Hewlett Packard Enterprise Monday kicked off its Global Partner Summit in Las Vegas with the launch of a new GreenLake Flex Capacity offering that brings the full force of the pay-per-use cloud model to partners selling on premises HPE infrastructure.
The public-cloud-busting GreenLake Flex Capacity channel compensation model provides partners with a whopping five times the rebate incentive that they would get in a traditional Capex deal.
The accelerated rebate program is aimed at providing a significant margin boost to partners compared with a traditional approach as they move to a pay-per-use consumption model and is designed to be break even in the first 12 months.
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The lucrative terms are the result of a hefty investment by HPE Pointnext to help power the partner pay-per-use transformation.
"We have the industry’s first and most partner-friendly [pay-per-use] consumption model," said HPE Pointnext Chief Ana Pinczuk in an interview with CRN. "We are enabling the channel to be part of the consumption solution. There is nobody else that is doing this in the industry."
The initial GreenLake Flex Capacity services for partners are for HPE ProLiant Microsoft Azure; HPE Synergy 480 compute modules; HPE SimpliVity 380; HPE ProLiant BL460c server blade; HPE 3PAR StoreServ 8200; HPE 3PAR StoreServ 9450; and HPE StoreOnce 5100.
Hewlett Packard Enterprise Vice President North America Channels Terry Richardson calls the Flex Capacity pay per use business model breakthrough simply the most "significant" partner opportunity he has seen in 30 plus years in the channel.
"Giving customers the opportunity to pay only what they consume is absolutely game changing," says Richardson, one of the most respected channel chiefs in the business. "Those that are embracing this model are really differentiating themselves from the pack and they are contributing to an absolute surge in our business growing many hundreds of percent quarter on quarter. The fact is only HPE has a Flex Capacity offering. None of our traditional competitors do."
Under the terms of the program, partners can hold the paper on the deal, determine the margin and add in their own services. The GreenLake Flex Capacity model teams the financial benefits of the Capex model with a robust annuity stream.
In a typical $300,000 capital expenditure deal, partners would on average received a 15-20 percent margin on hardware and services, and a low blended rebate. Under that same deal with a GreenLake Flex Capacity per-per-use model, partners would receive an accelerated 5X rebate paid at the outset on the full value of the $300,000 deal.
The beauty of the GreenLake model is partners are on average seeing a 25 percent growth rate every year in the form of increased capacity.
The GreenLake Flex Capacity business model innovation is unprecedented, said John Kolimago, executive vice president and general manager of the cloud solutions business unit at Anexinet, No. 208 on the 2018 CRN Solution Provider 500 and one of HPE's top Platinum partners. "This is a game-changer," said Kolimago. "I truly believe HPE is on the cusp of something great with this. Other vendors have always had creative leasing, step leasing and financing offers, but this is different. This is truly selling consumption-as-a-service. No one else is doing what HPE is doing with GreenLake."
The new GreenLake channel model allows sales reps to be paid up front for the value of the total deal, said Kolimago. "A lot of companies when they turn to a services-led model, it is to the exclusion of partners," he said. "HPE has worked hard to get the economics right for partners with a hybrid compensation model that compensates the sales reps up front on the total value of the deal on day one, and then the ability to share in the annuity over time as we grow those environments. That is the best of both worlds."
The HPE GreenLake Flex Capacity channel model comes in the midst of a public cloud backlash sparked by soaring monthly bills and increased concerns around data governance. "There is a shift going on," said Kolimago. "With Cloud 1.0, everyone wanted to run to public cloud. They thought it was going to be cheaper. Then they found out all the challenges with ingress and egress of data, variable costs that are spiraling out of control, lack of accountability of mission critical data. Now we are seeing a pivot back where customers are saying maybe the public cloud isn't the best place for their workload."
Al Chien, president of Campbell, Calif.-based Dasher Technologies, one of Silicon Valley’s top systems integrators, said the new GreenLake Flex Capacity offering provides a major boost to the channel when going head-to-head against public cloud providers.
"We don’t have an offering like this today, so customers default to public cloud," Chien said. "Now we have an alternative that we can offer so we can maintain the relationship with the client. This keeps us attached to the client and promotes our value to the customer. The intent here [by HPE] is to put the channel at the point of the arrow in a cloud consumption model."
ML Maco, senior vice president of worldwide sales and category management for HPE Pointnext, said partners can sign up and become part of the GreenLake Flex Capacity program immediately.
"We want to get this off the ground really quickly," said Maco. "Our plan is to really aggressively engage with our partners at Discover. We have a very well thought out end-to-end strategy and plan for execution. We are confident we are ready to roll as soon as we announce this."
HPE has a full portfolio of enablement services designed to drive partner adoption of the GreenLake Flex Capacity services, including starter kits and sales tools.
Maco said the new offering is first and foremost a "partner-first and partner-ready" solution—a sharp break from the old co-selling model with the earlier HPE GreenLake Flex Capacity."This is very different from what we have done in the past," she said.
It also is designed to be simple for partners to execute in the field, she added. That simplicity as well as profitability are going to be key in driving sales growth in a pay-per-use services market that is growing quickly, said Maco.
"The market is really coming our way," she said. "There is a huge level of [pay-per-use] adoption and growth for us and our partners to go after together. We are excited about the opportunity. This is going to be huge in the market for both our partners and HPE."