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HPE CEO Antonio Neri: Next Initiative Will Transform Partner 'Quote To Cash' Supply Chain

The second phase of the ambitious Next initiative to rearchitect HPE is going to reduce the number of touch points in the sales process -- a critical factor in getting price quotes to customers and closing deals faster -- by an order of magnitude from 1,000 to just 100, said Hewlett Packard Enterprise CEO Antonio Neri.

Hewlett Packard Enterprise CEO Antonio Neri told security analysts Wednesday that the company is ramping up its Next initiative to rearchitect the company with game-changing improvements in the "quote to cash" supply chain for HPE partners.

The second phase of the ambitious Next initiative is going to reduce the number of touch points in the sales process -- a critical factor in getting price quotes to customers on complex solutions and closing deals faster -- by an order of magnitude from 1,000 to just 100, said Neri.

"Today, a transaction takes roughly 1,000 touch points across our processes from the time you log the opportunity into all the way to building a quote, pricing, putting a PO (purchase order) in the system, shifting it to the supply chain and shipping the product," said Neri, who is the chief architect of the game-changing Next initiative. "Tomorrow when we are done we are only going to have 100 steps in that process."

Neri said the the "quote to cash" supply chain changes - which will directly impact the channel and direct sales force - will be implemented beginning next March and roll out through 2020. "Our approach is not a big bang," he said. "We are going to take a number of countries each quarter and revenue percentages and flip them over time. The reality is this we will be done sometime in the middle of 2020."

The dramatic improvements come with HPE moving from 10 Enterprise Resource Planning (ERP) systems to a single global Enterprise Resource Planning (ERP) system. "That allows us to consolidate inventory and do better planning with more accuracy," said Neri.

HPE is also moving to a single e-commerce platform that will speed up the quote to cash and delivery of volume sales on products like Proliant Gen10 servers. "There is a big opportunity for us there," said Neri. "Today we are not as efficient as we could be in that market."

In addition, Neri said, the supply chain changes will open the door for real time, dynamic configuration in the enterprise market.

HPE solution providers said the supply chain changes are a channel game changer that they expect will accelerate HPE sales growth and increase partner profitability and customer satisfaction.

Paul Cohen, vice president of sales for New York-based PKA Technologies Inc., an HPE Platinum partner and the inaugural HPE SLED (State Local Education) Platinum partner, said the "quote to cash" supply chain changes are a "huge" game changer for partners.

"One of the key components that differentiates us versus the competition is speed to market with quote to cash," said Cohen, a 20-year channel sales veteran. "This will incredibly speed up that process and separate us from the competition."

Cohen credited Neri for responding to partner calls for improvements in quote to cash. "Antonio heard the call to action and has stepped up and put this in place," he said. "This positions us to be incredibly successful going forward."

Michael Lomonaco, director of marketing and communications for Grand Rapids, Michigan-based OST, one of HPE's top enterprise partners, said the ambitious supply chain initiative is driving the HPE partnership to the next level.

"From a partner perspective, the more efficient, agile and nimble the HPE processes are the more effective we can be selling HPE solutions to our customers," said Lomonaco. "Making that sales process easier is critical. That ease of doing business is what customers expect in an age of so much choice and opportunity. The customer context has changed. Customers want it, they want it efficiently, they want it now and they want it to be flexible. Making the sales process easier is critical."

Ultimately, the HPE changes are going to be a "triple bottom line" improvement benefiting customers, partners and HPE, said Lomonaco. "As a partner we are always looking at the margin and profit that we can drive through the customer supply chain," he said. "Cutting inefficiencies in the supply chain is good for all of us. This is going to allow HPE, partners and customers to be more profitable."

The quote to cash supply changes are a testament to the leadership of Neri and his team, said Lomonaco. "HPE has an acute focus on the customer and partner experience," he said. "Antonio is doing a fantastic job. His boldness and leadership is helping OST accelerate HPE sales."

Dan Molina, chief technology officer at San Diego-based Nth Generation Computing, a top HPE enterprise partner and No. 354 on the CRN SP500, said he expects the significant cost savings from the supply chain changes to result in more competitive pricing on HPE solutions.

"Eliminating this many touch points is going to reduce costs and allow the channel to be more competitive," he said. "Ultimately we expect to transfer the cost savings to our end user customers so we can be even more competitive with HPE solutions in the marketplace. We are very bullish about these changes."

Molina said the first phase of the Next initiative has already resulted in a leaner, more nimble and more focused HPE. In fact, he said the changes have helped fuel double digit sales growth at Nth Generation.

"We are seeing very, very healthy growth with HPE," he said. "Streamlining quote to cash is going to help us be even more responsive to our end user clients."

HPE- which is completely modernizing its IT systems- has already made big supply chain gains by moving to a single "data master" – a significant achievement given the many applications the company was running before the Next initiative.

"The single data master is key, it is strategic for what you do in the company," said Neri. "You can't run very efficiently when you have multiple data masters. Ultimately the data will not give you the insights you need."

HPE is also bringing the finance side of the business to a single ledger starting in the first quarter of the new fiscal year beginning on Nov. 1, 2018.

Among the major improvements from the first phase of the Next initiative which Neri outlined to analysts one year ago, are: a reduction in HPE sales compensation plans from 400 to 25; a reduction in the number of volume compute platforms from 26 to 10; a reduction in the number of value compute platforms from 27 to seven and the reduction of SKUs by a whopping 75 percent from 3,500 to 875.

"It has been remarkable," said Neri speaking about the business impact of the Next initiative. "It has been an incredible success not just on the financial side but on the culture side – our ability to execute faster."

Under the Next initiative, Neri also took out several levels of management between him and the country leaders. "For me that is very important because I get the truth," he said. "I get exactly what is going on. I don't have to guess because everybody actually applies a judgement to whatever forecast has been provided. I can see exactly the demand. I can see exactly what is going on from the customer point of view."

The Next initiative has also provided HPE an opportunity to move more business to channel partners under a plan that took HPE's direct sales reps out of 84 countries. "We want channel partners to be our franchise in those countries," said Neri noting that HPE does 70 percent of its business through partners.

Neri said HPE is well positioned to execute the massive supply chain changes with a "high level" of confidence.

In fact, he said he is "personally" driving the Next changes with HPE CIO Archana "Archie" Deskus. "I believe this is one of the most exciting things you can do to really transform the company,' he said.

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