HPE Discover 2022: CEO Antonio Neri’s 10 Most Provocative Statements

Hewlett Packard Enterprise CEO Antonio Neri took on all the big issues at HPE Discover 2022 from HPE’s transformation into a software and services company with GreenLake to how HPE is out-innovating competitors. Here are his 10 most provocative statements from the event.

GreenLake Momentum: Customers Have ‘Voted With Their Workloads And Data’

HPE President and CEO Antonio Neri said the company’s GreenLake edge-to-cloud platform now has 65,000 customers with 120,000 users with over an exabyte of data under management.

“Customers have voted with their workloads and data,” said Neri in his keynote address at HPE Discover, where 8,000 customers and partners gathered for the first time since the pandemic to see the latest edge-to-cloud innovation from HPE. “Today 65,000 customers and 120,000 users are on the HPE GreenLake cloud platform consuming 70 unique cloud services with over an exabyte of data under management with customers worldwide. This demonstrates how customers are increasing and expanding their reliance on HPE GreenLake.”

When asked what workloads should be put in the public cloud and what workloads should stay on-premises, Neri said, “That is the wrong question. We think the better question is how do I bring a consistent cloud operating model across all my workloads and data? To do that you need to start with an edge-to-cloud architecture in a platform built specifically for a highly distributed enterprise. This is why the [GreenLake] platform not only complements your public cloud capabilities it also completes your hybrid cloud strategy by addressing your biggest data-first modernization challenges.”

Among the biggest challenges in that regard is the ability to provide an on-premises cloud model for customers struggling with moving to the public cloud because of data gravity and data compliance issues. “HPE GreenLake solves that problem by bringing the cloud operating experience to your data,” Neri said. “Because of this flexibility you can deploy your cloud anywhere.”

Another big differentiator is HPE’s continuing build-out of a growing GreenLake partner ecosystem that includes distributors, value-added resellers, systems integrators, ISVs and service providers, said Neri.

“We are placing partner capabilities at the center of our platform through our strategy to open our unique APIs [application programming interfaces] to partners,” Neri told the audience. “The bottom line is there is a growing partner ecosystem building on HPE GreenLake ready to help you. In fact, I believe that is another big difference from our competitors. We are winning with a growing partner ecosystem. We are helping our partners build a business on top of HPE GreenLake.”

Transforming HPE From A Hardware Company Into A Software And Services Company

That is our vision, honestly. It is a transition that is not black and white. We think about two business models in the cloud—one is SaaS [and the other is] the subscription to our software, which may include infrastructure sold as a Capex. Let me give you a real example. You buy an HPE ProLiant server and you buy it outright. It may have a lease or something. But the software to deploy and life-cycle the server is on HPE GreenLake, which means you subscribe to the software which, by the way, is not just SaaS software. There is also an [HPE] Pointnext OS that ships with it.

With Aruba Network as a Service you would be charged per port. This is exactly what we did with Home Depot. The Home Depot is a Network-as-a-Service model. We charged them per port for all the stores.

That is the model over time, and that is what really composes as-a-service. The way we measure that is what we call the annualized revenue run rate. The ARR mix is heavily skewed to software and services. Today that ARR is on track to deliver by the end of this year $1 billion. Two thirds of that—65 percent—is software and services. If you think about margins on software and services, which are very high, you can see how accretive it is to the company.

I think long term the vison is very simple: The infrastructure piece of this is nothing more than the cost of sales. 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.

HPE’s Edge-To-Cloud Innovation Advantage Versus Competitors

We have a lot of competitors, but we also have co-opetition. So if you go back to what [HPE Vice President of Product Management] Bryan [Thompson] showed today, we integrated our backup and recovery service with AWS.

We also have solutions with Microsoft Azure. We also announced a few weeks ago a unique solution with Google where we have become a part of their solution for Google Distributed Cloud on-premises.

Ultimately, what customers want is a hybrid experience and we give them that true hybrid experience all the way to the edge. The moment you select a public cloud and you may select two—those two don’t talk to each other. You are running on two tracks.

We can deliver a true hybrid experience both at the workload level and at the data level.

As far as the traditional vendors, I don’t dismiss anyone but so far I haven’t seen any big advancements yet from the Lenovos, the Dells.

Cisco is a little bit different because they focus on one thing, which is networking. We compete with them at the edge, but even that is a different story.

HPE GreenLake’s On-Premises Cloud Service Market-Share Lead

Obviously, there are thousands and thousands of customers in the public cloud but when I talk about the other spectrum—the traditional vendors—I don’t think they can spell it. Tell me what they have disclosed [in terms of on-premises cloud service customer data]. We have disclosed 65,000 customers with over an exabyte of data [being managed], 120,000 users, on track for $1 billion in ARR, growing 30 [percent to] 40 percent. We have disclosed the software and services mix, the financing fees that get added as part of the operating leases that get embedded in the cost per unit. Tell me which other vendors have disclosed that. The reason why is because they don’t have it.

