Hewlett Packard Enterprise is stepping up its march to accelerate and scale its HPE GreenLake cloud services business with a new Partner Ready Vantage as-a-service compensation model that pays more for IaaS and SaaS cloud services than the now-dominant custom on-premises GreenLake Flex capacity pay-per-use deals.
The new GreenLake Partner Ready Vantage model, which goes into effect Nov. 1, potentially pays as much as a 20 percent margin on HPE GreenLake IaaS and SaaS total contract value offers in enterprise accounts and below versus a potential 17 percent margin on custom GreenLake total contract value deals. The base incentive on a GreenLake IaaS and SaaS offer is 12 percent compared with 9 percent on a custom Flex capacity solution.
The HPE Partner Ready Vantage model is a shift away from the lucrative 17 percent up-front rebate on HPE GreenLake deals that has been in place for the past five years. Up until now, the GreenLake focus in the channel primarily has been on partners delivering often-time-consuming and complex on-premises Flex capacity deals that can take six months to a year or even more to negotiate and finalize terms and conditions.
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“We can’t continue to scale the deployment of custom as-a-service solutions in the way that we have,” said Hewlett Packard Enterprise Vice President of Worldwide Channels and Partner Ecosystem Simon Ewington. “We have been hugely successful, but we have got to shift toward simpler, more automated platform-based offers.”ADVERTISEMENT
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Ewington, in fact, said if HPE wants to continue “driving the same level of growth” that it has with partners over the past five years into the future it must “evolve” and shift to more standardized IaaS and SaaS offers.
“A big part of that evolution is our approach and the move towards more standardized IaaS and SaaS offers, which is one of the ways we are enhancing and changing the way we pay our partners,” he said. “And why are we doing that? Because it is critical that we allow partners to drive more sales campaigns, to be more efficient, to close deals faster with less resources and with higher margins. We have to shift away from custom as-a-service solutions which, given how fast we have already scaled with partners, we know is not really sustainable in the future.”
In the U.S., HPE is also shifting the GreenLake compensation model from monthly to quarterly.
The new quarterly payment GreenLake model is in line with the rest-of-the-world model that HPE has had in place for more than a decade.
The shift to IaaS and SaaS GreenLake offers comes with HPE implementing what it calls a new “partner-led and partner-delivered” services model under which partners can wrap their own branded services around GreenLake and deliver them themselves rather than HPE’s services organization.
Ewington called the new Partner Ready Vantage compensation model the “next step” in the pioneering HPE GreenLake as-a-service channel journey. He said HPE is creating a “massive” opportunity by sharing its “crown jewels” in what amounts to “millions of dollars” in services tools and intellectual property that ultimately will help partners build a “long-term, sustainable, viable” business that is much more profitable.
The new IaaS and SaaS sales offensive puts the channel focus on IaaS and SaaS opportunities with offerings like GreenLake Private Cloud Business Edition, block storage as a service, backup and recovery and disaster recovery services.
Ewington said the IaaS and SaaS offers allow HPE to continue to stay ahead of competitors that are stuck in the custom as-a-service game.
“We are fortunate that we have had a CEO [Antonio Neri] with great insight into where the market is going,” he said. “We have had a head start. That head start has allowed us to move from very customized solutions that many of our competitors are entering the market with today to much more standardized platform-based offers, which is where we want the market to go. And the reason we want the market to go there is it is more efficient for us but, more importantly, it is more efficient for our partners. They can drive so many more sales cycles much quicker, drive to conclusion much quicker and move time to revenue much quicker.”
HPE’s GreenLake business—which includes more than 1,100 partners transacting business on the predominantly custom business—now has a total contract value of nearly $12 billion, supporting 27,000 unique customers and 3.4 million connected devices.
Over time, HPE wants to move the “majority” of the GreenLake business to the cloud services IaaS and SaaS model, said Ewington. “We want to move towards much more standardized offers and they need to be attractive enough, they need to be priced competitively enough, which we believe they are because it just makes everybody more efficient,” he said. “It makes us more efficient, and it makes our partners more efficient.”
Under the new Partner Ready Vantage model, IaaS and SaaS compensation in enterprise and below accounts will be made up of a 12 percent base incentive, a 5 percent new logo incentive, both paid quarterly, and a 3 percent annual volume incentive for partners that hit five deals or more that will be paid at the end of the fiscal year.
