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Can partners help HPE GreenLake challenge the hyperscalers?

Katy Ring Profile picture for user Katy Ring November 9, 2023
Summary:
Drilling down on HPE's push to compete in the hyperscaler market.

HPE

The hyperscaler club is dominated today by AWS, Microsoft Azure and Google, but many other cloud contenders remain in the follow pack, including Oracle, IBM, and Hewlett Packard Enterprise (HPE). Aligned with its goal to become the world’s top provider of hybrid cloud, HPE has recently revamped its Partner Ready Vantage program for GreenLake with the aim of driving more as-a-Service capability into the market. The upgraded program provides partners with access to HPE tools, resources and IP, that have hitherto been the sole preserve of HPE’s own professional services arm HPE Services (Pointnext as was).

HPE Services and GreenLake – waving or drowning?  

HPE’s growth is pinned on the company’s bets on Intelligent Edge, High Performance Computing (HPC) & AI, and its new Hybrid Cloud segment, which opened for business on November 1. In combination, CEO Antonio Neri, expects these business segments to account for over 50% of HPE revenue by FY’26. Intelligent Edge is the part of HPE’s portfolio built around the company’s Aruba Networking business. Hybrid Cloud is HPE bringing together many of the on-premise and hosted infrastructure products and services its customers currently use with the newer GreenLake as-a-Service offerings in storage and compute.

The idea is to have GreenLake centre-stage to push the concept of hybrid cloud being a strategic design choice for infrastructure, rather than a tactical rationale of where most enterprises have accidentally found themselves today. HPE’s most ambitious play is around AI, where HPE intends to capitalise on HPE Cray’s HPC expertise to provide specialised architecture for running Large Language Models, as well as using its ownership of Opsramp to enhance its AI ops capabilities and its acquisition of Pachyderm to expand its AI development tooling. 

Where in this technology playbook does the company’s services business fit? HPE’s services arm was branded as Pointnext under the leadership of Meg Whitman, and has struggled to clarify its identity after the separation of HPE from HP. Part of the issue stems from the development of HP services (pre-split) from a technical support and consulting arm, to a bloated multi-service organization after the acquisition of EDS in 2008, and then back to a technical support and consulting arm after the sale of the outsourcing business to CSC in 2016.

In 2023, the new lower profile branding of HPE Services as a professional services arm to power HPE’s transition from a hardware company to an as-a-Service player is useful. As Pradeep Kumar, SVP & GM, HPE Services has expressed it, “HPE Services brings GreenLake alive.”  HPE Services currently does this by offering managed services around GreenLake as well as advisory and support services, which it will continue to do. However, it is about to witness the entry of many new channel competitors with the revamped partner program, and more of a ‘services inside’ HPE positioning.

HPE adds go faster stripes to partner program

HPE Partner Ready Vantage was launched over a year ago to support partners integrating with and building on HPE’s GreenLake; selling as-a-Service offers and delivering managed and professional services across the customer lifecycle.  HPE’s GreenLake business has a lifetime total contract value of nearly $12 billion, and has 1100 partners working with it to offer mostly customised capabilities. To date the majority of GreenLake revenue is from direct channels, with around 30% coming from partners. In order to become the hybrid cloud market leader, HPE must grow faster with partners enabling it to scale that growth.

However, partners are predominantly currently selling custom on-premises GreenLake flex deals which have long sales cycles and are not repeatable. HPE is changing the compensation model to incentivise more standardised as-a-Service offers in order to more quickly scale the GreenLake business. The partner model now enables partners to wrap their own services around GreenLake and deliver them themselves, rather than working through HPE Services. 

The plan is to enable partners to become the services account manager for the customer, owning the whole customer relationship for services, whether those services are delivered by the partner or by HPE. In this way, Partner Ready Vantage can now offer HPE partners the attractive managed services business opportunity that the big three hyperscalers already offer channel players. The competency framework in HPE Partner Ready Vantage helps partners develop Edge offerings integrated with HPE Aruba and GreenLake, as well as hybrid cloud offerings for storage and data, data protection and disaster recovery.

HPE is also promising its partners that it will help them to make margin from AI by “changing the conversation about AI from ‘how to’ to ‘how fast’.” Partner competency support in this area will be unveiled by HPE in 2024, which given the immaturity of enterprise adoption for AI deployment is a valid timeline. 

The firm has already announced its AI cloud portfolio, including HPE GreenLake for Large Language Models that is architected to run a single large-scale AI model at full computing capacity privately, rather than running multiple workloads in parallel in public cloud. It is also introducing inferencing engines integrated with NVIDIA processors and software to support NLP, and Generative Visual AI. Partner offerings will presumably take advantage of these capabilities.

My take

Helping hardware resellers transition to solution sales, and then to as-a-Service providers is a long-term commitment, requiring attractive, balanced incentives and plenty of support. The updated HPE Partner Ready Vantage program has many of the elements required to assist partners as they evolve towards service delivery. The managed service provider enablement will be particularly welcome.

However, ultimately the customer decides how fast market shifts happen and the stability that a hybrid cloud approach offers (whether by design or by accident), comes with a big dose of slow-moving buyer conservatism. 

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