HPE’s Antonio Neri: A Drive To Go ‘Further And Faster’
No one better exemplifies the drive to go further and faster than HPE President and CEO Antonio Neri, CRN’s No. 1 Most Influential Executive. Over the last four years, Neri has transformed the legacy infrastructure product provider into an on-premises cloud services powerhouse that is going head to head against Amazon Web Services, Microsoft Azure and Google Cloud.
PKA Technologies CEO Felise Katz was initially “very skeptical” in 2019 when she first heard Hewlett Packard Enterprise President and CEO Antonio Neri lay out his bold vision to move the company and its partners to a full HPE GreenLake Everything-as-a-Service model by 2022.
However, once Katz looked into how the change would drive a tighter and more strategic relationship with customers and in the process move PKA to a recurring revenue model that sharpened the focus on PKASolveIT managed services, she was all in.
Three years into the journey of reinventing what Katz calls her 26-year-old startup, she could not be more thrilled at what the change has meant to Montvale, N.J.-based PKA and its customers.
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“GreenLake is really resonating with customers at this point,” said Katz. “They are looking at things through a different lens. It has enabled customers to be much more efficient, to keep costs under control and to keep their data secure. Everything GreenLake has promised to do it has certainly done for our customers. We have a huge pipeline of opportunities.”
That huge pipeline is due in no small part to the bold vision of Neri, who made a big bet on Everything as a Service as far back as four years ago. That bet has put HPE far ahead of legacy infrastructure providers like Dell Technologies and Cisco Systems in the rapidly emerging Everything-as-a-Service contest. It has also forever changed the channel landscape, with HPE partners moving from selling infrastructure products in a capital expenditure transactional model to selling on-premises cloud services in a consumption model that pits HPE GreenLake head to head against Amazon Web Services, Microsoft Azure and Google Cloud.
Most remarkably, Neri this year delivered on his pledge made at the HPE Global Partner Summit three years ago to move HPE and its partners to the cloud consumption model. At the time, Neri told partners: “Three years from now, this company will become consumption-driven and everything we do—whether it is at the edge, the core, the cloud business—software or infrastructure and services will be available to you and to our customers as a service.”
Now that pledge—which at the time seemed like a pipe dream— is a reality. Neri’s success bringing HPE and its partners into the consumption-based cloud services market has earned him the No. 1 Most Influential Executive on CRN ’s 2022 Top 100 Executives List.
For PKA itself, which has had to undergo a massive cultural transformation, including three major changes to its compensation plan to drive pay-per-use GreenLake on-premises cloud services consumption, the change has led to a financially stronger company that is now acting as a strategic service provider to customers with its PKASolveIT suite of managed services, said Katz. “We could not be more pleased about the outcome for us and for our customers. We have a different relationship with our customers now. Our conversations are now with the C-suite—the CFOs and the owners and principals of companies. It’s a financial and a technical conversation at the same time. The future is brilliant. It’s a great story,” she said.
That great story began with Neri—who started his career at HPE in 1995 in an HPE call center in Amsterdam—taking the helm of HPE on Feb. 1, 2018. On his first day on the job, Neri pledged to bring an innovator’s heart, a customer-first and customer-last ethos and a drive to go “further and faster” —accelerating “what’s next” for customers and partners.
Today, Neri’s commitment to go further and faster has transformed HPE from a bits and bytes-focused hardware provider to a cloud services powerhouse. And he did it by putting partners at the very center of that software and services transformation.
Anatomy Of A Transformation
First off, Neri has done what many believed was impossible: moving the complete HPE product portfolio in just three years to a seamless and cohesive edge-to-cloud pay-per-use platform for both cloud-native and legacy workloads. In the process, Neri has made HPE GreenLake a compelling alternative to AWS, Microsoft Azure and Google Cloud.
HPE GreenLake now has more than 70 cloud services that run the gamut, starting at the edge with connectivity from Aruba to a complex ERP offering like SAP and breakthrough artificial intelligence, machine learning and analytics services. GreenLake is now on track to deliver $1 billion in annualized revenue run rate (ARR) this year with a three-year compound annual growth rate projection of 35 percent to 45 percent for ARR.
