Partners: HPE Is Walking 'Fine Line' As Its Builds Out Cloud Services Portfolio With Cloud Technology Partners Acquisition

Hewlett Packard Enterprise Partners Monday said HPE will have to walk a "fine line" with its enterprise account engagement strategy in the wake of its acquisition of cloud-agnostic solution provider Cloud Technology Partners.

"Anything a vendor does that falls into the services area potentially competes with us," said the CEO for one of HPE's top enterprise partners, who did not want to be identified. "There is a fine line here. Not only does something like this compete with what we do, it competes with the most significant profit stream all of us in the channel have, which is services."

[Related: HPE Global Channel VP Archer On The Pointnext Partner Offensive, Rules Of Engagement, And Tapping Into The $2.1 Trillion Opportunity]

The CEO said the acquisition of CTP – a 200-employee born-in-the-cloud provider focused on the Fortune 500 – could lead to channel conflict for Solution Provider 500 partners who have built out their own cloud services organizations.

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"If you are fairly good-sized solution provider with an investment in services, whether it is a cloud, data center, AWS practice, Azure practice or a private cloud practice, potentially this could be a competitive threat," said the CEO. "It depends on two things: what is the overall HPE strategy and, even more importantly, what is the go-to-market strategy? How does HPE plan to market these services in a way that is not competitive to partners? HPE needs to really communicate the overall strategy and what the ground rules are and what the flash points are for partners."

The CTP acquisition is more likely than not a non-issue for smaller partners who are more likely to be willing to "resell" CTP services because they don't have CTP-like capabilities and have no other way to get those cloud deals, said the CEO.

HPE Pointnext Senior Vice President and General Manager Ana Pinczuk said in a statement that as a "channel focused organization HPE is excited to help our partners leverage CTP’s IP and capabilities to drive larger transformational programs and ultimately drive increased service and product sales."

CTP brings a "unique set of capabilities that expands our Hybrid IT portfolio with differentiated offerings," said Pinczuk. "Our partners will be able to offer these new services alongside their traditional offers to increase overall deal size and drive relevancy. In addition, our partners will be able to present a comprehensive Hybrid IT portfolio that is unique in the industry."

Hewlett Packard Enterprise Global Channel Vice President Ken Archer Monday told CRN that the CTP acquisition will ultimately open the door to bigger cloud transformation deals for HPE and its partners. He said the HPE partners will have "full access" to the CTP portfolio."This is a huge benefit for partners," said Archer , a highly respected 30-plus-year channel veteran who was recently appointed the head of the HPE Pointnext partner business. "It is going to help us all win bigger and more strategic deals. This acquisition expands our HPE Pointnext [services] capabilities to partners. This enhances our value proposition to partners."

Once the deal is completed, the Boston-headquartered CTP will become part of Pointnext's advisory and professional services team, led by HPE Pointnext Senior Vice President and General Manager of Advisory Services Parvesh Sethi.

Partners, for their part, said they are heartened by the leadership of Archer as HPE moves to integrate Pointnext. They said Archer's strong ties with solution providers are going to be critical as HPE integrates Cloud Technology Partners into Pointnext as part of its channel account engagement strategy. "Like a lot of partners, I have a lot of confidence in this with Ken Archer being involved from the channel side," said the CEO of another HPE enterprise partner, who did not want to be identified. "Having someone like Ken who is truly an advocate and really understands channel partners is going to make a big difference. But you know the history with HPE's technology services organization. It is always, 'proceed at your own risk.'"

The CEO said it is no small task to "crack the code" with any large vendor services organization. The devil is going to be in the details of how HPE engages with larger enterprise partners, the CEO said. "I need to sit down with HPE so I understand more about the potential for working together," he said. "The good thing about HPE is things change, so you need to keep an open mind as the business evolves."

The acquisition comes as HPE's cloud strategy has been "moving in a lot of different directions" over the last several years with HPE building out its Helion public cloud starting in 2014 and then shutting down the business effective Jan. 31, 2016, said the CEO.

The HPE acquisition of CTP comes just four days after HPE completed the year-long process of integrating its legacy software business with Micro Focus – part of a spin-merger. That spin-merger led to the creation of the seventh largest pure-play software company with annual sales of $4.4 billion.

It also comes five months after HPE completed the spin-merger of its $20 billion enterprise services – the former Electronic Data Systems- which HP acquired in 2008 for $13.9 billion- with CSC to create DXC, a $26 billion services powerhouse.

HPE launched what it called its newly redefined Pointnext services business – a $7.16 billion, 25,000-employee organization that was formerly HPE technology services organization (TSO) - in March.

The HPE acquisition of CTP also comes as HPE is set to take the next step in its transformation into a smaller and faster-moving company with a plan to take out as much as $200 million to $300 million in additional costs. "With the pending RIFs (reduction in force) that HPE is going through, they are going to really, really need channel partners. That means enabling and empowering partners," said the CEO of another top HPE enterprise partner, who did not want to be identified. "HPE really needs to define what they are looking for from channel partners in that context."

The CEO of an HPE-exclusive solution provider, who did not want to be identified, said he is anxious to hear from HPE on how the CTP acquisition fits into its go-to-market sales motion and account engagement with partners. "I haven't heard anything about this," he said. "If HPE is going to augment my services capabilities, it is a good thing. If they are going to compete against me, it's a problem."

One source close to HPE with direct knowledge of the CTP cloud services business said the new consulting capabilities will be used to boost HPE's hybrid IT tools and resources for partners. "This is just going to make HPE a better resource for the channel, who can use these resources as an extension of their own team," said the source. "This in no way competes with the channel. It is about being up to snuff with what the market needs in terms of hybrid IT services."