Racing Into The Future: Why HPE Aims To Be First And Fast With Data Insight
"Racing into the future comes down to innovation first," said HPE CEO Antonio Neri. "It is both technology and business model innovation and the ability to enable the partners to speed up that transition in the digital journey we are all on."
In the intensely competitive high-tech world of Formula 1 racing, the Mercedes-AMG Petronas Motorsport team points to technology and services it gets from Hewlett Packard Enterprise as its “unfair advantage.”
The outcomes for the Mercedes-AMG team this year -- led by Team Principal and CEO Toto Wolff -- have been nothing short of spectacular, finishing No. 1 and No. 2 in the first five races of the season.
What Wolff describes as the “unfair advantage” provided by HPE technology -- and seen by HPE customers the world over -- is the very thing that drives HPE President and CEO Antonio Neri: finding the technological edge that puts you on the podium.
[RELATED: Antonio Neri: The ‘Biggest Innovation’ At HPE Discover Will Be A Pivot To As-A-Service]
For the ultracompetitive Neri -- who likes to say that if you can’t win, at least get into a fight and have some fun -- being first and fastest matters.
“One-tenth of a second can mean the difference between winning and losing a race,” said Neri, a Formula 1 racing fan from an early age when he closely followed 12-time Grand Prix-winning Argentine driver Carlos “Lole” Reutemann. “Anything we can do to help optimize with a one-tenth-of-a- second advantage is a big deal.”
Those one-tenth-of-a-second advantages HPE provides the Mercedes-AMG team are powered by an edge-to-core-to-cloud solution that includes Apollo and Moonshot high-performance systems running machine-learning algorithms designed by HPE. The HPE technology runs complex edge-compute calculations trackside; assists with computational fluid dynamics in a high-tech factory running HPE Synergy composable cloud architecture; and provides location and collaboration services via HPE Aruba networking within the team’s U.K. campus.
“Think about a true edge-to-cloud architecture,” said Neri of the HPE solution. “The edge is the car moving at 220 miles per hour -- essentially an office that is moving all the time. The garage and the factory are the core where they do all the design and analytics. We provide the infrastructure and software and services at both ends and then we enable them through AI and machine learning to analyze that data.”
The ability to analyze that data in real time and transform it into insight that leads to performance advantages for MercedesAMG Petronas Motorsport drivers Lewis Hamilton and Valtteri Bottas is key to winning races. “The more information we can give to the driver in real time, the more data he has available to make decisions,” said Neri, noting the complex calculation that drivers are making every 90 seconds with a steering wheel jam-packed with buttons, switches and a display. “Because in the end the driver is the one that makes the difference. We have enabled them with data and insight they could not get before.”
The edge-to-core-to-cloud data management challenge that the Mercedes-AMG team faces in every race is not unlike the challenges that every business grapples with in a world in which more than 60 percent of data is generated at the edge.
For Neri, providing customers with game-changing data and insight is the key to success in a digital transformation era in which customers are betting big on HPE technology for a competitive advantage. Being first and fast with data insight matters in every business, he said.
“Racing into the future comes down to innovation first,” said Neri in an interview with CRN last month at HPE’s new mobile-first, cloud-first Aruba wireless edge-powered headquarters in San Jose, Calif. “It is both technology and business model innovation and the ability to enable the partners to speed up that transition in the digital transformation journey we are all on.”
Partners will see that technology and business model innovation in full force at HPE’s Global Partner Summit and Discover conference, which runs from June 17-20 in Las Vegas.
The biggest game-changer for the channel is an all-out GreenLake Flex Capacity pay-per-use sales market expansion with a move to take the model from hundreds of partners to thousands of partners by introducing a new “right-sized delivery” version of GreenLake for the midmarket. That midmarket offering will target a sweet spot of deals with a total size of $300,000 but can stretch down to $100,000 depending on configurations and customer need.
The new midmarket version of GreenLake is available now. The new offering represents a move to get partners to go broader and deeper with the lucrative pay-per-use model in the midmarket.
HPE also is releasing a new GreenLake Quick Quote configuration sales tool that takes quotes from 15 hours to 15 minutes. Last but not least, HPE is rolling out partnerships with co-location providers Equinix and CyrusOne to power next-day rollouts of GreenLake.
