HPE’s Simon Ewington: ‘There Will Be Opportunities For AI With All Of Our Partner Community’
HPE Worldwide Channel and Ecosystem Leader Simon Ewington says the company has a “broad” AI channel strategy that will lead to opportunities for all of HPE’s partners.
Hewlett Packard Enterprise Worldwide Channel and Ecosystem Leader Simon Ewington says the company has a “broad” AI channel strategy that will lead to opportunities for all of HPE’s partners.
HPE, in fact, is putting in place an HPE Partner Ready Vantage AI ecosystem strategy that is designed to take partners from AI “opportunity” to AI “reality” in what is a $160 billion partner opportunity by 2028, said Ewington.
“There will be opportunities for AI with all of our partner community irrespective of the skills and capabilities they have today or where they are on their own AI journey,” said Ewington.
To that point, HPE’s GreenLake cloud service is an ideal platform for AI solutions, said HPE Vice President of Worldwide Partner Programs and Operations Jesse Chavez. He believes that a majority of HPE’s AI solutions will be on increasingly popular HPE GreenLake pay-per-use platform.
“People really don't know what the demand is going to be within their own enterprise environments and businesses,” he said. “So they want the flexibility of being able to start small and grow big. GreenLake is absolutely designed for that. So I think GreenLake is a great fit for AI as we go forward. And just my prediction is that a majority of the AI implementations will be on GreenLake.”
HPE has a “two-pronged” AI attack plan: a “broad play” that makes HPE the “natural” vendor for Nvidia based AI solutions with a strong Gen11 server refresh opportunity for partners and a “more focused, specialized” AI pilot program.
Ewington said HPE’s Partner Ready Vantage program – which is building competencies for AI, high performance computing, sustainability and sovereignty- is a trailblazing program that sets the stage for partners to drive AI sales growth.
“We've demonstrated that we not only continue to be a technology innovator but also a business model innovator,” said Ewington. “And we're a program innovator with Partner Ready Vantage. And we will do the same as we help partners to turn this AI opportunity into AI reality in the coming 12 months. That's our mantra!”
What is the overall framework of the partner strategy and the results so far this year through partners?
The three key pillars of our strategy are innovation, profitability, and a best-in-class experience. And I'm going to talk through each of those and I'm going to give you some specific proof points of the progress that we've actually made.
So when we talk about innovation the first is driving business model innovation and evolution. So essentially that is around you our as-a-service strategy. What we're looking to do is essentially three things. The first one is to help our traditional partners to move to an as a service business But we've always said that we want them to transition at their own pace.
The second thing we are trying to do is attract new partner archetypes. So these are mainly CSPs and MSPs. And we're trying to do that through the capabilities on the HPE GreenLake cloud services platform.
And then the third area we're trying to focus is trying to help some of our traditional partners to develop new partner personas. So basically moving to being more service providers, and that's where Partner Ready Vantage comes really into play.
There is two other things that we're doing and then I'm going to give you some stats. The first one is around repeatability. If you remember we wanted to drive more partners to doing multiple HPE GreenLake deals and we even baked that into our compensation changes for FY 24. And in order to enable that we've also been running workshops with partners, to really look at how we transform their business, and we've got some really nice proof points.
Partners who've gone through those workshops drive a much better business outcome for their as a service business than those who have not. So to give you a good example. When we have partners who go through a transformation workshop they on average close deals with a 90 percent higher total contract value for as a service deals and they have 60 percent higher repeatability, which is fantastic! That is absolutely aligned to what we're trying to drive with our HP GreenLake business.
I'm absolutely thrilled with the continued strength and performance with our HPE GreenLake business! In Q1 we were up 42 percent year over year.
And while I can't share specifics on Q2, I would say that I'm very happy with the progress we've made in Q2 as well. In fact, (the channel) continues to be one of the best performing parts of our business in FY 24.
The other thing that we focused on is around repeatability. And we set ourselves some goals this year in terms of the number of partners that we wanted to drive more than five deals in a year. We met that target already in the first half.
