HP Can’t Pay Its Salespeople – Another CIO Failure?

by drjim on September 14, 2009

HP's Sales People Have Not Been Getting Paid On Time <p> <div xmlns:cc="http://creativecommons.org/ns#" about="http://www.flickr.com/photos/pixieclipx/308927905/"><a rel="cc:attributionURL" href=Being a salesperson is a hard job. More often than not they live from quarter to quarter and if you don’t make your numbers, then you end up getting shown to the door. Hewlett-Packard is a huge IT products and services company that lives and dies by the actions of its sales teams. Making sure that the sales teams get paid should be a simple task right? Think again…

The Problem With Pay At HP

HP’s CIO Randy Mott has a problem on his hands. Within HP, payments for the HP’s business-technology group sales teams are handled by a software application called Omega (which is sorta funny when you think about the fact that Omega is the last letter in the Greek alphabet – it sure doesn’t seem to have the last word on calculating pay).

Omega has been around for a long time. It was born back at Digital Equipment Corporation (anyone remember DEC?), got picked up and used by Compaq Computer Corporation, and then finally found its way into HP. It must either be a well designed program to have had that long of a life or else it’s so dang complex that nobody is willing to tinker with it.

The problem with Omega is that it is struggling to deal with HP’s growing amounts of sales data. It was never originally designed to deal with this much volume. What’s happening is that Omega is now malfunctioning. Some HP salespersons are not getting paid on time – they are ending up waiting up to seven months to get paid!

Fixing The Omega Problem

HP is aware of the problem and they’ve tried unsuccessfully to fix it. As a stopgap measure, HP has been automatically paying its salespeople 60% – 70% of what they should be getting for meeting their sales quotas. One suspects that this is being done in order to allow employees to meet house payments and keep food on the table.

In the past HP has tried to fix Omega by adding new software that was intended to smooth out the flow of sales data. However, back in November of 2008 when HP closed its books for the year, they discovered that some of the data in Omega was both incorrect and incomplete. Clearly the band-aid approach to dealing with the problem had not worked.

What Should HP Do?

The Wall Street Journal is reporting that at a HP sales meeting in 2008, one of HP’s senior vice presidents of sales, Randy Runk, got up on stage and promised the sales teams that they would all be paid on time. Clearly that is not happening.

As CIO, Randy Mott (are all HP senior executives named Randy?) is responsible for fixing this problem – he’s already let it go on for far too long. Let’s say what HP is clearly not willing to say themselves: Omega’s time has come and gone and it must be replaced.

Mott needs to do two things immediately: he needs to campaign to have all HP sales reps who’s compensation is handled by Omega to be automatically paid at the level that they would be if they met their sales quotas. This should continue until the Omega issue is resolved. Any bonus will be calculated and paid with interest once the Omega issue has been resolved. Doing this will calm the sales forces and prevent them from leaving en-mass.

Next, Mott needs to start building a new replacement system for Omega. Why this has not been started already is beyond me. You would think that when HP took a look at the 6,500 that they were using and decided to slim it down to just a mere 1,500 systems, that Omega replacement would have been identified as being a high priority.

Based on the age of the Omega application, I’m willing to bet that its a single monolithic solution. Clearly a modular design is called for. I’m also willing to bet that HP doesn’t have a clear idea of all of the things that Omega does. No problem, if Mott and his IT team sits down with HP’s finance team they can come up with system requirements that may be much simpler than the twisted requirements that Omega now implements.

Final Thoughts

Randy Mott has been doing some amazing things at HP. However, somehow the way that he’s been prioritizing what his IT teams need to be working on skipped over the Omega problem. Clearly the prioritization of IT projects needs to be re-looked at.

Mott needs to take immediate steps to resolve the problems that this IT issue has created and then he needs to fix the problem once and for all by creating a replacement solution for the out-of-date and overworked Omega system. If he can do this quickly, then he will have found a way to apply IT to enable the rest of the company to grow quicker, move faster, and do more.

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What We’ll Be Talking About Next Time

Innovation, innovation, innovation – everyone wants it, but nobody seems know know how to get and keep it. CIOs are under a lot of pressure to do more with less these days and being able to nurture an environment of innovation sure would help. The trick is HOW to do this…

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