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HP- CISCO Alliance
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Executive Summary
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Despite HP- CISCO top management intentions and senior and middle management commitment to renewed alliance stalemate stalemate has reached due to lac! o" clearly de"ined ground rules a#sence o" detailed plan o" action cultural disconnect in decision ma!ing and non availa#ility explicit "inancial integration plan$
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Hurdles "or the "ormal agreement #etween the two organi%ations
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Change o" management team
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&oth teams assuming that that they are middleware spanning spanning hori%ontally across &us and vertically #etween top management and sales "orces
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Alliance team as!ing &'S to do activities which might #e #ene"icial to the organi%ation(s whole #ut a loss proportion to the unit
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)ultiple interdependencies interdependencies and potential "or con"licts
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Incentives Incentives stopped "or HP sales sta"" "or selling Cisco products
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*raining needs o" managers to understand #oth technologies
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Organi%ational changes "or persona reason o" employees employees
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A#sence o" dedicated sales teams
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Product overlap #eyond limits
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+on availa#ility o" per"ormance metrics "or individual #usiness unit initiatives
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A#sence o" clearly de"ined metrics "or customer re,uirements
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Alliance team mem#ers mem#ers not meting regularly regularly "or lac! o" interactions
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Demand "or high level o" management management s!ills in the a#sence o" "ormal authority
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Positive points
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HP ands Cisco are largest and third largest companies in Silicon alley
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CEOs o" #oth companies are willing "or the synergy #ene"its o" alliance
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HP has a very strong service networ! with ./000 employees and Cisco has 1200 technical sta"" in the services group
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HP has 1/000 sales representatives
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HP CEO 3iorina 4oined the Cisco #oard
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HP strategy strategy is very sales driven
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Cisco strategy is long term
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5ood "inancial per"ormance o" #oth organi%ations
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*wo alliance initiatives S6*S and HA are already success"ul
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CISCO customer test driven
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Clear understanding o" the designoragna%ational designoragna%ational structure #y #oth HP-Cisco
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Clarity on the #usiness model and technical expertise with #oth HP-Cisco
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6illingness o" #oth to reorgani%e the structure "or #etter "ocus
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Clear "ocus o" the top management management on the alliance growth
Step I What organization is being discussed? HP largest and Cisco third largest companies in Silicon Valley formed an alliance, signing for Technology collaboration, product integration, professional services, and customer support. In February !!, the t"o companies decided to further formali#e and e$pand their alliance by signing a contract that "ould outline in greater detail both ho" they "ould "or% together and the strategic initiatives on "hich the alliance "ould focus. What is the size of the organization? H P Founded in &'(', HP "as one of the more senior Silicon Valley technology companies. The Company had gro"n from a small outfit housed in a garage to a global technology and services Company that "as a leader in many areas, including printers and computers. HP formally merged "ith Compa) in *ay !!, the result "as a company that "ould have had combined sales of almost + billion for fiscal year !!&, although for the first three-)uarters of fiscal !!, sales "ere do"n about &( as a result of the continuing slump in most high-tech mar%et and chairman of the company
is Carly Fiorina The HP services group/"hich
included &,0!! Cisco-trained specialists/"as 12,!!! employees strong, comprising half of HP3s &(!,!!! employees "orld"ide. 4ith sales offices in &1! countries "orld"ide, HP had &2,!!! sales representatives. CISC5 6 Founded in &'0, Cisco had en7oyed meteoric gro"th during the company3s first &1 years. Cisco manufactured and sold net"or%ing and communications products, providing a broad line of products for transporting data, voice, and video over both long and short distances. Cisco3s ne"er offerings included IP telephony, Internet net"or% services, optical net"or%ing, and net"or% management soft"are. Cisco3s fiscal !!& revenues "ere appro$imately + billion, dropping to appro$imately +&' billion in fiscal !!. C85 9ohn Chambers led the San 9ose, California-based Cisco. :outers and s"itches comprised about ;! of the company3s sales, "ith services bringing in about &; of revenues in fiscal !!. Cisco had appro$imately &!,!!! employees involved "ith sales accounts/including account managers, systems engineers, and operational support staff/"ith offices in 1! countries. The company employed a total of (2,!!! people.
