HP- CISCO Alliance

Executive Summary

Despite HP- CISCO top management intentions and senior and middle management commitment to
renewed alliance stalemate has reached, due to lack of clearly defined ground rules, absence of
detailed plan of action, cultural disconnect in decision making and non availability explicit financial
integration plan.

Hurdles for the formal agreement between the two organizations

Change of management team

Both teams assuming that they are middleware spanning horizontally across Bus and vertically
between top management and sales forces

Alliance team asking BUS to do activities , which might be beneficial to the organizations whole but a
loss proportion to the unit

Multiple interdependencies and potential for conflicts

Incentives stopped for HP sales staff for selling Cisco products

Training needs of managers to understand both technologies

Organizational changes for persona reason of employees

Absence of dedicated sales teams

Product overlap beyond limits

Non availability of performance metrics for individual business unit initiatives

Absence of clearly defined metrics for customer requirements

Alliance team members not meting regularly for lack of interactions

Demand for high level of management skills in the absence of formal authority

Positive points

HP ands Cisco are largest and third largest companies in Silicon Valley

CEOs of both companies are willing for the synergy benefits of alliance

HP has a very strong service network with 65000 employees and Cisco has 1400 technical staff in the
services group

HP has 15000 sales representatives

HP CEO Fiorina joined the Cisco board

HP strategy is very sales driven

Cisco strategy is long term

Good financial performance of both organizations

Two alliance initiatives SWTS and HA are already successful

CISCO customer test driven

Clear understanding of the design,oragnazational structure by both HP-Cisco

Clarity on the business model and technical expertise with both HP-Cisco

Willingness of both to reorganize the structure for better focus

Clear focus of the top 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 2002, the two
companies decided to further formalize and expand their alliance by signing a contract that would outline in
greater detail both how they would work together and the strategic initiatives on which the alliance would
focus.
What is the size of the organization?
H P Founded in 1939, HP was one of the more senior Silicon Valley technology companies. The Company
had grown from a small outfit housed in a garage to a global technology and services Company that was a
leader in many areas, including printers and computers. HP formally merged with Compaq in May 2002, the
result was a company that would have had combined sales of almost $82 billion for fiscal year 2001, although
for the first three-quarters of fiscal 2002, sales were down about 13% as a result of the continuing slump in
most high-tech market and chairman of the company

is Carly Fiorina The HP services groupwhich

included 1,400 Cisco-trained specialistswas 65,000 employees strong, comprising half of HPs 130,000
employees worldwide. With sales offices in 160 countries worldwide, HP had 15,000 sales representatives.
CISCO : Founded in 1984, Cisco had enjoyed meteoric growth during the companys first 16 years. Cisco
manufactured and sold networking and communications products, providing a broad line of products for
transporting data, voice, and video over both long and short distances. Ciscos newer offerings included IP
telephony,2 Internet network services, optical networking, and network management software. Ciscos fiscal
2001 revenues were approximately $22 billion, dropping to approximately $19 billion in fiscal 2002.
CEO John Chambers led the San Jose, California-based Cisco. Routers and switches comprised about 70% of
the companys sales, with services bringing in about 17% of revenues in fiscal 2002.
Cisco had approximately 10,000 employees involved with sales accountsincluding account managers,
systems engineers, and operational support staffwith offices in 60 countries. The company employed a
total of 35,000 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, Russell joined HPs sales organization in Scotland in
1980. Russell later became general manager of sales for the computing systems group in the EMEA region. In

1996, he moved to California, subsequently heading up several HP product organizations such as technical
computing and software. Russell took over global alliances in February 2002 and Jim Heal The general
manager for the Cisco global alliance, Heal joined HP in the early 80s, first working as a sales rep on the East
Coast where he sold testing equipment and technical computers to AT&T and Bell Labs. He later moved to
the West Coast where he was HPs global account manager for Chevron, and then manager of both the
Informix and PeopleSoft alliances. Heal
has a BS from Purdue. of Hewlett-Packard, Inc. (HP)
Steve Steinhilber Vice president of Ciscos strategic alliances group, Steinhilber joined Cisco in 1999 as
head of Ciscos wireless alliances team before moving into his current role in 2000. Prior to Cisco, Steinhilber
a 1980 graduate of Harvard Business Schoolworked at AT&T and Concurrent Computer in sales and
marketing roles. He also served as a member of the executive team at two startups in ATM switching and
wireless technologies and Mike Thomas The director of the HP strategic alliance, Thomas joined the Cisco
alliances organization in 1996 as head of the IBM relationship. Next he managed multiple teams of platform
partners before being given overall responsibility for the HP alliance. Prior to joining Cisco, Thomas had
worked in sales and product management at Alcatel as well as at several startups.
Are the case actors high-level managers or middle level managers
The actors are high level managers assisted by middle level manger who are supposed to help them in
framing the formal alliance documents for better coordination and execution
Step 2 and step 3
Review the case and make notes
What do you know about the organization?
HP and CISCO largest and third are in alliance for more than five years by now. They have also achieved
synergetic benefits. However both the parties believe that they are not able to capitalize on their full
strengths. The also believe that more formal agreements in the form of contract would benefit the alliance
and they can further improve the business and increase the profitability.

What do you suspect, at this point in time, is the issue that arises in the case?

Change of Management team the

Both the HP and Cisco alliance teams think of themselves as company middleware.

The primary responsibility for the management of the alliance fell on an alliance manager.

Alliance managers asking BUs to do something that, while benefiting the company as a
whole, did not benefitor perhaps was even detrimental toa particular BU.

why should we care about another company HP sales persons selling cisco products which
was not digested by HP

High skill level requirements for the In technology for the joint product development.

Development of joint marketing materialsrequired a sound understanding of both

partners technical capabilities.

The location of the alliance teams in their respective organizations had changed over time
in both companies.

No dedicated alliance sales force.

Alliance teams were pushing to change some of the alliance-related processes. The The
alliance team also had to be committed, which meant being held accountable to certain
metrics

Need for central strategic alliances group than by a BU.

Product/service overlap.

No monitoring of performance with appropriate metrics

Both the HP and Cisco alliance teams agreed that developing a joint business plan and
metrics were critical to the success of any strategic alliance.

no formal authority over either companys executives or sales personnel for alliance

Non availability of

compelling business plan which is important when dealing with BU

heads to address their perceptions with facts, since BU buy-in is critical.

Ineffective sales compensation plan for the sales force

Sales situations that commonly led to disagreements included when a Cisco team was
selling servicesperhaps with another partner that competed with HP, or when HP was
selling a product (their own or someone elses) that competed with Cisco.

What does the customer want? is not clearly defined

When field issues escalate, no procedure in place to sort out.
Sales engagement model needed to be specified for each target market and included in any
formal contract.

HP and Cisco alliance teams did not meet in person on a regular basis, although once every
two weeks the two teams had an hour-long conference call to discuss channel issues.

Governance processes not properly defined.

The business concept in alliance with clear metrics missing.

No formal authority for alliance team members.

Low trust levels among alliance members. .

Incomplete Understanding and influencing his or her own company by alliance members.

Two sides not agreeing on basic business terms.

Considerable time has passed since they began working on the agreement.

People involved in negotiations have changed, and in others, BUs have changed their
strategies.

Cultural disconnect among the alliance members in decision making

Both sides were frustrated in October.

Both CEOs Fiorina and Chambers scheduled for meeting in January,2003

Pressure of the top management on both sides