CRN Exclusive: HPE EVP Antonio Neri On The Enterprise Services Spin-Off, DXC, Dell, And Why Aruba Is Beating Cisco

Neri On HPE's Software Defined-Intelligent Edge Future

Hewlett Packard Enterprise Executive Vice President Antonio Neri, the principal architect of company's hybrid IT buildout, spoke with CRN ahead of HPE Discover about the company's software-defined data center strategy, and how HPE stacks up against Cisco and Dell EMC.

Neri, a 22-year HPE veteran who said he feels "liberated" by the structure of the new HPE, says the speed at which the company is moving has been particularly pronounced in the time to close acquisitions like the SimpliVity deal – start to finish in just four weeks -- and the Nimble dea -- start to finish in just five weeks,

Now is the time for HPE and its partners to execute, said Neri. "I always say no good deed goes unpunished," he said. "It is true. Before, we were part of a bigger organization, there were a lot of moving parts. … There is a saying, 'With power comes responsibility.' This is a very interesting time. Now we have a clear vision. We have a clear strategy. And we have an operating model that simplifies things for us to go execute."

What is the difference between the HPE of today versus a year ago?

We just completed the ES [Enterprise Services] separation (the HPE spin-off of a $20 billion business with more than 100,000 employees). Our message to the market is we wanted to be more focused, nimble and agile.

Enterprise Services, which was perceived as a competitor for our channel partners, is actually no longer inside Hewlett Packard Enterprise. That was done well. It was done on time. They created their own company called DXC.

I have to tell you since then whether it is channel partners or system integrators, they are all very much open and enthusiastic about working with us and expanding what we are doing. Our strategy has been very consistent since last year when we spoke at the industry analyst event. We help customers implement the right hybrid IT solutions in the context of the transformation journey they are going through, which is at the core of their applications and data, so we make hybrid IT simple. We help them power the intelligent edge, which is a critical growth area for us and our channel partners as well.

How has the Enterprise Services spin-off and the creation of DXC impacted HPE and its partners?

When it comes down to sales execution, when you are part of a bigger company, you have to drive your business for the greater good of HPE. In that case, obviously, we were collaborating very closely with ES because in many accounts we worked together there. Now we are able to create a bigger market for ourselves. Because while we have a very important relationship with DXC, I can tell you a lot of channel partners and new SIs are coming to us because they want access to our technology and services. That has allowed us now to move fast in areas where in the past we were perceived as much more conflicted.

How big is the intelligent edge Internet of Things opportunity?

If you believe a lot of the data is generated at the edge and will stay at the edge, that really opens up new horizons for both of us – the partners and HPE -- to really capture a significant growth opportunity, which is nascent: next-generation campus and mobility solutions and industrial IoT. We have the capabilities and assets to deliver in a solution-driven approach through our channel partners and strategic partnerships.

Last on the list it is all about services: how we help customers connect the edge to the core, the core to the cloud, an application and data-centric approach. Ultimately, customers need help. This is where the channel partners' services capabilities with our own capabilities can really complement each other to help make it all happen for our customers.

What is HPE's acquisition strategy?

We do acquisitions based on return on invested capital. You can see what we have done. Every acquisition we have done is at the core of our strategy, whether it is SimpliVity or Nimble or SGI or some of the interesting ones that allow us to deliver that simplicity and experience [or] it is Cloud Cruiser or Niara or Rasa Networks. They all center around our strategy. Our first approach is to invest organically in things like Synergy, hyper-converged together now with SimpliVity, Apollo high-performance compute or the hybrid IT software-defined aspect of this.

Obviously, when it makes sense we will make the right acquisitions. So we will continue to look at those, but I want to be clear it is not grow by buying companies. We see if it makes sense and if it enhances or accelerates our strategy, that is what we are going to do.

Getting smaller gives us focus and simplicity and gives us a better purpose and allows us to innovate faster and then we use our capital where it makes sense.

What is the strategic partnership strategy?

We have also struck strategic partnerships which you are familiar with: Mesosphere, Docker, Scality, Chef and the ecosystem of solutions in this new world, which is all software-defined [and] which customers need. But they need it in an integrated solution and experience – not as a bag of technology that they have to put together.