At the same time, GreenLake is driving higher margins, with the ARR percentage of software and services set to soar from 61 percent in fiscal year 2021 to 77 percent in fiscal year 2024.
To power the Everything-as-a-Service transformation, Neri rebuilt HPE from the ground up, starting with a big investment in 2018 to modernize HPE’s own IT systems, putting the company on a single ERP system. From there, Neri put in place the ARR metric on the HPE balance sheet so investors and partners could track HPE’s as-a-service evolution.
At the same time he was making those changes, Neri was literally transforming the culture and character of HPE into a software and services organization. The company is now being viewed by customers and partners as a cloud powerhouse. Case in point: HPE now has 8,500-plus software engineers.
Customers have voted by moving their data and workloads to HPE GreenLake, Neri said. The edge-to-cloud GreenLake pay-per-use platform now has 65,000 customers and 120,000 users with 1 exabyte of data under management.
GreenLake’s total contract value has more than doubled from $3.1 billion in 2019 to $7.1 billion in the most recent quarter.
The channel has also voted for GreenLake, driving 155 percent sales growth on the platform in the most recent quarter, the second consecutive triple-digit growth quarter. More than 900 partners are now selling GreenLake, up 60 percent year over year. What’s more, the number of partners selling multiple deals is up 2.5 times year over year.
Neri told CRN that the key to the evolution of the $27.8 billion infrastructure provider was a matter of having “the courage” to do the right thing. He ran headfirst into that leadership lesson when he made his first big move to modernize HPE’s IT systems.
“No one wanted to do that,” said Neri. “No one wanted to do it because it was an enormous amount of work and money to reset the entire operations of the company and close the technical debt that we were not able to address because of the spins and splits [we went through]. That was a foundation [for the HPE transformation]. The second piece of this was, ‘OK, let’s establish who we want to be and stick to it.”
Sticking to it is something Neri is good at. One of his leadership maxims is never procrastinate and always look at “what you are going to do today that you could have done yesterday.”
For help making tough decisions, Neri credits HPE CFO Tarek Robbiati for knowing how to drive HPE to go “further and faster” with a sound capital allocation strategy. That rebalancing of resources has led to bigger investments in HPE research and development, from $1.7 billion in fiscal year 2018 to $2 billion in fiscal year 2021. “We had to rebalance resources,” said Neri. “We looked at it through the financial lens as well as through the innovation lens. We married the two and said this is where we are going to double down—as-a-service is obviously one example.”
Neri has also doubled down on HPE’s culture, investing in new benefits like six months of paid parental leave and retirement transition support. Neri told CRN that a “pivotal moment” during his tenure as CEO came from a “who we are, what we stand for and how we operate” commitment that arose in conversations with HPE Executive Vice President and Chief Communications Officer Jennifer Temple.
Another top HPE executive who has made a big difference in overcoming obstacles in the transformation, said Neri, is HPE Executive Vice President and COO John Schultz.
Shultz, whose role has expanded recently with what HPE calls “increased responsibilities and a broader role in driving the company’s edge-to-cloud transformation,” has helped HPE “cross the chasm” by making sure it brings top talent into the organization, said Neri.
“One of the things that I really agree with [former HPE CEO and Neri mentor] Meg [Whitman] on is having the right person in the right job at the right time with the best attitude. Even though they may not have all the skill sets, I will take that over a perfect engineer that has no [emotional intelligence] to collaborate or understand the bigger picture,” said Neri. “It is phenomenal to do this thing [you may want to do], but I need people to think about the bigger picture, including partners.”
Another pivotal moment propelling Neri’s vison for a single unified edge-to-cloud platform came in the midst of the pandemic under a tent at HPE’s then-Santa Clara, Calif., headquarters. That led to the establishment of a team of 30 leaders to drive the cultural shift deep into the organization.
So just how radical is Neri’s view of the software and services transformation at HPE? “I think long term the vison is very simple: The infrastructure piece of this is nothing more than the cost of sales,” he said. “There is revenue, there is margin and a cost of sales. The majority of the margin will be services and software. The hardware piece, if you want see it that way, is a cost of goods sold.”