If that isn’t enough, HPE has signaled that it plans to add new high-performance HPE GreenLake pay-per-use opportunities for partners in hot markets like machine learning and artificial intelligence with the planned $1.3 billion acquisition of supercomputing superstar Cray. That deal is expected to close by the first quarter of HPE’s fiscal year 2020.
For partners, the GreenLake advancements are a huge leap forward in the race to drive bigger sales and profits with a pay-per-use model that delivers business-outcome-based services in a long-term contract for customers with robust recurring revenue opportunities for partners.
Xara Tran, CEO of Champions of Change, a Melbourne, Australia-based solution provider that closed the first deal under the GreenLake 3.0 channel model after it was launched at Discover last summer, said she sees the new midmarket offering as a big “game-changer” for midmarket customers anxious to take advantage of an on-premises pay-per-use model.
“I have a lot of clients that want to adopt the GreenLake model but feel they are not big enough,” said Tran, who bills her company as a disrupter of the “norms” so readily accepted in the IT business. “I see a number of opportunities for clients who will be a perfect fit for this new $300,000 to $100,000 offering. There is definitely demand for this. This gives us more reach and shows HPE is investing more in GreenLake because of the positive response from customers.”
The GreenLake Quick Quote configuration tool also is going to help drive more midmarket client engagements, said Tran. That’s because the tool will open the door for presales tech reps to provide GreenLake sales quotes to customers. “With my techs being given the opportunity to scope out these deals, we are going to be able to drive more GreenLake opportunities,” Tran said.
Tran expects her company’s GreenLake business to double over the next year. She expects to drive about $5 million in GreenLake sales over the next three years. “It’s exciting to see HPE building a pay-per-use model like this that supports the channel,” she said. “Competitors have tried to emulate GreenLake, but they are not providing the same consumption model as HPE.”
The sales offensive is aimed at driving even greater growth for the HPE channel, which booked more GreenLake sales in HPE’s second fiscal quarter than all of last year.
“What we are talking about is how do we take that [GreenLake] rocket ship and get it to the moon even faster,” said HPE Worldwide Channel Chief Paul Hunter.
The dramatic changes move the GreenLake business from a custom configuration, bespoke-like model to standardized midmarket workloads that open up the market significantly for partners, said Hunter. “With the extension of the portfolio downmarket, we are not thinking about this in the millions [of dollars] now, we are thinking about it in the billions,” said Hunter of the potential size of HPE’s GreenLake channel business.
For partners, the 17 percent up-front rebate HPE offers on GreenLake deals, combined with the ability to add in their own managed services, represents a big opportunity to increase their margin in a market that is demanding consumption-based IT services, said Hunter. “I think for every partner, it is going to be vital to their healthy growth that they embrace consumption,” he said. “Customers are asking for it.”
The no-holds-barred GreenLake offensive is a direct shot across the bow of competitors. “There is no bigger profit opportunity for partners than GreenLake,” said Hunter. “The rebate value applies to the hardware. If you are selling servers, you are getting paid a single-digit rebate from us at best. You have a chance to incorporate that into a consumption offer and get paid double-digit rebates. It is double what our competition is paying. This is as good as it is ever going to get.”
The advancements make GreenLake simpler than going to the public cloud, said Neri. “With a few clicks, you are in business.”
The call to action for partners at Discover is to accelerate the GreenLake Flex Capacity pay-per-use sales offensive, said Neri, who envisions at least 30 percent of HPE’s revenue coming from consumptionbased services in five years.
“For us, it is important that partners come along that journey because there is no choice,” he said. “You have got to do it. If you want to just sell boxes, it is going to be a challenge. The reality is that is being commoditized.”
Bob Breynaert, global managing director for Redwood City, Calif.-based Equinix, the $5 billion data center powerhouse that is teaming with HPE as a co-location provider, said the HPE GreenLake channel charge is a breakout opportunity for partners. “This allows the channel to not fear the cloud, but embrace it,” said Breynaert. “The channel partners that get on these new models faster will take market share because they will be aligned with CEOs and CFOs who want to decrease Capex.”
Breynaert sees GreenLake as a platform to bring partners into a whole new realm of innovation-charged use cases such as artificial intelligence, machine learning and the Internet of Things. “This gives the channel a beachhead into new accounts and the power to do end-to-end solutions with a consistent [HPE] rebate structure,” he said. “It’s a land and expand opportunity for partners to take GreenLake to market with new technologies, including our [Microsoft] Azure Stack as a service. It’s pretty cool.”