So we're making really good progress. In fact, our partners are doing an amazing job of continuing to drive that as a service evolution and driving you know repeatability of deals.
So the 42 percent in Q1 is GreenLake deals?
Yes, HPE GreenLake deals up 42 percent year over year.
What percentage of those deals were IaaS/PaaS deals versus Flex deals?
The majority is still Flex deals because obviously there's a sales cycle that you know that we need to go through and obviously we're transitioning from Flex to more platform based offers.
So the majority is still Flex. However, we're also driving more standardization even with our Flex Solutions deals. So we've got more template based type deals.
We're even trying to make sure that there's less customization because it just speeds up the quote time. So that's been a big, big area of focus for us in the first half: driving repeatability just through simplifying our offerings.
What are you seeing in terms of GreenLake versus Dell Apex in terms of growth, simplicity and repeatability?
I'm super happy with the progress that we've made. As you say, we launched HPE GreenLake a number of years ago. To steal drive a 42 percent growth year over year on what is a substantial business now, within our partner community is fantastic!
If you look at FY 23, we drove over a billion dollars of as-a-service contracts through our partner community. A billion dollars! We had our Q1 performance driving 42 percent growth on a maturing business because it's now a significant business, I think demonstrates the progress we've made, and the maturity we have with our offering.
The fact is that our partner community is maturing and driving more and more HP GreenLake deals. I think it's been a fantastic success! I think partners are realizing as well the margin opportunity, not only from selling HPE Greenlake solutions per se, but the massive opportunity they have from embedding their services around an HPE GreenLake opportunity which has always been the focus of HPE Partner Ready Vantage!
The opportunity is more in the service the partners add to an HPE GreenLake opportunity than in selling GreenLake by itself. And we're seeing that now. In fact, we will publish at Discover a third-party piece of research that backs up the scale of the margin opportunity that's being realized by partners through HPE Partner Ready Vantage.
How do you feel about how you’re performing against Dell in terms of channel compensation and what is the HPE channel advantage versus Dell Apex?
Overall, we're very happy with the progress that we’re making. And Dell pays differently. The compensation schemes are different. Dell offers an upfront pricing. We offer a rebate with a very, very clear structure that we launched on the first of November.
I'd say that our momentum in the channel is fantastic! I think the maturity of our offering and of our platform is first class in the industry. And I think that is being demonstrated with the results that we're showing up with our partners. And the fact that we now have already this year hit our goal for number of partners who have sold five or more deals, which is absolutely fantastic.
Any other details on the number of partners who have sold five or more deals?
What I can tell you is the number of partners last year that sold multiple HPE GreenLake deals was in the hundreds. And I'm not going to share the exact target we set ourselves for the full year. But we are obviously thrilled with the fact that we've met that goal only six months into our financial year. And having partners who are selling more than five deals is absolutely fantastic. That shows our momentum. The sales cycles are accelerating because we are simplifying the sales process. We're making it easier to quote. We're making it easier to contract and that's turning up in our results!
What is the average time to quote and sales cycles on the GreenLake deals at this point?
I can’t give you a specific in terms of the sales cycle. But given the repeatability is improving so much it would naturally indicate the sales cycles are shortening because we're improving the processes around them.
So contracting is a great example. So we launched what we termed as our Fast 2.0 contracting process, which has now rolled out I think we've rolled out globally.
We launched English language first and then we've launched into local markets. And that is a simplified contracting process with one set of T’s and C’s across all of our as-a-service offerings. I mean that's radically simplified the whole process of getting a customer from decision in principle to decision in ink.
So you know, that I think is making a huge difference! Also the changes we've made in terms of sort of pre-populated templates for quoting has also dramatically reduced the quoting time experience from what was days before is now down to hours just because we're standardizing so that makes a huge difference for our partner community.
Any details on how many partners have gone through the transformation workshops with GreenLake in the last six months?
