Whitman: Enterprise Services-CSC Deal Makes HPE A 100 Percent Channel-Focused Company

Hewlett Packard Enterprise CEO Meg Whitman said the spinoff merger of HPE's $20 billion Enterprise Services business with systems integrator CSC makes HPE a "100 percent channel-focused" company.

"The message for the partner community around this spinoff is we now are even more enthusiastic about the partner community -- if that is even possible -- because we are pretty enthusiastic," said Whitman in an interview Wednesday with CRN at HPE's Discover conference in Las Vegas. "We have got to partner even more aggressively with our partner community to deliver software, to deliver converged infrastructure, to deliver hyper-converged. We have no business now that doesn't go through partners."

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The HPE tax-free spinoff, which was announced last month and is expected to be completed by March 31, 2017, creates with CSC a $26 billion pure-play global services giant. HPE shareholders will own approximately 50 percent of the new company.

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HPE Executive Vice President Antonio Neri, who oversees Palo Alto, Calif.-based HPE's $28 billion Enterprise Group business, said he expects the percentage of sales going through partners -- currently at 70 percent -- to increase in the wake of the HPE Enterprise Services spinoff. "Channel partners are the main route to market for us," he said.

"The channel partners are critical for us," he said. "Everything I do, I do with channel partners in mind. Everything I do for my sales force I give to the channel partners.".

What's more, Neri said he sees the Enterprise Services spinoff shining the spotlight even more on HPE's Technology Services business, which is working closely with solution providers. "We are doing a lot of work between channel partners and [Technology Services] to enable partners to use those [Technology Services] capabilities even more," he said.

HPE partners, for their part, said they see the blockbuster deal as a watershed moment of sorts, accelerating sales engagement in the field as HPE puts even more focus on partners. A number of partners said they had experienced conflict with Enterprise Services in the sales trenches.

"Both for us and for HPE's [Technology Services] group, they were competitors," said Rich Baldwin, chief strategy officer at Nth Generation Computing, a San Diego-based HPE enterprise partner. "They were not partners. We have gotten rid of a competitor now. This is a huge move. It is one of the best bits of news I have heard in years."

Baldwin said the merger spinoff gets rid of a "burden" that will lead to a faster-moving and more agile HPE. "That is 100,000 employees they no longer have to manage," he said. "That is one-third of the company. This is massive for the channel. It's a huge move."

Steve Tepedino, CEO of IT Partners, a Tempe, Ariz., HPE enterprise partner, said he is pumped up about HPE's Enterprise Services spinoff. "What gets us really excited about this is Hewlett Packard [Enterprise] is now a 100 percent channel-focused company," he said. "There is no hint of a conflict anywhere."

IT Partners' Tepedino said he sees the HPE Enterprise Services-CSC merger accelerating the pace of innovation at HPE. "It didn’t fit," said Tepedino of the Enterprise Services business. "This makes HPE so much smoother and streamlined. What it does is simplify sales engagement. With a simplified engagement and a great HPE product lineup, it just gives us a pervasive acceleration of our business together. When HPE talks about 'Accelerate Next,' this is what they mean," Tepedino said, referencing HPE's marketing mantra. "Next is now. We are going to roll."

Harry Zarek, CEO of Compugen, one of HPE's top enterprise partners and No. 67 on the 2016 CRN Solution Provider 500 list, called the deal a "brilliant" move by Whitman. "It's just beginning to sink in how smart the deal with CSC is," he said. "In the end, this will go a long way toward simplifying HPE. What this does is refocus them on the need to have partnerships with channel organizations."