Programs for building affinity between a brand and a customer aren’t uncommon. Enterprise vendors have events, both large and small, that talk about technology but are often mostly focused on just getting to know customers and making them love the brand. One of the few companies that seem to get this right is EMC, which knows what its customers like and makes sure it keeps doing it. It knows what its customers hate and does what it takes to fix the aggravation.
This month, I did a number of customer reviews of HP shops that have suddenly switched to EMC solutions. I came to the conclusion that HPE has a core problem in that it doesn’t instrument its customers and it appears to have forgotten why it does things.
Whether it was VCE or XtremIO I spoke to, the decision to go to EMC was because EMC's solution was vastly better. It had to do with how EMC and HPE dealt with problems and staffed their respective efforts. Currently, HPE is heavily siloed, and I expect, due to the repeated layoffs, there is a massive effort to avoid responsibility there. So if the customer has a problem, the most common answer from HPE is that it isn’t HP’s fault so remediation is left up to the customer. EMC, on the other hand, takes ownership and resolves the problem. This is a huge difference and showcases the difference between a firm measured on customer satisfaction and a firm measured on revenue.
In addition, HP has aggressively been replacing older experienced workers with younger inexperienced workers, so much so that it is being sued for discrimination for this practice. So the other repeated complaint was that HPE people were relatively inexperienced, poorly trained and unprofessional.
Sadly, with the massive influx of hedge funds onto boards, most firms are shifting to HPE’s process and forgetting that part of the purpose of enterprise engagement is to grow the relationship because the cost of customer acquisition and replacement is so high. So, yes, you can cut costs dramatically by doing layoffs and replacing experienced expensive people with novices, but you’ll drop into a death spiral because customers will become frustrated and move to vendors that are more focused on their needs than a profit margin that forces more layoffs and cost cutting.
I’ve followed and talked about consumer “halo” products for some time. Halo products are top-line offerings that pull buyers into the brand and product line. The Samsung Galaxy Note 7 is a halo product that showcases both the promise and problem with this approach. Earlier versions of the phone brought buyers into the company's appliances and even TVs. (Granted, if the things start catching fire and blowing up, that will drive buyers away from the brand. I doubt Samsung fully understands how dangerous it is to make this problem go away.)
But this is the first time I’ve seen products in the enterprise space that seem to have halo-like capabilities. Both VCE and XtremIO from EMC have broken into HP accounts and formed the basis for expansion, showcasing not just the difference in technology but a difference in customer approach. The customer approach part is the sustaining expansion advantage.
You often see the situation where a vendor is better at customer support but it can't showcase that benefit because it can't get in the door. With a targeted halo offering at an enterprise level, EMC is successfully penetrating and then expanding its influence in HPE accounts.
I guess I should have assumed the halo approach would work for enterprises but until this I’d never seen it.
If you are an HPE account, I’m not telling you anything new, since the complaints have been pretty consistent and the kind of shops that use VCE and XtremIO do heavy testing and typically have to prove the advantages the firms I spoke to claim. I’m likely just letting a few folks know they aren’t alone and reminding you to check these halo offerings out if you haven’t already.
But one other thing occurred to me. Dell and EMC just merged, and when I asked the accounts that had mixed opinions about Dell, they indicated they were status quo. In other words, they planned to stay with HP. But this was pre-merger and before the same kind of care they were seeing with storage migrates over to servers, and HPE’s issues are tied to the firm, not to any one platform. This suggests that just as EMC has been cutting into HPE’s storage, Dell is about to do the same with servers. While I’d normally say HPE has six months to address the competitive exposure before Dell can take advantage of it, Dell closed the EMC merger with reorganization plans and staffing complete, which suggests it could happen far sooner.
I’ll check this again in a few months to see if I’m right. In the end, this not only points to the advantage of going private, since HPE’s behavior is largely the result of excess influence by stockholders like hedge funds, but also the critical need to instrument customers so you know you have exposures before your competitors do. It is clear to me that HPE is absolutely unaware that its soloed nature and employee practices are wiping out their installed base. If it did -- at least I think -- it might change its practices. If you’re driving blind and running into trees, maybe the first thing to do is fix the blind part, not push down on the accelerator harder (which I’ve seen way too many companies do).
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+.