What is the difference between the HPE of 22 years ago when you started with the company and today?

I have had the honor and the pleasure to work in every business of that journey – the PC business, the printer business, the infrastructure business and the services business.

Getting mind share in a large organization like that it was clearly difficult. Ultimately, we had to deal with seven lines of business in 170 countries and compete pretty much everywhere with everybody.

Now actually everything we talk about is my [Enterprise Group) business. The company is the business I run. That gives us a better quality of dialogue. It gives us the ability to move faster on decision-making and allows us to have conversations around where to invest our capital. It allows us to have simplicity in the way we drive business through the channel because we are very, very focused. It allows us to actually do a better job of enabling our sales force, including the channel. We have fewer messages, go deeper in the way we deliver them, and the quality of our work actually will improve over time.

How does it feel now that you are running what has become the singular business for HPE?

For me after 22 years being here it is actually very refreshing to have one thing to focus on -- it just happens to be the business I run,m which makes it even more fun.

I have to say just the time management and the focus you can bring to that conversation is unbelievable. If you talk to Meg [Whitman, HPE's CEO] she will say all the time we spent today is about one business.

When we talk, every meeting is about our business. It is much easier to really do it that way rather than talk about PCs in one moment and then move onto a large IT outsourcing business and then a high-performance compute business.

We have to execute now, but I am very confident with where we stand. Even in the function side of the organization whether it is HR, legal or finance or the back-end operations – they are all focused on making our business better -- which overall translates into a better experience for our partners because in the end we can be much more agile in reacting to the channel and customer needs.

Do you have some specific examples of how much faster HPE is moving with the business?

Look at the integration of the companies we have acquired. Look at the time when we announced these deals and when we closed the deals.

We announced the SimpliVity deal on Jan. 17 and by Feb. 20 we had the deal closed. That is five weeks. That is super fast. Why? Because we had the mindset of legal, HR and finance -- and the IT organization – to focus on that acquisition instead of doing 100 different things.

The same thing with Nimble. I announced that acquisition on March 7 and we closed it on April 17.

The speed of how we have been executing is fairly amazing to me. And, by the way, getting that message down into the field to our channel partners with the quality of the positioning of the products and what they need to do [to start selling] was also done very, very quickly. That's because our sales force is only focused on that -- making sure we are creating value – in a way that we probably would not have been able to do before.

How has the structure impacted how fast you can move with the software-defined data center-cloud product strategy?

In the old construct, we had a software business that had assets, we had a cloud business that had assets and an infrastructure business that had assets. Bringing the three together in an operating model where people had a say in the way to do things, it was time-consuming. In this new world I only have one guy responsible for that – Ric Lewis (HPE senior vice president, general manager of Software Defined-Cloud Group). Ric Lewis and I make the decision. That alone simplifies things. When you have no people in the way, it actually makes things much easier.

Ric and I – with the input from the rest of the team -- make the decision. But Ric is the owner. He is the accountable person because all assets around software-defined, infrastructure and cloud are owned by him. So he owns everything from developing the strategy to program management to R&D and engineering. He owns it all. Therefore, we can make decisions faster. That is very clearly visible.

By the way, if I am a customer or partner I now have a consistent vision of your strategy and your road map as opposed to what are you doing with this product, what are you doing with that product. We have simplified dramatically. And we are just at the beginning here. Things are going to get better over time.

How long would it have taken to get the acquisitions like SimpliVity or Nimble done in the old HP?

It would have definitely taken longer. I don't know if it would have taken three weeks more or two months more, but definitely there would have been a capacity problem because people were supporting different entities. We may have made decisions in a way that were based on resources and availability instead of speed.

It is much simpler now. Everyone is rowing for the remaining company now. It makes it so much easier to execute.

In this case with the acquisitions we have done, and I have done seven of them now, you have to move fast, you have to be crisp on messaging and you have to be out of the gate selling it together with the rest of the portfolio.

By the way, one of the missions of the acquisitions is to deliver a clear vision for the people who are coming to HPE. Because in the end you are bringing people on this journey and you want to make sure they understand what role they will play. We have done a pretty good job of not only retaining people but giving them a clear mission with our customers and partners.