HPE has been working to drive improvements in the land and expand pay-per-use model for the past decade. That hard work has given HPE a big lead in the race to provide metered, consumption-based hybrid IT services and has paid off in big GreenLake sales gains.
GreenLake had its largest quarter ever -- with robust 39 percent sales growth -- in HPE’s second fiscal quarter, ended April 30.
Overall, HPE’s GreenLake business now has more than 600 customers with over $2.5 billion in total contract value and a Net Promoter Score (NPS) of 92. “Since day one when we started, we have not lost one customer,” Neri said.
A Bridge To The Cloud Model
With the GreenLake model, HPE channel partners can offer customers an open, seamless composable hybrid cloud experience with the ability to optimize workloads for cost and efficiency on-premises or off-premises. What’s more, it puts partners into the recurring revenue services fast lane with a solution that allows them to add their own services to the GreenLake workloads and invoice the customer themselves. In short, it moves the channel model into the cloud-based consumption-based services era.
Bob Panos, vice president of sales and services at American Digital, Elk Grove Village, Ill., which closed one of the first GreenLake 3.0 channel deals last year, said he sees GreenLake as the future for the channel. “More and more of our customers are asking for the consumption model,” he said. “They want out of the data center business and they want us to manage it for them. At the end of the day, they don’t want to worry about it. With GreenLake, HPE is enabling my business to transform into more of a service provider model. This is visionary. You have to be able to think years ahead to come up with a model like this. HPE saw the world was changing and made the move.”
Indeed, one of the secrets to HPE’s success, said Panos, is its ability to look into the future and set the pace in the industry with innovation in both business models and technologies. “HPE comes up with a lot of technology before customers even know they want it,” he said. “Think of converged infrastructure and now Synergy composable architecture. HPE was first with both of those, and now everyone is trying to copy them.”
Panos said he sees the GreenLake model as the same kind of breakthrough. He said it has the potential to fundamentally change the financial character of the channel with a more predictable services revenue stream. “Over time, we could see 30 [percent] to 40 percent of our number made each quarter through these contracts,” he said. “Antonio [Neri] is right: More and more IT revenues are going to be consumption-based. There is a consumption wave that is happening made up of public cloud, private cloud, a mix of everything. What GreenLake does for a traditional VAR like us that is used to selling hardware is it allows us to make the transition to consumption. It’s a big shift in terms of how you sell, what you sell and how you make money. GreenLake is a bridge to that cloud model.”
HPE’s 17 percent up-front rebate -- which is aimed at helping partner sales reps make the transition from Capex project based IT sales to Opex, multiyear recurring revenue -- is driving GreenLake adoption, partners said. The new model places an emphasis on managed services rather than commodity hardware sales. “You are selling a monthly service,” said Panos. “It’s a services engagement with a statement of work.”
Key to the GreenLake model is HPE’s unwavering channel commitment to partners over more than three decades, said Panos. That’s no small matter in deals that essentially tie the channel hand in hand with HPE. “The reason we jumped into this is because of HPE’s channel commitment,” he said. “You have to have a higher level of commitment to the partnership to do something like this. HPE is really putting its money where its mouth is with GreenLake.”
American Digital’s strong Platinum-level partnership with HPE was key to the decision to take the GreenLake plunge, said Panos. “We trust HPE implicitly,” he said. “At the end of the day, we think HPE has the best solution, so the risk doesn’t scare us. HPE has been behind us for 30-plus years, and we know they’re going to be behind us in the future. That enables us to go do these deals.”
Panos expects American Digital’s HPE GreenLake business to double this year. At the same time, he sees continued strong double-digit growth for its high-value HPE infrastructure business with offerings like Synergy, Nimble and 3Par. In fact, he said the HPE shift to high-value software-defined infrastructure offerings, along with GreenLake, is creating even tighter ties with customers. “We are in the business of creating strong, long-term trusted adviser customer relationships,” he said. “Customers trust us. It’s a true partnership. We are not in the transactional business. That’s a short-term mentality. We are focused on the high-value data center that is mission critical to the client. Our trusted adviser status with the client is around mission-critical workloads. That is what we value the most. That is where HPE enables us to be the best. That is why we are growing.”
