HP – Cisco Alliance

Group 9
 Situation Analysis

It is 2002, Bill Russel and Jim Heal of HP are going to meet with Steve and
Mike Thomas of Cisco on their HP- Cisco strategic alliance to discuss how to
make is more effective

The alliance first signed in 1997, was redrafted in February 2002 to expand
and formalize their alliance with greater details

The activities of the alliance slowed in March 2002 when HP and Compaq
merged

In August 2002, the negotiations about the alliance renewed

Background
 Founded in 1939, HP is one of the largest companies in Silicon Valley.
 Cisco was founded in 1984 and through communication & networking products had a
meteoric growth for 16 years

 HP and Cisco formed an alliance in 1997 and HP was Cisco’s first alliance in their plan to
work with horizontal partners rather than compete vertically

 HP had 4 core business groups

 Enterprise Systems group
 Imaging and Printing group
 Personal Systems group
 HP services group – Total 65,000 members (1,400 Cisco and 63,600 HP)

 Cisco offers IP telephony, internet network services, optical networking and network
management software

 Each company moved their products in 3 ways

 Sell to – Direct sales to business
 Sell through – Sales through Distributors and Value Added Resellers
 Sell with – Through alliance with each other. Ex. HP was the distributor and strategic alliance
partner for Cisco
Background of the HP-Cisco strategic
Alliance
Mission : Alliance
Key People Co- In Feb teams
- Fabio marketing 2002, met in In march
enterprise HP : formal 2001 to 2002,
Fontana :
networking Cisco’s contract to review updated
HP’s
solutions to first expand the partners alliance
worldwide
HP and strategic alliance hip agreement
alliance
Cisco’s alliance negotiated, opportuni included a
manager
joint partner in because of ties master
for Cisco
customers Jan’97 HP’s agreement
and Steve
Harmon : intended and six
Cisco’s merger detailed
strategic with initiatives,
alliance compaq, and moved
manager this forward in
Alliance relationshi August
for HP would p had 2002
benefit if To become
grown more
HP became 4 joint
more tactical,
more solutions :
important Cisco
‘strategic’ IP
and while telephony alliance
Cisco , service team
became and developed
Revenues
more network relationshi
increased
‘tactical’ managem p with
steadily
or near- ent, Cisco
from 1997
to 2001 term sales mobility/ channel
driven wireless organizatio
and n, which
utility owned HP
data resell
center quota and
HP-Cisco
field
engageme
nt
Formal design of the alliance

Developing a business strategy optimizing the value of the alliance both to

executives and sales force

Make their and their partner’s products and services work together

Understand the technology and motivate business unit and sales people of
both the companies

Include all company functions or groups whose roles required them to interact
with the strategic partner

Understand strengths, weaknesses, opportunities and threats of both the

companies

Motivate the sales force to promote and sell the products of their alliance
 Organisational Structure

At HP, Fontana’s reported to sales instead of marketing because of

‘sell to’ instead of ‘sell with’ activities

In 2000, Fontana took over both ‘sell to’ and ‘sell with’ activities

After HP- Compaq merger the activities were split again, Fontana
promoted and Jim heal took over as Alliance manager in July 2002

Enablement or operations unit to represent strategic alliances to the

sales force

In August 2002, changes were made due to increased focus of Cisco

on HP’s consulting services organization
Choosing Partners
• Alliance has to generate $500 million
revenue & Cisco will have 50% share
• BU will take 5-10 initiative each having its
objectives, metrics & business plan
• The alliance team will be held accountable
Cisco’s
for certain metrics
Criteria
• Central strategic alliances group will handle
investment in people, capital, and
intellectual property
• Product/Service overlap should be less than
20%
• Partnership should be client centric
• Partnership should be devoid of any biasness
HP’s Criteria
• Partnership should be technology enabled
i.e. joint R&D
 Rules of Engagement
• Escalation process - Shows how and when sales force should escalate when conflict arise

HP’s RusselI notion of

Disagreements due to product
Overlapping
Occurs when a Cisco team was
selling services with another
partner that competed with HP
and Vice versa
Life cycles of sales engagement
Sales Engagement model :
Who leads in which situation
How to treat customers
Forecast sharing
Sales funnel sharing
‘Co-opetition’ – Where in some
areas we partner and in some
areas we compete with same
company
Sales manager of both
companies meet at local and
regional level as done in HP-
PeopleSoft Alliance
 Developing trust was 
Cisco strategic 
Thomas and Heal  made harder by the 
alliances had a  The alliance 
recognized the  emotions that team 
governing committee ­  managers and their  Cisco’s Rudolph ­  The HP­Cisco alliance 
October 2002 ­ the HP  importance of  members and  Joe Carr ­ just telling 
5–6 people that met  Two CEOs would  team members had no  Diplomacy is critical  team members were 
and Cisco alliance  developing trust at all  salespeople carried  people what to do 
four times a year,  meet once a year,  formal authority on  in our jobs.   all very thoughtful 
teams had conference  levels of the  with them in dealing  doesn’t work.  You 
governance groups  reviewing input from  majority of people, so  Relationships take  about how to 
call once every two  organization. Many  with another  have to rely on 
met quarterly to  the governing  their jobs were very  months or years to  influence others both 
weeks to discuss  team members  company. Past  personal relationships 
review performance,  committee. demanding, time­ build, but just  inside and outside 
channel issues believed that it took a  relationship  a great deal
status of the business  consuming, and  moments to break.  their organizations
long time to develop  breakdowns can 
pipeline, key issues,  sensitive
trust create huge hurdles in 
action items
the field

ALLIANCE 
GOVERNANCE
Thomas shared that, in 
Both Heal and Thomas  HP’s Heal and Cisco’s 
every executive 
discussed the  A resume won’t tell you  Thomas emphasized 
meeting, one must go  Consider the executives 
importance of  Figure out the  whether or not  that an effective 
in with a  themselves—where  HP’s Russell discussed 
understanding the  executive’s spheres of  someone has personal  alliance manager must 
recommendation and  they came from, what  the importance of the 
executives in their own  influence, which is  gravitas—you have to  first focus on 
ask for an action. Heal  their goals are, how  alliance manager’s 
companies. Heal added  tricky in a company  look at the person’s  understanding and 
described the  much knowledge they  ability to influence 
that the alliance  made up of several  body language and  influencing his or her 
importance of  have of the subject  others. 
manager has to  merged companies demeanor when you  own company rather 
understanding and  matter, etc. 
approach meetings  meet with them. than the alliance 
tapping into spheres of 
with senior executives  partner.
influence
October 2002
The legal contract had not yet been finalized. Least pressure from the top, because Fiorina and Chambers wanted to increase the 
impact of the strategic alliance 

The contract consisted of a master agreement and sub­agreements for each of the six initiatives such as Optical Technologies, Storage, 
Utility Data Centre, Mobility/ Wireless Infrastructure, IP Telephony, Service and Network Management

Value propositions have gotten cloudier­ time has passed since they first began working on the agreement, people with whom they 
negotiated have changed and some BUs have changed their strategies

Cisco being the conservative company when compared to its counterpart HP and hence the framing of the document has been carefully 
devised

Both the Strategic alliances teams of HP and Cisco wanted the strategic alliance to move forward

HP is aware that the market position of the new HP in the systems integration market is very important

Cisco believed there might be significant new opportunities for the two companies to extend collaboration in areas such as OpenView 
and UDC (Utility Data Center solution) OpenView was used to optimize Web sites by tracking customer activity. 

Both the alliance teams are looking forward to move ahead in January, 2003 and hence focusing to accomplish the necessary activities 
by then