How does it feel in the new HPE sharply focused on hybrid IT and Intelligent Edge?

I feel a little bit liberated in some aspect. But I always say no good deed goes unpunished. It is true. Before, we were part of a bigger organization. There were a lot of moving parts. …There is a saying, 'With power comes responsibility.' This is a very interesting time. Now we have a clear vision. We have a clear strategy. We have an operating model that simplifies things for us to go execute. It makes everybody around the table more relevant than before. All the resources and tools and the financial architecture of this company are available to this business.

What gets you excited about coming to work at HPE every day?

As the leader of this company, we have a big responsibility not just to our customers and partners but also to our shareholders. For me what makes me excited every day is I know when I walk into the office I know this is the business we are in. I now have all the attention from the board and Meg obviously as the CEO and all the focus from the rest of the organization in this business. In the end it is all about winning. That is the opportunity we have in front of us.

At the same time we have to make a contribution. We have to create a place where people can contribute and have some fun. We want to create that environment with our heritage of innovation, which is very clear, and our heritage of the way we approach the market through our channel partners.

We have been, are and will continue to be a channel-centric company. That is the opportunity we have been granted – to deliver a great recipe to our customers and partners. That is what excites me every single day.

What is the message for partners with regard to how much margin and sales growth can be derived from teaming with HPE?

First of all, we want to make sure our partners continue to add their value, but we want them to be relevant with our joint customers – helping them deliver the right business outcomes while we deliver a solutions-centric approach. By default when you sell a solution you are talking about value not just volume, which by default means better margins for both of us. Customers are looking for help. Customers need solutions to their business problems. They don't just need technology.

We are going to continue to drive innovation at the infrastructure level. We have been an infrastructure company and we will continue to do that. That is peace of mind for customers and partners. But we are going to continue to move up the stack to deliver that software-defined and cloud experience in a hybrid IT environment or at the edge with next-generation mobile-first and cloud-first approaches including IoT in specific verticals that can be monetized in a way that partners have not been able to do before.

How has the role of the solution provider changed in the digital transformation era?

In the past we addressed IT output problems. Today and tomorrow we are going to address business outcome problems. Digital transformation is disrupting every industry. The channel and ourselves have to become even more relevant in that disruption. We have the ability to provide them and through them what they need. Those who are smart and embark on that mission will get that better outcome. To those who want to continue to sell volume, that is fine. In the end, they are going to get great products and great innovation. You will see that at Discover.

When you go to Discover you are going to see an incredible amount of innovation that I am personally proud of. At the core, I am still an engineer in many ways. In the end, you win through innovation. That is what channel partners need to know and what they should expect from us.

How much innovation is HPE bringing to the table and how disruptive is it compared to Dell EMC?

With the long-term game, you have to be differentiated in everything you do. What customers are looking for are efficient and cost-effective solutions with speed and agility to meet the demands of their constituents, whether it's internal or external.

We are leaning in harder on new technologies. We are leaning in harder on different business models, too. Remember, innovation is not just technology. It is also business models. Example: Flexible Capacity Services – how we are bringing the public cloud experience and public cloud economics with a public cloud consumption model on prem, how we give control to the CIO and the line of business where they are and where the data resides, and what is the most effective way at the service level and the cost level for them to control that.

We give them peace of mind through security and compliance and risk management. We give them the ability to create new workloads and applications and data in a way that accelerates the business results. That is what our focus is. It is not just technology for the sake of technology.

What is the difference between the HPE strategy and the Dell strategy?

If you look at Dell, they have done a consolidation play. We are doing an innovation play. They are levering up the company. We are not. We are actually creating value and differentiation and also a significant return for the shareholders. This is a totally different strategy than Dell-EMC. We want to continue to innovate. We can't be fast followers. That is not where the Hewlett Packard Enterprise DNA is.

Let me remind you of our three principle values: innovators at heart, partnership first and bias for speed. Those are the three values of Hewlett Packard Enterprise as a brand. Partnership first obviously fits perfectly in what we do for the channel.

We need to move faster even more than we are today. Our strategy and cultural values are around those three principles.

How big a differentiator has Aruba been to HPE?

