5 Reasons HPE GreenLake Is A Hit

A Home Run For HPE Partners

HPE partners says the latest version of GreenLake Flex Capacity is a "revolutionary" breakthrough that gives HPE a significant competitive advantage over next generation infrastructure competitors.

"GreenLake 3.0 is one of the most innovative things HPE has done in the last 15 years," said Jeff Smith, vice president of business development for International Integrated Solutions Ltd. (IIS), an HPE Platinum partner headquartered in Plainview, New York, No 106 on the 2018 CRN SP500. "We think within the next two years GreenLake will account for 30 percent of our business. Nobody to my knowledge is doing what HPE is doing with GreenLake Flex Capacity."

Hewlett Packard Enterprise's GreenLake pay-per-use offerings are a hit with channel partners with the sales pipeline "growing exponentially," said HPE Pointnext North America Sales Vice President David Twohy in an interview with CRN.

GreenLake 3.0 makes the Flex Capacity model simpler and more profitable than ever with a 20 percent margin or more on every GreenLake transaction. The average GreenLake deal is four years.

HPE GreenLake Eliminates Over Provisioning

HPE GreenLake has eliminated the perennial problem of customers buying excess compute, storage or networking capacity for on premises solutions.

"The average customer's actual utilization rate for IT is around 45 percent, meaning 55 percent of their IT assets are unused," said Twohy. "The problem is you end up tying up capital in IT assets that are not being used. Eliminating over provisioning frees up a ton of money."

HPE is seeing on average a 22 – 30 percent cash flow savings with customers adopting the GreenLake model, said Twohy. "This is not just about about how you procure, it is about the actual financial impact to the company," he said. "Instead of talking to IT and procurement, we are talking to IT controllers and CFOs."

Given that HPE has $5 billion in assets under management with GreenLake that translates to cash flow savings of about $1.5 billion for customers.

HPE GreenLake Provides Detailed Consumption Data For Customers

HPE has a "consumption manager" for every deal who analyzes month-to-month customer consumption patterns including what clients are consuming, who is consuming it and what are they likely to consume in the future.

That HPE "consumption manager" is, in effect, providing critical data and analysis on IT usage.

Under the terms of the GreenLake services model, HPE owns the on premises equipment that sits at the customer site ensuring security, latency, data sovereignity, compliance and governance.

HPE and partners are selling "units of consumption" with compute, storage, services and software in a bundle that is easy to price and quote for customers, said Twohy.

GreenLake Speeds Up IT Provisioning

GreenLake allows customers to avoid what has been as much as a four month wait to buy and provision new on premises IT.

"There is no longer a three to four month waiting period, the hardware is already there," says Twohy. "The hardware is already there. The way it works is we figure out what the workload requirements really are and then we deploy that and a buffer for the customer."

Customers do not pay for the buffer consumption service unless they start consuming it, said Twohy.

"If usage accelerates we are way in front of the cycle before customers actually need it," he said. "This is about getting in front of that procurement cycle. Customers are no longer beholden to supply chain issues."

The HPE Cloud Cruiser Pay Per Use Metering Advantage

HPE GreenLake's "secret sauce" may well be the metering and analytics software it obtained when it acquired Cloud Cruiser in 2017.

"We can meter down to the core, Gbyte, or VM (virtual machine) or in any way the customer wants," said Twohy. "That's a big, big advantage. Cloud Cruiser is the difference. It is very powerful. I have had customers tell me the metering alone is enough for them to say yes to GreenLake. It helps customers transform their internal IT into a true internal service provider."

As part of GreenLake, HPE provides access to a portal that shows detailed consumption metering. "Customers can get very granular with this data," said Twohy. "We can track it by project, business unit or external customer."

For many customers the metering software is bringing a profit and loss statement for each and every IT service.

Customer Has Option For Capex Or Opex

HPE GreenLake is effectively a statement of work service contract that provides the ability for partners to provide the multiyear service as either a recurring revenue, operating expense subscription or capital expenditure.

"We can make the financial handling of this look like capex or opex," said Twohy. "The customer has the option. They can decide what matters to them: capex or opex."

Some customers focused on EBITDA (Earnings Before Interest, Taxes and Amortization) prefer the ability to depreciate IT assets in a capital expenditure deal, said Twohy.

At the same time, other customers are looking to free up cash to be used in stock buybacks or mergers and acquistions. "We can free up that capital and they can apply it elsewhere into areas like stock buybacks or mergers and acquisitions versus maintaining IT systems or managing things," says Twohy.