Mike Murphy’s job is to ensure e3000 end users don’t notice his company. But few organizations are more essential to the North American HP 3000 owner, especially in these times of rising sales. The president of the e3000’s North American distributor for the system leads a team whose objective is to make purchasing or upgrading a 3000 a seamless experience. About four out of every five North American e3000s come off the company’s configuration line in Denver, Colorado. In this spring’s rainstorm of new product numbers, parts and components, Murphy’s company is the collector that turns the flood of technical promise into a stream of productivity.

In the past two years the distributor launched two other services: its Internet portal, 3kworld.com, and the authorized resale supply point Phoenix 3000. 3kworld is the end user customer-centered operation, while Phoenix brings used 3000s to North American resellers, which sell the units to end-users. Murphy is at the head of the organization that operates all three entities.

He joined Client Systems in 1994, after 17 years of experience with several large manufacturers. Murphy came to the distributor from a 3000 end-user’s seat, calling on experience in quality control, inventory management, receivables management — accounting fundamentals, as well as an in-depth understanding of two-tier channels at the manufacturers where he worked.

Murphy started as Client Systems’ first accountant, repositioning and substantiating the viability of the company as a sound distributor. In early 1995 he designed, developed and implemented the distributor’s operational model, one that could effectively compete with any other distributor. Managing operational, logistical, and inside sales areas, Murphy laid the plumbing that delivered systems to the customers through resellers.

Last spring he was promoted to VP and GM of Client Systems, assuming the responsibilities of the entire distribution business. In September Client Systems’ board of directors appointed him to the board and named him as president. We checked in with him as his company was swamped with orders and new hardware, to see how the firm was directing the rising tide of new systems.

You came to the HP 3000 world from the customer side, didn’t you?

I came into Client Systems to get its books up and running and get some processes and procedures in place — so it could continue to move forward and be a viable distribution channel for Hewlett-Packard.

Prior to joining Client Systems I didn’t do anything specifically with HP 3000s except work with one at Pella Window Company. I’ve primarily been associated with the accounting field. They were manufacturing-distribution organizations which sold into a two-tier channel. It’s interesting to be an accountant with one firm and go to another company and find out those businesses are related.

That two-tier model sounds a lot like the kind of business that Client Systems is in for the e3000. How does what you do impact the North American 3000 customer base?

Client Systems distributes 100 percent of HP’s indirect [North American 3000] channel. Outside of a few enterprise accounts, we do it all. We do a lot that’s centered around the product life extension of the 3000, everything from demand fulfillment to presale technical support to integration services and marketing services. We do program management for HP, call center routing. The primary function we play is to make a seamless process from HP all the way down to the end user customer.

The big thing on everybody’s mind now is the new systems. What kind of preparations has Client Systems been going through for the new rollout?

We’re a business partner with HP, and in our position we have to do a lot of work in preparation for any kind of product launch. We’ve done things like collaborative program management pieces, collateral materials around the A- and N-Class, involvement in the Webcasts and Webinars, doing sales tool diagnostics, product structure validation, training, supply and logistical issues. All of this is to ensure that when the product is ready for release, it’s absolutely seamless. There’s been months and months of preparation to get to that point.

It sounds like you folks have to learn these new systems better than anyone except maybe the HP factory itself. True?

Absolutely. We provide all the presale technical support for our reseller channel. We need to be able to help them on any technical questions that they have. That’s the reason we do factory training and internals training. We know the product inside and out. We sent our integration team out to California [to the factory]. That way there’s no difference in how the systems get integrated, a seamless process between the factory and Client Systems.

Without getting too technical, it looks like these new systems are very different from their predecessors. Did the level of training prove that to be the case?

Yes. There’s certainly a lot of differences between them. It’s a matter of understanding what those differences are. At first they look like they might be cumbersome and really different, but when you get down to it, I think for the most part customers will find this product has an awful lot to offer. It certainly addresses many areas that have been expressed concerns before.

What kind of reaction have you gotten from the resellers about the system offerings?

The good news is that we’re absolutely slammed, as orders are coming in for both products. I always joke with the people in the integration center, “My goal is to break you.”

There’s a tremendous level of excitement and enthusiasm around this product. I hear it on a regular basis. Once they understand it, there’s been a high level of appreciation and enthusiasm for this. It’s been a remarkable time, and there’s no question about HP’s commitment.

Activity couldn’t be any higher. Deals we did, quotes for six or nine months ago, are being re-quoted on the new product. We’re seeing a tremendous response in both quotes and accounts we haven’t seen much activity in historically over the last couple of years. We’re seeing some of the older quotes turn into live and active quotes. We’ve got purchase orders flowing daily.

Are the configurations HP first announced meeting the resellers’ immediate needs?