We have a cloud operating environment [with GreenLake] that ultimately takes many years of software and services and unique skill sets to build.

HPE’s Push To Become A More Engineering-Driven Company

We continue to update and upgrade skills throughout the company. We’re becoming more technical. The shift on the composition of the company’s employee base is becoming more engineering-driven, more technically driven.

With that technical path, you will see more and more software and services talent being added. You will also see more data-driven expertise being added as we go forward. Even in the last 18 months or so, we have had quite a significant shift because everything you saw today in the platform is actually software. That has been done organically throughout the company. That is part of the journey because we as an industry have to continue to transform.

Partners’ Ability To Add Value On Top Of GreenLake Through APIs

We are opening up the APIs so partners can add their own value on top of the platform. They can choose to build, resell or manage on behalf of the customers. And through our leading Partner Ready program we actually expanded that as an elastic program [through Partner Ready Vantage] so you can decide as a partner where to play and add value. So if you want to be just in distribution and sell transactional products, fine, you can do that. But a lot of these products are now being delivered through the [GreenLake] platform even if it is Capex.

If you want to be a true managed service provider you can add your managed services on top of the GreenLake platform and you still monetize that on top of HPE GreenLake. So we believe we are not only the only edge-to-cloud company, but the one and only company that really gives the choice and flexibility for partners to decide where they want to add value and how they want to monetize it.

The Supply Chain Crisis

On the supply chain, people take the negative side. I actually look at it the opposite way. This is not a supply problem. It is a demand problem. That is the main message. Capacity has not gone down. Demand has gone up dramatically. If you look at our results, the last four quarters we grew bookings in excess of 20 percent year over year. And the supply in the system was not ready to fulfill all that demand.

This is actually quite interesting because it is technologies that you do not think about. It is lower-level components— programmable boards of sorts or microcontrollers or board-level components that sometimes you don’t think about.

There are some components that at times go out to 55 weeks.

When you get on HPE GreenLake, capacity gets added for you. That is a benefit of being on the HPE GreenLake platform. You have reserve capacity that gets scaled up or down versus running the typical procurement process that takes a long time.

A ‘Massive’ HPE Transformation

We have been on a massive transformation, which started actually in 2018 when I said the enterprise of the future would be edge-centric, cloud-enabled and data-driven. Guess what? Through the pandemic we validated that.

Also we said in 2019 we would deliver everything as a service. Interestingly enough, during the pandemic the most important thing customers had to deal with was preservation of cash and the ability to really refocus their energy on the balance sheet while navigating through the uncertainties. And all of these trends came together at once. That is why in 2019 I said we would offer everything as a service and we launched HPE GreenLake.

To me at the core of that strategy are our joint customers. We know they need to drive data-first modernization, they need to navigate these multigenerational IT journeys because it is not just one thing they need to do. At the same time, they need to be way more agile and more efficient in everything they do. That is what we built with HPE GreenLake.

Core Products Versus HPE GreenLake: The ‘Journey To One’

People sometimes get confused looking at it as the core business versus GreenLake. The two are very synergistic. But the way you deliver that core business has changed. It is a different experience.

When you think about the past you may have got a different experience from HPE depending on the product you purchased, whether it was a ProLiant, Primera, Nimble or Aruba. What we have been doing over the last three years plus is what we call the ‘journey to one’—one platform with one experience with the ability to consume those amazing products in a different way. But also the value-add with services and software continues to increase. So the foundation we are going to show you is still the infrastructure. But how you consume it has changed dramatically.

What is really important is that we think about how we build brand and innovate on the platform. And infrastructure comes with it, no differently than financing comes with it.

A Cultural Transformation At HPE

Our culture continues to transform. People ask me, ‘How are you guys doing this?’ I would argue that the technology side of the equation is not as hard, although it takes a lot of effort, Most of that effort is in the software and services space. I would say the biggest challenge or the hardest part of the work is the cultural transformation: the way we think about innovation and the way we develop the value proposition.

That cultural transformation for me has been one of the most challenging but at the same time most rewarding experiences because when you establish a clear vision—which we have now had for four years—and a clear mission for people and you allow them to rally around that and empower them, magical things happen.

The Journey From The Pandemic, Challenges And Women’s Right To Choose

As I look at our audience today, I am reminded of how far we have come from those early days of the pandemic. In the face of uncertainty and business disruption—so many people exhausted and honestly pushed to the brink. We adapted collectively to the new situation. This very gathering is a testament to human perseverance, innovation and flexibility, a sign of what we can do when we all come together and work together.

Of course we continue to face challenges. We see rising prices, supply chain disruptions, geopolitical issues and as recently as last week developments that threaten the advancement of women. Our values as a company as well as the significant impact derived in the diversity and equality of the workplace compel HPE to stand up for a woman’s right to choose.