A Big Bold Vision Come To Life
HPE North America Managing Director Paul Hunter, who was previously HPE worldwide channel chief and chief of staff to Whitman, credits Neri for making a “really bold statement” to move the complete HPE portfolio to Everything as a Service and then getting the entire company of 60,000 employees on board.
“We knew we had to move quicker than we have moved before, and everything we needed to do was to serve that purpose,” said Hunter. “We knew we had to be working as hard as we possibly could to help us move our teams, our partners, our proposition, everything to be as-a-service such that when 2022 arrived everything was as-a-service-enabled.”
Hunter saw first-hand at the recent HPE Discover how transformative the move to GreenLake has been for partners. “The change I see is those partners have got religion,” he said. “They believe. The nature of their relationship with the customers has completely changed. They are much more important and relevant to customers and are having conversations they never had before.”
But it has been “hard work” for partners that have committed to GreenLake, said Hunter. “You have to be tenacious, you have to be committed to winning in the cloud-as-a-service world, and that is longer, harder and more complicated than it is in a ‘let me just refresh your environment’ world,” he said. “But the benefits are so much greater to the partner and us and the client. So partner perseverance is really rewarded.”
Hunter sees HPE GreenLake as a pivotal moment for all partners. “This is the lifeblood of the future for a healthy partner ecosystem,” he said. “We are in the process of partners reinventing themselves into companies that can really help their customers with problems that are business-related rather than feature- and technology-related. I think it is going to be invigorating. I think our companies are going to grow. The market continues to be very healthy. They and we have a path to being much more relevant to our customers in five years’ time than we were 10 years ago.”
Neri has been critical to driving sales growth because of his ability to handle everything from technology architecture and vision to support issues in front of customers and partners, said Hunter. “Antonio has basically worked in every part of the company and remembers all the processes and policies associated with it, so he knows the actual plumbing of the business,” he said.
HPE Worldwide Channel Chief and Head of Partner Sales George Hope calls Neri the “industry’s biggest partner advocate” and most “partner-forward” CEO in the business. Nowhere is that more evident than with GreenLake, which was designed from the ground up to “grow with and through partners.” That includes an open API that allows partners to layer in their services on top of the GreenLake platform. “The partners see some of the other vendors bolting on channel after the fact,” said Hope. “They see us as baking in channel with the original recipe. That is a result of Antonio’s leadership in general for the channel. As he has put this [Everything-as-a-Service] vision forward and we have executed it, there has always been a channel weaved into the design and the conversation. That is a testament to his leadership.”
Solving Public Cloud Pain Points
A momentous bet on GreenLake three years ago has paid off in significant consumption-based sales growth for Milestone Technologies, Castle Rock, Colo., which was just named HPE GreenLake U.S. Partner of the Year. “We are seeing tremendous growth,” said Andy Johnson, director of enterprise solutions at Milestone.
Milestone has five customers that it has outfitted with GreenLake and just signed another two, said Johnson. “Customers are really jumping on board because it really addresses a lot of their pain points,” he said. Those pain points—which have become increasingly prevalent in public cloud—include concerns about the high cost, security issues and even scalability, said Johnson.
Customers are starting to realize that public cloud is not all that it was made out to be and that if “they are not looking at a GreenLake secure private cloud solution then they are doing their company or agency a huge disservice because it really does solve a lot of the [cloud] pain points,” said Johnson.
“When customers start to realize their costs are out of control with the ingress and egress fees [of public cloud] and bandwidth restrictions, and that they are sharing the [public cloud] with other customers and that there are security issues and downtime, they look at it differently,” he said. “The timing is right because customers had to experience what public cloud was offering. … Once customers go through those pain points, they realize that there are a lot of advantages that GreenLake provides them.”