Yes. What they’ve got addresses the most immediate needs the customers have, particularly around the 9x7.

We were a little surprised to find so many 9x7 owners looking at N-Class purchases instead of A-Class. Did you see that coming?

I wasn’t surprised at that. I always felt many of our 9x7 customers would find the N box very attractive, and it would be a sweet spot for HP. We’ll see it on both the A and the N, but I’m not surprised at the number of them [who are considering the N-Class]. When you look at the performance, it really depends on where the 9x7 is. If they’re on the higher 9x7, clearly they’re going to want to begin to look at the N-Class for scalability.

How would you rate the impact of the channel consolidation we talked about last year? Has it helped service levels to the customer base?

It has improved the service levels. But I’d caution that improvement is not just from the consolidation alone. It’s all the different things that go along with the consolidation: the introduction of the new product, an improvement in the communications process, both within the channel and direct to the customers. If you look at all the things we’ve been working on over the last year, we don’t want to look at the consolidation of the channel as an event. It’s an ongoing process, and as the market continues to evolve, so too will the channel.

It certainly was necessary. With that in place, it’s culminating into positive things for the customer.

Will there be more consolidation of e3000 resellers in the months to come? Is this an annual process, having reseller contracts renewed each year?

We have to be careful, and avoid asking “Is there going to be change in the channel?” Change is inevitable, and the fact is that HP’s committed to focusing on the product and the service and ensuring the customer is receiving the highest level of service. It may or may not mean changes in the channel. HP’s really coming from improving the total customer experience throughout the entire value chain.

What’s changed with 3kworld’s mission? Will you be proceeding with e-commerce parts of the original business plan, or have those needs changed in the 3000 community?

Absolutely nothing has changed with 3kworld’s mission. What may have changed are some of the functions that 3kworld was exploring, such as e-commerce. We do not believe that e-commerce is a functionality that’s viable for 3kworld at this point.

Given the complexity of integrating the product, I’m not sure that’s the correct direction for 3kworld. Another example is the auctions. We wanted to try them and see if it was a viable service, and the answer came back no. What you’ll see moving forward is a much more intense focus on the ISVs, and some of the tools makers and other folks that bring things to the market.

Do you think those ISVs will be offering things over 3kworld they haven’t offered before?

There’s a tremendous opportunity for some of the non-reselling ISVs, tools and middleware. It’s a great way to help them extend the reach into the market. It will be more apparent where these things are on the site. The navigation will be easier. By adding those features up front, instead of burying them in the site, it will be easier for an end user to find applications that they need.
We recognized an opportunity and created 3kworld to fill a void in the marketplace. As we’ve gone through an evolution, we recognized some things worked very well, and some things have not quite panned out.

How has the portal’s business model has worked out for you?

3kworld.com has been successful. This is why we’re tweaking it a little bit. It provides a great opportunity. It certainly has substantiated its value, both to Client Systems and to the market. I believe we can do a lot more with it. We’ll continue to make it more and more valuable.

How will the Phoenix 3000 offerings change this year, now that every system has been given an end-of-service date except the A- and N-Class? Will the 9x7 owners find it easy to get certified, authorized 9x9 systems?

As customers more over to the newer product, we expect to see some of that other [e3000] product that is not normally churning in the pre-owned equipment channel today. We believe that Phoenix will be able to stay its course and provide the channel with an alternative solution, to help the reseller customers get to a point that’s good for their business. If we can’t move them to the newest product, we certainly feel we offer the channel a solution with equipment.

Is Phoenix selling anything direct to customers, or is it simply a source for systems that authorized resellers offer?

Phoenix is authorized to either sell into the direct channel on behalf of HP, as well as its reseller channel. If we have opportunities and leads we funnel those back through our resellers.

Something else that’s on everyone’s mind is the economy’s downturn. What advice would you give a 3000 solution provider in these slow times? Do you think the 3000 might have some kind of advantage in a market that’s become cautious?

This is a difficult question, in that I don’t want to provide business advice or strategy. I think each of our ISVs and providers operate in a different market. My belief is that the 3000 certainly has an advantage in these type of times. If you go back to the HP “Run it, Trust it, Evolve it,” message, we have a very strong, loyal customer base that loves the 3000. This is one of those opportunities where we will fare well. I think most businesses will look at that and recognize it’s not the time to move.

My advice to providers is to stay focused. Focus on your core competencies and the application that works extraordinarily well on a system that is absolutely reliable — during a period of time when you don’t need radical changes and uncertainty. We’ll fare very well in these times. You’ve got great products coming out with huge performance benefits. It’s on an operating system that you’ve been able to trust for more than 25 years. We expect a lot of wonderful things to happen this year, despite the economy.