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Partner services growth mandate prompts HPE revenue momentum

Partner services growth mandate prompts HPE revenue momentum

HPE GreenLake retains strong customer demand and presents new partner opportunities.

Heiko Meyer (HPE)

Heiko Meyer (HPE)

Credit: HPE

Partners and customers have provided Hewlett Packard Enterprise (HPE) with a strong mandate to continue serving up edge-to-cloud solutions and services, evidenced by increased revenue margins during the third and fourth quarters of the year.

The vendor's third quarter financials returned a net revenue of $7 billion, up from $6.7 billion during the second quarter. Antonio Neri, president and CEO of HPE, attributed such an increase in recurring revenue to the “strong response” by end-users to the GreenLake platform.

“Customers continue to prioritise investments in IT and are finding HPE’s industry-leading edge-to-cloud portfolio to be particularly relevant in today’s complex macroeconomic environment, where technology innovation is critical to accelerate business transformation and deliver important business outcomes,” he explained at the time.

Echoing a similar sentiment, Heiko Meyer, executive vice president and chief sales officer at HPE, outlined the vendor’s commitment to develop “world-leading technology”, and more importantly, deliver innovation designed to benefit both partners and customers.

Speaking to Channel Asia on the sidelines of HPE Discover More in Singapore, Meyer remained optimistic of the vendor's ongoing performance against an inflationary and challenging supply environment – citing “four per cent revenue growth” in Q3 and “strong demand” – while also looking ahead at where opportunities lie for partners.

"This number is an indicator of how well we are doing and what we have seen," he said. "We had 39 per cent growth in orders for HPE GreenLake."

Meyer also noted that within that segment, 55 per cent was credited to channel partners, indicating that performance was even higher than on the direct side, representing “a good message” for the ecosystem.

Services business continues to dominate

According to IDC's latest predictions for the Future of Digital Infrastructure, by 2026, 65 per cent of technology buyers will prioritise as-a-service consumption models for infrastructure purchases to help restrain IT spending growth and fill ITOps talent gaps.

The data supports HPE’s approach of offering flexibility and agility, while bringing the cloud to customers via channel partners, now viewed as how the vendor provides “relevance” in the market.

Meyer observed that more cloud services, specifically via HPE GreenLake, are “coming to life” with the “strategy really fitting the demand in the market”. But HPE’s progress could not be possible without “close collaboration” with a diverse ecosystem and tailored support for each partner type across Asia Pacific.

"We will continue to support them in the best way and give them the best experience," he added. "And there are some who want to bring the whole service experience to their customers by including their own services – where they can use parts of our portfolio and enrich it with their services.

"When you talk numbers, for system integrators, 40 per cent of our business goes through GreenLake. There is a need for what we are doing, and I would say we are not only on track but we are well on track."

Narinder Kapoor, managing director and senior vice president of Asia Pacific at HPE, also stressed that regional growth is “exactly in line” with global growth, identifying that the vendor's services segment represented the largest area during the third quarter and continues to expand “really fast”.

"Especially with the partners, we're seeing growth in all segments so far," he noted. "So that's why we're really excited that the strategy is working. The focus on digital transformation with the customer is actually driving a lot more demand. Despite whatever we're seeing globally from a market and economic slowdown, we continue to see that our pipeline is strong."

As part of efforts to continue innovating and supporting its growth trajectory in the cloud services space, HPE unveiled advancements to the GreenLake platform earlier this year which included enhanced security, a new developer portal and developer tools, and deeper capabilities to manage assets and workloads at scale.

The HPE GreenLake for Private Cloud Enterprise was also released and provides an "automated, flexible, scalable and enterprise-grade" private cloud offering.

"HPE is really creating a new future, and we want partners to come on this journey together with us,” stated Heng Huey Lih, head of Partner Sales across Asia Pacific at HPE.

“We're also seeing in Asia Pacific a lot of interest and growth in the mid-market, small- to medium-sized business [SMB] segment, and customers are very interested in HPE GreenLake because they like the flexibility of the cloud, with more security, and a better price point. That's where HPE really comes into play, and that's where we have a lot of opportunity for partners to work together with us."

In terms of the prospects in incorporating HPE Private Cloud Enterprise for partners, Meyer viewed that the private cloud journey “resonates so well” with customers, with the ecosystem set to play a big role.

"Partners want to have capabilities around build – where they can build a solution using parts of our portfolio, or a sell track where they just use our capabilities and sell it, or the service track they can add their services on top of what we can bring to the market," he outlined.

"We want to see partners selling our services, and we want to have them contributing to this story. Two-thirds of our business is going through the channel. We are a channel-centric company. Whatever we bring to the market will go through the channel, with the channel."

Meyer shared that his commitment to channel partners is manifested in the training and enablement that HPE provides and reflects his view of them as part of the vendor’s go-to-market strategy.

"I have my direct sellers but the expansion with the channel partners is so essential for me," he confirmed. "They get the same enablement, so we have the same story. They're sitting sometimes in the same trainings, which is exciting."

Evolving cloud journey

HPE also confirmed that it has achieved its goal of shifting its entire portfolio towards a subscription model – a three-year strategy that was announced in mid-2019. However, as to be expected, the trends around how organisations are setting up and operating their digital infrastructure continues to evolve.

“Today, we have our whole portfolio available as-a-service," Kapoor said. "But now, what is happening is that more and more workloads are moving to the edge. There is no worry about the cloud being a destination – it is all about bringing the cloud experience irrespective of where your workloads are sitting. And that's the next part of our journey."

Meanwhile, Meyer considered it is a “continuous transition” as the process presented it as a “huge ramp” for the business. Identifying hybrid cloud as the “next big wave” for the market, there is confidence that the journey is working for HPE and that “much more” growth is expected.

"My preparation for the sales organisation for next year is really focusing on how we can further increase that,” he added.

HPE partners can also anticipate the roll out of the vendor’s new Partner Ready Vantage program which was unveiled this June.

The new program encompasses both HPE’s hybrid cloud and Aruba portfolios, and will feature three tracks - Build, Sell, and Service. It recognises different partner capabilities and business models, aiming to be “in tune with how partners want to do business” whether that’s through traditional sales models or ‘as-a-service’.

Each track features focused Centres of Expertise (COE), offering tailored enablement, training, go-to-market initiatives, and sales tools.

The enhanced partner program still sustains HPE’s commitment to the mid-market and SMB segment, which Huey Lih described as a “high margin opportunity segment” for partners to take control of.

HPE also made changes to its existing Partner Ready Program in fiscal year 2021 to support opportunities in this specific segment, with the aim of offering partners “a profitable compensation model, access to financial resources and robust enablement opportunities”.

Meyer reiterated that maintaining a constant feedback loop with partners is key to understanding where HPE has done well and what needs improving. Looking ahead, bringing partners along a “digital journey” and delivering business outcomes for customers will continue to be key drivers for the vendor.

“It's a transformation and we want to go up the stack," Meyer added. "What we are doing is to be more relevant for our customers. Whatever we discover, we need to add to the model, and we bring it back to our partners."

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