s your first-year goal as marketing manager for the 3000?
Every marketing manager has a number one goal: to exceed quota. If I say anything other than that, then Harry is not going to be too pleased. Beyond that, what’s very important to me is that we bring new customers into the HP 3000 community, and we can clearly identify who those new customers are for everybody. That’s what will build the enthusiasm and continue the commitment to the platform going forward.

What’s the most important aspect of the 3000 customer base that will make achieving that goal possible?
Our customer loyalty. I believe the HP 3000 customers are the most loyal computing customers out there. A lot of people tell me it’s similar to the Macintosh customers. I’ve got to say I think it probably is, with the big difference being that our business hasn’t been collapsing for the last year and a half. We have incredible customers, and that’s what’s most important we do with the future is that level of loyalty. It gives us so much ability to do other things going forward. They trust us, and we trust our customers to tell us the right things. There’s an awful lot of power in that.

Roy Breslawski

Marketing Manager

HP Commercial Systems Division

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