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Merritt: HPE Created More Partner Opportunity By Spinning Off Enterprise Services Business

Michael Novinson

A Hewlett Packard executive said that spinning off the company's Enterprise Services business will allow HPE to tighten bonds with companies like Accenture and Deloitte.

Systems integrators based in India and beyond are now much more willing to work with HPE since the company will no longer have a competing, $18.87 billion managed services arm, said Jim Merritt, SVP of HPE's North American Enterprise Group.

HPE Enterprise Services, No. 3 on the CRN Solution Provider 500, and CSC, No. 8 on the SP 500, are slated to close a merger April 3 that will create DXC Technology.

[RELATED: DXC Technology's Corporate Structure: Here Are 116 Emerging Department Leaders For The New CSC-HPE Enterprise Services]

"Since we have spun out our ES [Enterprise Services] business, the tie-in with partners is even more critical as we want to deliver integrated, seamless solutions," Merritt told nearly 500 Synnex conference attendees Monday. "So that offers all of you out there a huge opportunity."

As a result, HPE is doubling down on parts of the channel where it wants to build market share, such as state and local government, and small and midsized businesses, Merritt said during the Varnex 2017 Spring Conference in Austin.

Despite being very fragmented, Merritt said the SMB market is HPE's most profitable.

"Too often, we focus on the whales and the tuna, but the SMB makes us a huge volume of what we do," said Darren Basch, director of marketing and channel management at DH Wireless Solutions, a Battle Creek, Mich.-based Synnex partner.

HPE's Merritt said his company intends to invest a lot in its SMB business and offer channel partners significant incentives.

"It's critical for us to grow and to win," Merritt said. "Our market share in small and medium business is low, so it's a huge opportunity for Hewlett Packard Enterprise."

HPE has joined its federal business with its state, local and education practices to create a complete public sector business unit. Merritt said this would enable HPE's state and local government teams to leverage more resources and talent.

Other markets HPE's North American Enterprise Group plans to target, Merritt said, include net new accounts, telecom and financial services industry players, and smaller Tier 2 and Tier 3 service providers.

"That [the Tier 2 and Tier 3 business] is growing very rapidly, and we are doing very well in a focused position against those accounts," Merritt said.

HPE is also doing well very selling through Synnex, which Merritt said continues to be its largest distributor in the United States.

HPE sales sourced through Synnex grew by 5.4 percent in HPE's 2016 fiscal year, Merritt said, driven by a more than 30 percent jump in storage revenue and a 20 percent increase in services revenue.

Synnex was also named Aruba's 2016 Distributor of the Year, Merritt said.

Synnex partners like DH Wireless' Basch said they were happy to hear about HPE's plans to dedicate more resources to vertical markets.

Another partner, Infratactix, plans to leverage HPE's capability to expand into the mid-market and small enterprise space and grow its annual revenue from $600,000 in 2016 to $1.7 million in 2017, according to its president and CEO Stuart Selbst.

Selbst said that HPE provides good products and support, and the Madison, Wis.-based company has been successful in selling HPE services into vertical markets such as biotech, health care and construction.

"HPE is just a big, monster company," Selbst said.

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