The custom Flex Capacity deals in enterprise and below accounts—which previously paid 17 percent within 30 days on all deals—will now be made up of a 9 percent base incentive, a 5 percent new logo incentive, paid quarterly, and a 3 percent annual volume incentive for five deals or more.
The change to the rebate structure is an “increasingly smaller part of the picture” given the “much richer” services opportunity HPE is opening up to partners, said Ewington. “Competitive pricing and the ability to add partner-led, partner-delivered services are equally—I would say arguably—much, much more important,” he said.
The compensation changes come with a new GreenLake partner-led experience model that opens the door for partners to lead a GreenLake engagement with the ability to build the account support plan and lead service review meetings.
“We are focused on giving our partners the opportunity to earn more based on the value that they deliver and repeatability and focusing the ability to drive more of their own services, which is where the big opportunities for many partners are,” Ewington said. “They can earn a huge amount of money by driving their own margin-rich services.”
With HPE Partner Ready Vantage, HPE partners can deliver more and more services under their own brand, said HPE Vice President of Worldwide Channel Partner Programs and Operations Jesse Chavez.
“We are going to give them the capability of becoming basically the services account manager for the customer where they own the entire relationship from a service perspective and provide their own services or leverage our services,” he said. “As they start moving up with their services, that’s where the margin capabilities exist.”
As part of the IaaS and SaaS sales offensive, HPE has been providing new quoting tools and simplifying cloud services offers, said Chavez. “We’re making a shift to more repeatability, which is what most as a service companies want to do—go drive repeatability,” he said.
As for the new GreenLake compensation model, Chavez said it represents a move to “value-based compensation” that rewards partners for as-a-service investments.
“We are going to recognize the value, and not all partners deliver the same value,” he said. “So the partners that are delivering the value based on the strategy, we are going to pay more for as-a-service when you are talking about the sell track. So you can still make up to 17 percent but we have added capabilities that we are going to recognize repeatability, new logo and cloud services, which is the repeatability. So if you do those things, you can actually earn up to 20 percent. So it is going to be higher than the 17 percent.”
HPE has established a new competency framework designed to empower partners to successfully deliver on business outcomes including new competencies centered on HPE storage and data services, private cloud solutions and hybrid cloud solutions, said HPE Aruba Networking Senior Director of Worldwide Chanel Partner Programs and Strategy Beth Jensen.
Furthermore, HPE is planning to release “many more” competencies in the fiscal year, including AI and data analytics competencies, said Jensen.
“We are really investing in our partners, making sure that we’re building out the relevant expertise that our customers want and making sure that we have strong relationships together to increase customer satisfaction,” she said.
Pat O’Dell, general manager and managing partner for Clinton, N.J.-based CPP Associates, the 2023 GreenLake North America Partner of the Year, said he sees the “potential” for CPP to earn more based on the new Partner Ready Vantage compensation model.
“HPE is trying to disincent custom GreenLake deals so we will put more emphasis on quick quote IaaS/SaaS GreenLake offers,” he said. “We expect double-digit, if not triple-digit, growth on our IaaS/SaaS GreenLake business in 2024 as we have seen our clients and even prospects latch on to the benefits of GreenLake. It’s like anything else: There are pros and cons. While we would have loved the compensation to stay at 17 percent in all scenarios, we can see how this could be a good thing for us if we execute on our plan, which is to add substantial new accounts using quick quote and to provide many of the GreenLake services on our own. If we do all those things, it should be a net positive for us and our clients.”
The biggest game-changer with the evolution to the Partner Ready Vantage model is the ability for partners that have made deep investments in GreenLake to for the first time be able to provide critical GreenLake services that in the past were only delivered by HPE’s Pointnext services organization, said O’Dell.
“This is an evolution of the GreenLake model that lets partners that have made the investments like CPP perform the profitable managed services,” he said. “This gives us a chance to add more margin, be more sticky and increase our footprint with highly profitable managed services.”
To that point, O’Dell sees the new Partner Ready Vantage model as the emergence of HPE as a full-fledged cloud IaaS and SaaS provider that poses a significant competitive threat to Amazon Web Services, Microsoft Azure and Google.