The great thing about when you run something like a transformation workshop is you want proof in terms of demonstrable business results. And those two figures I gave you before - partners have been through a transformation workshop have 90 percent higher TCV (total contract value) and more than 60 percent repeatability improvement just shows you that the process actually works.
Are you seeing any AI deal wins in the GreenLake wins with the numbers are you seeing?
There are going to be some announcements coming up at HPE Discover specifically about our HPE GreenLake for AI offerings.
How big is the AI opportunity and do you think you have an AI first mover advantage with the Partner Ready Vantage AI Competency?
I think it's well stated that the opportunity for partners is estimated to be about $160 billion by 2028. So it’s big.
I think the challenge that partners have is how do they go from opportunity to reality in AI. That's what we are trying to do and how we will differentiate ourselves in the market: helping partners on that journey to first understand where they are today In their AI journey; what are the skills that they have; where do they want to get to and then helping them to build a plan to get there which is exactly what we did with (the) Zenith program for HPE Greenlake. Part of that is clearly going to be an expansion of our competencies as part of Partner Ready Vantage.
We obviously launched HPE Partner Ready Vantage across the full portfolio. We announced it last June at HPE Discover. We launched officially across the full portfolio. Aruba started 12 months before but we started (officially) on the first of November (with HPE Partner Ready Vantage).
This is a natural evolution of adding new areas of competency for our partners to demonstrate that they're competent and capable in the market and that we can drive customers to those partners based on the competencies that they hold.
So it's a natural evolution. And I think we'll differentiate ourselves in the market by really helping partners by helping to take partners on that (AI) journey, and really show them the way, show them the light when it comes to the AI opportunity.
And we are doing great! I think (HPE CEO) Antonio (Neri) said in our Q1 earnings or just after that we had about $4 billion of AI orders already in 2024. We had about a $3 billion backlog for AI. That was up about $500 million from the previous quarter.
About 25 percent of all our server orders now are related to AI workloads. So I think we are doing a great job on capitalizing on the opportunity. What we now need to do is make it easy for partners to move from AI opportunity to AI reality.
We have got a two-pronged attack when it comes to AI.
The first is very broad-based. Clearly, AI is a massive opportunity for all of the partner community. And that's a broad play and we want to make sure that we are viewed as the natural partner, the natural vendor for Nvidia based solutions. So that when partners are thinking of Nvidia based solutions they're thinking HPE. That we are the fries to Nvidia’s burger.
You’ll hear much more announcements from (HPE CEO) Antonio (Neri) and (Nvidia CEO) Jensen (Huang) at HPE Discover in June.
The second prong is a much more focused specialized program which (HPE Worldwide Vice President Partner Programs and Operations) Jesse (Chavez) has just just referred to. So there's an AI program where we're really looking at identifying partners who have got either the capabilities todayor who can develop those capabilities to really drive deep specialization in AI.\
Not every partner will be able to do that. But there will be opportunities for AI with all of our partner community irrespective of the skills and capabilities they have today or where they are on their own AI journey.
Where are you with the Nvidia partnership and how you see that playing out? How big an advantage do you have when you look at what HPE is doing channel and technology wise versus Dell?
I can't say too much because a lot of this is lined up with HPE Discover and you're gonna see some pretty fundamental announcements about our relationship and our partnership with Nvidia.
What I would say is that where HPE has traditionally been very different is we're an engineering company. We engineer. We drive unique solutions into the market. And with our relationship with Nvidia we want to do the same. We want to be unique. We want to add value for our customers and our partners by engineering AI solutions that drive business outcomes for our customers and our partners.
HPE led in as a service and invested a lot of money to get partners to cross that chasm. What kind of investment is HPE making to get partners to from opportunity to reality?
I think we’ve done a really good job with HP Partner Ready Vantage, which now allows us to leverage that experience with AI.
