 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 organization’s 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 group—which included 1,400
Cisco-trained specialists—was 65,000 employees strong, comprising half of HP’s 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 company’s 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.
Cisco’s newer offerings included IP telephony,2 Internet network services, optical networking,
and network management software. Cisco’s 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 company’s sales, with services bringing in about 17% of revenues in fiscal
2002.
Cisco had approximately 10,000 employees involved with sales accounts—including account
managers, systems engineers, and operational support staff—with 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 HP’s global alliances , Russell joined HP’s 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 HP’s 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 Cisco’s strategic alliances group, Steinhilber joined Cisco in
1999 as head of Cisco’s wireless alliances team before moving into his current role in 2000.
Prior to Cisco, Steinhilber—a 1980 graduate of Harvard Business School—worked 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 benefit—or perhaps was even detrimental to—a
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 materials—required 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 company’s 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 services—perhaps with another partner— that competed with HP, or
when HP was selling a product (their own or someone else’s) 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