“HPE has been adding services over the last few years that put it much more in line with the self-service and automation characteristics of the hyperscaler companies like Microsoft and AWS,” he said. “HPE has closed that gap dramatically and in our experience their pricing for 24x7x365 workloads is substantially better.”
In fact, O’Dell said, there are some scenarios in which CPP has priced out GreenLake solutions that save customers more than 50 percent on their spend compared with the hyperscaler providers. “If we can save clients 50 percent on 24x7x365 mission-critical solutions, that is the kind of value that moves the needle and that clients remember,” he said. “We’re very bullish on GreenLake and have made the investments necessary to optimize those solutions for our clients from an as-a-service perspective.
As for legacy infrastructure competitors, O’Dell said HPE has left them in the cloud services dust. “HPE is far ahead on cloud services with GreenLake,” he said. “HPE has been doing as-a- service longer, and GreenLake is more mature and comprehensive than any other competitive offering that we have looked at.”
Rob Schaeffer, president and COO of CBT, Orange, Calif., a top HPE enterprise partner that specializes in IoT, data and information, and artificial intelligence, machine learning and deep learning, said he sees the new Partner Ready Vantage model helping partners capitalize on the AI market opportunity.
“HPE Partner Ready Vantage is built with what’s ahead of us technologically with AI, machine learning and data fabric,” he said. “This gives us the option to deliver these next-generation solutions in a more agile and flexible way. This gives us the opportunity to have the closest relationship possible with our customers, and the best way to do that is creating value with as-a-service. When you sell as-a-service in a contractual way you have assurance that relationship will be for a longer period of time. If you live and die by transactional business in the future you will be closer to dying than living. HPE Partner Ready Vantage brings to life Antonio’s vison that HPE GreenLake will be the fourth hyperscaler.”
Schaeffer, in fact, said he sees Partner Ready Vantage as an “inflection” point to put HPE GreenLake in the same category as AWS, Microsoft Azure and Google.
“The reason we invested in HPE is that there’s predictability that our solutions and the channel model will always evolve and advance through our partnership with HPE,” said Schaeffer, a former seven-year HPE veteran who was vice president of U.S. channels at HPE until he moved to CBT in 2020. “HPE not only wants us to, but they are encouraging us and providing us an opportunity to provide our services before, during and after the GreenLake sale.”
HPE Partner Ready Vantage opens up the ability for partners to capitalize on the Build, Sell and Service tracks of the Partner Ready Vantage program backed up by Centers of Expertise and new competencies including HPE storage and data services, private cloud solutions and hybrid cloud solutions, said Schaeffer.
“We’re going to have the ability to do all those things, some which will be HPE-SKU’d and others which will be partner-SKU’d unique services,” he said. “It is incumbent on all of us to remember GreenLake solutions’ value provides flexibility, agility and locks up the partner relationship with the customer for an extended period of time. Partner Ready Vantage allows us to focus more on the next strategic opportunity with the customer.”
As HPE and partners team to address the challenges with the new model, including the quarterly payment schedule, Schaeffer said it is vital that they work together with “integrity” and “authenticity” focused on helping each other to be successful.
“We have to do that together with a go-to-market that builds a plan that we both understand and we are going to abide by the fact that we are both better together,” he said. “If we do that, we will all come out very successful and have very happy clients.”
Ewington, for his part, said he is “super excited” about giving partners the opportunity to drive more services revenue by unleashing HPE tools, resources and intellectual property. “That’s the crown jewels,” he said. “We are giving our partners the opportunity to make more margin on services as some of the hyperscalers have done in the past and to drive more high-velocity business in our as-a-service offering with IaaS and SaaS.”
Ultimately, Ewington said Partner Ready Vantage is a “super revolutionary” step forward that unlocks the ability for partners to drive long-term sustainable GreenLake practices.
“The partner community has done an amazing job of driving turbo growth across our as-a-service business in the last five years,” he said. “This is the next step to allow us and allow them to drive a long-term, even more profitable, sustainable relevant business in the future.”LEARN MORE: Cloud Software | Software as a Service
Steve Burke has been reporting on the technology industry and sales channel for over 30 years. He is passionate about the role of partners using technology to solve business problems and has spoken at conferences on channel sales issues. He can be reached at [email protected].
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