One Milestone government GreenLake customer moved away from public cloud because the “costs were outrageous,” said Johnson. That customer had issues with billing, with multiple fees in a disaster recovery environment, he said. “When we talk to customers about GreenLake, we show them up front what their costs are going to be for the next four years if it is a 48-month deal,” he said. “If you take a look at where supply chain is and where it is going, this is giving customers a predictable cost model that is not going to change for four years. Customers love that.”
One of the keys to Milestone’s success with GreenLake has been to accurately size the GreenLake on-premises pay-per-use cloud service environments for customers, said Johnson. Often customers are overprovisioning, he said.
“When you start taking a look at the cost model and what customers actually need, there is a big delta between what they think they need and what they really do need,” said Johnson. “That is where we come in and show them real data.” That has led to big cost savings for customers and instilled customer “trust” and confidence in Milestone, said Johnson.
The GreenLake model has opened the door for customers to easily grow their IT environments with the “ease of billing” and “simplicity” to grow their own pay-per-use platform, said Johnson. Customers also like that there is a growing ecosystem of third-party vendors like Cohesity, Commvault and VMware that can be integrated into GreenLake. “Customers are really digging that because it is a much easier model for them to adopt and to integrate into their current [IT] environment,” he said.
Security issues and the ability to ensure regulatory compliance have also been big differentiators, said Johnson. One state law enforcement agency that manages Criminal Justice Information Systems—a mandate for security compliance—turned to GreenLake in the wake of the pandemic after running into trouble certifying that the public cloud would be a “safe location” for its data, said Johnson.
“When COVID hit, all of a sudden work-from-home and VDI were a big deal; they had this explosion of storage growth immediately and they had no idea how to handle it,” he said. “That was one of our first key wins with GreenLake. … It was a great use case for them. They knew the security issues would go away with GreenLake because it is in their environment. They are the only ones touching it. It is secure, and they don’t have to worry about sharing workloads.”
Milestone is doubling down on its investment in GreenLake as it sees the payback for customers with the as-a-service model, said Johnson.
A ‘Tremendous Visionary’ And The Road Ahead
PKA’s Katz credits Neri with being a “tremendous visionary” who had the foresight to look into the future and move HPE and its partners to the edge-to-cloud Platform-as-a-Service model.
“Antonio had to look at what the iconic Hewlett Packard Enterprise brand was going to look like in the future,” she said. “That required a lot of inner searching. Then to be able to shift and translate that back to HPE partners is quite incredible. Antonio and HPE have made a huge commitment to make a stand for partners on Everything as a Service. HPE has always led with the partner community, but now this opens up that partnership tremendously so we are able to really provide all of these services and benefits to customers. At the end of the day, that is what we are all about.”
Katz sees PKA in the next several years continuing to build out its PKASolveIT managed services on top of the GreenLake edge-to-cloud platform with HPE APIs. “We are adding more and more solutions under the GreenLake portfolio that will continue to enable our customers to be better at what they have to do every single day,” she said. “We are adding more and more services every day.
We are a true edge-to-cloud provider. That is clearly becoming more and more of a differentiator for PKA.”
Katz, in fact, said the direction PKA is going with HPE is leading to success. “It is a great journey,” she said. “I couldn’t be more excited to be an HPE partner at this point. I think only greater things are yet to come.”
Neri is also “excited” about what’s coming next for partners like PKA now that “big aspects” of the transformation have been completed. He sees a future for HPE and its partners that goes far beyond the role of an infrastructure product provider.
“I think the partners—together with us, obviously—have a huge opportunity to become the service providers for their customers,” said Neri. “When you become the service provider, you become way more relevant than just reselling someone else’s cloud offers. At the core of that, you need to be comfortable with the transformation of your business and the culture. We bring to the table the technology and the portfolio that partners need to compete and win in becoming a service provider.”
That move to a full-fledged strategic service provider makes partners “more relevant” and “way more profitable because the infrastructure comes with it and all the service consumption comes on top of it,” said Neri. “Then you add your own services.”
For Neri, making the big bold bet to transform was a matter of letting go of the past. Partners, he said, must do the same thing. “If you don’t want to move forward and let the past go,” he said, then “you are going to be less and less relevant. And our job is to make partners relevant.”