Hewlett Packard Enterprise Pointnext Chief Ana Pinczuk spoke with CRN about the game-changing economics behind the new GreenLake Flex Capacity pay-per-use partner model, including the rebate structure and the power of moving the channel to a services-led conversation with customers.
Can you explain the rebate/margin on the new HPE GreenLake Flex Capacity offering for partners?
It is about a 25 [percent to] 30 percent total reseller margin on the deal and it is sort of break even with Capex in the first 12 months. The renewal rates on this are 90 percent and the growth rate from that original sale is an increase of 25 percent or more.
How important is the rebate incentive for GreenLake Flex Capacity?
The size of the rebate is about five times the size of the rebate that they would get in a Capex model. It is a significant increase in terms of the rebate. If on a traditional Capex model, a partner makes 18 [percent to] 20 percent [margin], then on a GreenLake model they would make total margin closer to 30 percent. It is about a 50 percent potential increase in terms of how much money they could make.
How does the rebate model work in terms of partner compensation?
What we have done is allow the partner to basically get a greater amount of rebate sooner. If you compare the GreenLake model to the traditional [channel] model, the rebate portion and how we sort of rebalanced that is what makes this super attractive. What we have done is, frankly, make the GreenLake model more attractive to the partner than the traditional model.
How big a breakthrough is this for the channel as a whole and for HPE leading the pay-per-use channel charge?
The big debate in the industry has been what happens to the channel with the new consumption business model. The big breakthrough here is that HPE is from my perspective differentiating itself by enabling the channel to win in a consumption model, whereas there are many other companies that believe that the channel gets disintermediated. We have the industry’s first and most partner-friendly consumption model. We are enabling the channel to be part of the consumption solution. There is nobody else that is doing this in the industry.
How do you feel as you get set to unveil the GreenLake Flex Capacity model at Discover?
It is like the anticipation was for the Royal Wedding. When you have an offer that is this good and you want to take it to partners, you just can’t wait. This is the sexiest thing at the company. I’ll tell you why it is sexy: No. 1, it makes money for the channel. No. 2, it allows the partner to have a long-term, multiyear relationship with the customer -- not just to sell something up front and then go away. It builds that long-term relationship. No. 3, it is a land-and-expand-and-adopt sales motion.
What is this going to mean to the long-term health of the channel?
From my perspective, this is an opportunity in partnership with the channel to help them move into a services-led conversation with the customer. Traditionally, they would be attaching services to a hardware sale. This is a fundamental shift to the channel that helps them talk about advisory services plus a consumption solution. That is what I have been telling the market: The world is moving to advisory-led and consumption-enabled. This really allows the channel to be that way as well -- to have that advisory conversation because they know that customer best. And then to be able to follow it up with this consumption story as opposed to not being able to offer those things. That’s a one-two punch: to be able to offer their services together with a consumption model enabled by HPE.