Nth Generation, San Diego, one of HPE’s top enterprise partners, is also seeing robust growth with the high-value HPE infrastructure portfolio and GreenLake. In 2018, high-value infrastructure sales were up 35 percent for Nth Generation, said CTO Dan Molina. The HPE gains are being driven by ground-breaking innovation like HPE Synergy composable infrastructure, HPE Nimble with the HPE InfoSight AI-based predictive analytics platform, SimpliVity hyper-converged infrastructure and ProLiant’s “huge” root of trust security advantage, he said.
As for GreenLake, Nth Generation recently closed a large GreenLake Flex Capacity pay-per-use deal and is looking to double that business this year, said Molina. Nth Generation is seeing a robust sales pipeline for GreenLake, he said, powered by new partnerships like a deal HPE inked with hyper-converged software powerhouse Nutanix in April. “GreenLake is gaining momentum,” he said. “We are headed into a consumption-based IT world. That is what GreenLake provides. It’s all about pay for what you use. The consumption-based model is resonating with customers. The Nutanix move was brilliant. The level of excitement is enormous. A lot more customers are now asking us about consumption-based IT on-premises. There are a lot of questions and new interest based on the Nutanix announcement.”
GreenLake is “well ahead” of competitors, which are now scrambling to catch up, said Molina. “HPE started this many years ago,” he said. “HPE has had time to refine the offering in order to provide a much better customer experience as the industry adopts new technologies for IoT and DevOps. They know what resonates and what is useful to customers and partners. Other OEMs are just getting started.”
Molina said the increased GreenLake interest comes as more customers are doing detailed analysis that shows not all workloads are more economical or efficient in the public cloud. “Customers are seeing that it is definitely less expensive and more economical to stay on-premises for some workloads,” he said. “There are also the customer concerns about losing control, security and privacy. Many, many customers still want some of their workloads on-premises but they like the cloudlike agility where if they need resources, they can turn them on at a moment’s notice.”
The deals to provide Nutanix and Google Cloud versions of GreenLake, the latter also unveiled in April, are simply the latest in a long line of HPE alliances aimed at offering “choice” in a hybrid IT landscape in which customers are anxious not to be locked into a single public cloud or infrastructure provider, said Molina. “I see this as the beginning of an expanding ecosystem. HPE has been on the customer choice journey for a number of years.”
That focus on customer choice, along with a breakneck pace of technology innovation, is going to continue to drive sales growth in the future, predicted Molina. He expects 20-plus percent growth this year in his HPE business as Synergy composable architecture and InfoSight gain momentum. “HPE InfoSight is bringing more and more AI to customers,” he said. “That is providing better analytics and outcomes to the customer. Predictive analytics is a very important component of agility, resiliency and availability for our customers’ business applications. Kudos to HPE for continuing to develop InfoSight and its AI capabilities.”
HPE is preparing customers for the future with its focus on intelligent edge computing, AI, big data and other areas, Molina said. “HPE has predicted where the future is going and has built a very strong portfolio. That is going to help customers gain a competitive advantage and make better-informed decisions. The HPE portfolio is really empowering customers to be able to get better insight from the mountains of data that are being generated on an ongoing basis.”
The Cultural Change At HPE: Moving Fast Into The Future
It’s a crisp, clear May day with the sun breaking off the bay in San Jose on the high-tech marvel that is HPE’s new headquarters. It’s about a 25-minute drive -- when there is little traffic -- from HPE’s former headquarters in Palo Alto, but it seems like a world away.
The first thing visitors see before entering the building is a three-pronged sculpture designed by Neri, who was trained as both a computer engineer and a professor of painting. The sculpture, called “Elysium,” represents HPE’s past, present and future. It also represents HPE’s three key cultural traits: partner, innovate and act.
Then, inside the lobby, there is a startling sight: a full-blown replica of a Mercedes-AMG Formula 1 race car. That masterfully engineered vehicle is the perfect metaphor for the new HPE’s unrelenting drive to push the technology innovation envelope to give customers a competitive advantage.
The cultural chasm that HPE has crossed with the move to the new headquarters is not lost on Neri, who opened the building by announcing a slew of new benefits for HPE employees, including six months of paid leave for new parents; a program to allow new parents to apply to work part time for 36 months; a career reboot program for those who have been out of the workforce awhile; and retirement transition support.