Who are the case actors or the level of managers called upon by the case to render recommendations?
Bill Russell Vice president of HPs global alliances , :ussell 7oined HP3s sales organi#ation in Scotland in &'!. :ussell later became general manager of sales for the computing systems group in the 8*8< region. In
&''1, he moved to California, subse)uently heading up several HP product organi#ations such as technical computing and soft"are. :ussell too% over global alliances in February !! and !im Heal "he general manager for the Cisco global alliance, Heal 7oined HP in the early !s, first "or%ing as a sales rep on the 8ast Coast "here he sold testing e)uipment and technical computers to ell ?abs. He later moved to the 4est Coast "here he "as HP3s global account manager for Chevron, and then manager of both the Informi$ and PeopleSoft alliances. Heal has a >S from Purdue. of He"lett-Pac%ard, Inc. @HPA
Steve Steinhilber Vice president of Cisco3s strategic alliances group, Steinhilber 7oined Cisco in &''' as head of Cisco3s "ireless alliances team before moving into his current role in !!!. Prior to Cisco, Steinhilber /a &'! graduate of Harvard >usiness School/"or%ed at * relationship. Be$t he managed multiple teams of platform partners before being given overall responsibility for the HP alliance. Prior to 7oining Cisco, Thomas had "or%ed in sales and product management at
What do you suspect* at this point in time* is the issue that arises in the case? •
Change of *anagement team the
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D>oth the HP and Cisco alliance teams thin% o f themselves as company middle"are.
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The primary responsibility for the management of the alliance fell on an alliance manager.
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Es to do something that, "hile benefiting the company as a "hole, did not benefit/or perhaps "as even detrimental to/a particular >E.
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"hy should "e care about another company HP sales persons selling cisco products "hich "as not digested by HP
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High s%ill level re)uirements for the In technology for the 7oint product development.
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evelopment of 7oint mar%eting materials/re)uired a sound understanding of both partners3 technical capabilities.
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The location of the alliance teams in their respective organi#ations had changed over time in both companies.
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Bo dedicated alliance sales force.
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Beed for central strategic alliances group than by a >E.
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ProductGservice overlap.
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Bo monitoring of performance "ith appropriate metrics
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>oth the HP and Cisco alliance teams agreed that developing a 7oint business plan and metrics "ere critical to the success of any strategic alliance.
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no formal authority over either company3s e$ecutives or s ales personnel for alliance
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Bon availability of
compelling business plan "hich is important "hen dealing "ith >E
heads to address their perceptions "ith facts, since >E buy-in is critical. •
Ineffective sales compensation plan for the sales force
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Sales situations that commonly led to disagreements included "hen a Cisco team "as selling services/perhaps "ith another partner/ that competed "ith HP, or "hen HP "as selling a product @their o"n or someone else3sA that competed "ith Cisco.
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D4hat does the customer "ant is not clearly defined 4hen field issues escalate, no procedure in place to sort out. Sales engagement model needed to be specified for each target mar%et and included in any formal contract.
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HP and Cisco alliance teams did not meet in person on a regular basis, although once every t"o "ee%s the t"o teams had an hour-long conference call to discuss channel issues.
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overnance processes not properly defined.
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The business concept in alliance "ith clear metrics missing.
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Bo formal authority for alliance team members.
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?o" trust levels among alliance members. .
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Incomplete Enderstanding and influencing his or her o"n company by alliance members.
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T"o sides not agreeing on basic business terms.
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Considerable time has passed since they began "or%ing on the agreement.
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People involved in negotiations have changed, and in others, >Es have changed their strategies.
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Cultural disconnect among the alliance members in decision ma%ing
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>oth sides "ere frustrated in 5ctober.
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>oth C85s Fiorina and Chambers scheduled for meeting in 9anuary,!!(
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Pressure of the top management on both sides