Partners see the opportunity. So we've allowed partners to wrap their own services around our solutions. We've opened up our kimono. We give them access to our IP, our tools, our methodologies, and we've said, ‘We want you to grow your services practices!’ And we've done that because we genuinely believe that we will be much more attractive as a vendor, as a partner for our channel to work with If we show them we want to grow their services business. And the same applies to AI.
We want to develop our partner community so that they can wrap their services around AI solutions. So it's a natural progression of what we've already brought to market in the last couple of years.
What kind of other opportunities do you see out there right now for partners?
One of the big opportunities we have right now, which I think is often overlooked with all of the noise around AI and the opportunity for the channel, is around technology refreshes. And we have a massive opportunity right now today for our partner community in refreshing old technology with new Gen11 server technology. And you mentioned about sustainability, a huge sustainability, messaging and improvement on moving to Gen11.
We have about 400,000 just HPE servers that are ripe for a technology refresh. We really want to make sure that the partners understand the opportunity they have there to drive profitable growth through that program. So we all are always talking about innovation and the great exciting things we do with as a service and with AI, but let's not forget the bread and butter business which is massive opportunities right now to drive technology refresh opportunities, and to reinforce our sustainability credentials by having more efficient, less power hungry IT technology within the data center.
How big is that sustainability advantage between Gen11 and earlier versions of technology?
It's a no brainer. If I remember rightly you can consolidate 11 Gen8 servers to one Gen 11 server. Eleven to one!!! I mean that is just hugely compelling, and it's an opportunity for all of our partners and our customers to drive technology refresh and drive more sustainable outcomes for our customers. A fantastic opportunity.
How big is the storage refresh opportunity with HPE Alletra?
We have a massive installed base refresh opportunity, which again is linked to innovation and sustainability for our primary storage platforms.
Think 3Par. Think Nimble. Think Primera. We’re actually working with a tool we have to identify all of those installed based installations, the majority of which were originally sold by our partners.
Through this tool it does automated sizing, configuration, quoting and comes up with an automated customer proposal to refresh that technology. And there's a huge push right now from HPE to enable our partner community to take advantage of that massive installed base refresh opportunity on storage as well.
We have an embarrassment of riches for partners from new technology areas around moving to as a service and AI to some of the more traditional tech refresh opportunities which are really compelling right now.
You have new product specialists working with partners in storage and compute. Are you measuring that and what are you seeing there in terms of joint engagement with HPE?
It is still relatively early on this shift towards specialization. Just to remind you we added 167 compute specialists globally. Before Fiscal Year 2024 we had no compute specialists. We had more of a generalist model. And we doubled the number of storage specialists we had in the market working with partners. We added another 66 from memory globally. And their job is to help partners to hunt and win in the market. And what partners tell us is we're showing up more often! We’re more visible! We're hungrier! And we're bringing opportunities for them to win in the market!
The opportunities we talked about around server refresh and also around automatic generation of configuration, quoting and customer proposals around storage are two great examples of how we're enabling the partner community through this shift to specialization. It was the right move at the right time for our industry and for HPE as a company.
Partner Ready Vantage is a breakthrough program. Not everyone has made that investment. Do you think the AI opportunity will accelerate the move of partners into HPE Partner Ready Vantage?
We were trailblazers when it came to HPE Partner Ready Vantage, allowing partners to really develop their own services practices, which is where we all know the margin is! (For us) being really the first vendor to do that, I think we've done the heavy lifting.
I think the heavy lifting was done when we innovated with HPE Partner Ready Vantage. The opportunity we now have with AI is essentially leveraging that program that we put together, that Jesse and the team built and leveraging it for the AI opportunity.
Again it is all about services and developing services practices around AI. And we plan to enable our partners to capitalize on that opportunity, to turn that opportunity into reality as I mentioned earlier.
What are the advantages of the GreenLake AI service in an opex model with GreenLake?
I just think that we've demonstrated that we not only continue to be a technology innovator but also a business model innovator. And we're a program innovator with Partner Ready Vantage. And we will do the same as we help partners to turn this AI opportunity into AI reality in the coming 12 months. That's our mantra!