On a Friday afternoon as Neri is providing a casual tour of the new headquarters, two young employees approach him and ask him to pose for a photograph. The energy and excitement in HPE’s new home dramatizes just how far Neri has come in defining what he calls this “new chapter” in HPE’s history. HPE employees say there is a new drive and determination to set the technology pace in the emerging edge computing market.
Keerti Melkote, co-founder and president of Aruba, a Hewlett Packard Enterprise company, and one of the architects behind HPE’s big intelligent edge bet, said in just 16 months at the helm Neri has already had a dramatic impact on HPE employees and the HPE culture.
“I think the greatest impact Antonio has had is around our people,” said Melkote. “Antonio has put innovation back at the core of what we do, and it has reinvigorated the company in a dramatic way. The culture has completely shifted. It feels a lot more nimble, fast-paced and a lot more fun, frankly. It’s just a fun atmosphere to be in. Antonio has brought an element of fun back into the culture. It’s bringing a little bit of swagger back into a company that has been through a lot of change and transformation over the last five years. It’s giving employees the self-confidence to continue to innovate and transform the marketplace.”
Under Neri, who started his career at HPE in a customer service role 24 years ago and worked his way up the corporate ladder step by step, the employee engagement scores have soared, with 94 percent of employees saying they are “excited” to be a part of HPE.
“This is the most engaged and excited I’ve been about the company since I joined 18 years ago,” wrote one employee responding to the company’s employee survey. “I love Antonio’s leadership and the fingerprint he’s putting on the company. Very excited to be part of this.”
The impact of the HPE cultural shift should not be underestimated, said Melkote. “This is now a company that knows what its role in life is and the future that we are aiming for,” he said. “Then you insert that fun back into the workday. It makes for a much better workplace to come to. The employee experience has gotten a lot better. To me, any transformation in any business happens with the employees. That is where it all starts. The last year has been very, very dramatic in the shift we have seen.”
For partners, Melkote said, HPE’s innovation charge and the $4 billion investment HPE is making in the intelligent edge requires partners to re-evaluate their business models as part of the move into the future. That requires looking at the business value customers are demanding with analytics, artificial intelligence and big data. “The biggest takeaway for partners is innovation,” he said. “We are focused on innovation at the edge. That is where we see the future. We have made a bet on the edge. That does not mean we are not innovating in the core. We’ll continue to innovate across the board. What we see is a connected edge-to-cloud architecture. IT in the future is going to be edge-centric, data-driven and cloud-enabled.”
Kelly Ireland, founder and CEO of CB Technologies, Orange, Calif., which has bet big on a “Refinery of the Future” platform with Texmark Chemicals alongside Aruba and HPE, said no one is moving faster into the future with edge computing than HPE. “Antonio has focused HPE exactly where it needs to be,” she said. “That is why HPE is so far ahead in the race to provide edge solutions.”
CB Technologies, which will showcase its Refinery of the Future at Discover, is starting to see a “wave of growth” around the HPE edge and IoT products, said Ireland, whose company has invested literally millions of dollars in the edge opportunity.
“If you are not investing in innovation around things like IoT, cloud, edge and artificial intelligence, you are not going to be viable in the future,” she said. “We saw this coming five years ago. Our OEM and distribution partners tell us we are two years ahead of the rest of the industry.”
At Discover, CB Technologies will be showcasing a number of industrial IoT solutions in a broad range of markets, including utilities, manufacturing and insurance companies. Its big investments in Refinery of the Future are starting to pay off with sales up 46 percent last year, bringing the company to $141 million in annual revenue. CB Technologies’ HPE sales were up 20 percent. “In 2019, we are going to see more growth around IoT, edge and delivering solutions like Refinery of the Future,” she said.
Neri, who has singled out CB Technologies as a channel partner that invested early in the new edge-centric, cloud-enabled and data-driven era, said the future belongs to the fast and is not for the faint of heart. “The changes we are driving in the industry and the business are unbelievable,” he said. “We have not seen the amount of change we have seen in the last three years in the last 30 years. Clearly, the future belongs to the fast. It is a race into the future. That is important. It is absolutely critical. If you are not waking up in the morning thinking about, ‘What I am going to do different and better today,’ you are not up to this task.”