Aruba has been an unbelievable addition to our portfolio. Aruba is winning and is wining big in the market and the reason why Aruba is winning big in the market is because it is focused on experiences through a set of innovation that is very, very differentiated.

Think about what Aruba does today: it provides you a mobile-first and cloud-first approach to connectivity and services through the edge. Aruba at the core is a software company. They have disagreggated the solution many, many years ago. Make no mistake, we are winning at the edge through campus, branch and mobility solutions and we are expanding that strategy into new adjacencies whether it is software-defined, wide-area network or IoT solutions in different use cases.

Aruba is unbelievable for us. I am super excited about the business and we now see new opportunities with that business. It is not just ubiquitous connectivity through wireless. Listen, we are going to have the next generation of 802.11ax. But what we are really focusing on is making the workforce more productive – how do we make the workforce more productive through connectivity and mobile apps and then wrap the services around that.

What do you think of the Cisco strategy compared to Aruba?

I think they are going through their own journey as we speak. I think they are pivoting to a different strategy than before. You can see that through their investments and in some of the M&A choices they have made. An example is AppDynamics. So clearly they have a profit pool and an installed base that they need to manage and transition over time. What I have learned is you can't be someone you are not. We have seen other examples of that in this industry.

I think they are leaping to where they have strength and where they think they can make a difference. I think over time they are going to realize there is not space for them to participate or it is not relevant to their strategy – like we have done with our enterprise services or even the mature legacy software assets we had. Let them play where they want. I am very comfortable in our ability to compete with our portfolio and with the innovation that we drive. It is going to be a slightly different play – that is for sure.

How much more innovative is HPE with the product portfolio you have assembled versus a year ago?

The portfolio is significantly more innovative. Let's talk about the transition from traditional IT to software-defined to these cloud architectures. Through the traditional side we made clear investments in pockets of growth where both our ourselves and partners see the value and where customers are actually driving demand.

Example: high-performance compute. It is a market that is growing and growing very nicely. And we have an incredible set of assets to compete with. In fact, we are already the No. 1 vendor in high-performance compute by any measure.

In that case, we decided to acquire SGI because it gave us the high-end supercomputer that we were missing before. That business is very, very good. Think about in-memory solutions with SAP HANA, SGI also added capabilities there to our very strong portfolio with our SuperDome X and our ProLiant business.

When you look at the portfolio there has been massive improvement.

What kind of disruptive impact are you seeing from rest of the portfolio?

Think about SimpliVity. This is where the next generation of software-defined architectures are coming in play. That data services for enterprise business was super critical for us. You put that with our automation and our hybrid IT orchestration and our best-in-class infrastructure. Now we have an industry-leading platform called HPE SimpliVity 380, which we are now in the process of introducing.

Composable infrastructure with Synergy is totally disrupting the way you do infrastructure going forward. If you want to provide that simplified experience on prem with public cloud economics with any type of workload, Synergy is the way to go.

Nimble adds another piece we were missing in the lower end of all-flash to that journey. Nimble is a great channel play with hyper-converged or even Synergy or as part of an all-flash story, which allows the channel to be even more relevant in these transitions customers are going through. Partners are very, very excited. It is a fantastic platform and we are taking InfoSight and are adding analytics, telemetry and machine learning around how we make that infrastructure even more effective going forward while we take advantage of the technology transitions like all-flash.

How much bigger and faster will HPE be as a result of being faster moving and more focused?

When you look at how big we are going to get, we are going through a transition. There are markets declining and there are markets growing. We are pivoting hard to the markets that are growing with full integrated solutions. That is where we want our partners to participate going forward. We have to deliver solutions for business outcomes. That is where we are uniquely positioned going forward.

I have a lot of passion for this. But we need to execute. In the end, we have to execute.

What is the services potential for partners with PointNext?

Services is a critical element of the strategy because customers need help: help me define my right mix, help me design and implement the right mix, and help me optimize that right mix all the time.

How important has it been to move quickly from acquisition to close of the deals like SimpliVity and Nimble?

Once you make your mind up, you have to move fast. That is what we are doing. And then you need to make sure the sales force is cranking and the channel partners are enabled to go sell the solutions. We treat the channel partners like they are part of our sales force. That is second to none. What is different with Dell? Dell does not have that DNA.