Now That HPE Has Gotten Smaller, Meg Whitman Is Ready For Massive Growth
For Hewlett Packard Enterprise CEO Meg Whitman, now that the company has gotten smaller and faster it's time to get bigger.
With Whitman leading the charge, HPE already has bought four companies this year — including hyper-converged powerhouse SimpliVity and all-flash superstar Nimble Storage — that are driving significant sales growth for partners. And the company is planning to put even more of its $11 billion war chest to good use, said Whitman, as it doubles down on its finely-honed strategy of making hybrid IT simple, powering the intelligent edge and providing services to drive growth in those markets.
"We are going to do more acquisitions like the ones that have been successful for us," she said, rattling off a string of acquisitions that have paid off handsomely for HPE including the 2015 purchase of Aruba Networks — which is powering double-digit sales growth with a software-defined wireless networking portfolio that has taken the market by storm. "So we'll do more. We have got a lot of dry powder, and this is a good time to have some of the dry powder ready and available."
Having that "dry powder" available is more critical than ever in an IT market moving at warp speed — where the best-positioned technology vendors are the ones capable of making businesses of all sizes ultra-competitive in an era of digital transformation.
"What partners should feel very confident about is we are acquiring assets in markets that are big and fast-growing so that we'll grow, but we only grow when they grow," said Whitman. "So they ought to be able to sell SimpliVity into the hyper-converged market. They ought to be able to sell Nimble into the entry-level all-flash [market]."
It's no small matter that the acquisition charge is focused squarely on leveraging HPE's highly prized partner network. SimpliVity and Nimble are 100 percent channel companies.
Harry Zarek, CEO of Compugen, No. 67 on the 2016 CRN Solution Provider 500 and one of HPE's top enterprise partners, said Whitman's decisions are driving sales growth for HPE and its partners. "Meg has had a huge impact on HPE," said Zarek. "What she has done is align HPE's business with the channel. It is simpatico. I can't even imagine HPE without Meg. She was the right person at the right time for HP. She made dramatic changes and was willing to stand behind those changes. And she has done it in a way that was right for the business, the industry and the channel."
Zarek expects double-digit growth for the Richmond Hill, Ontario-based company's HPE business over the next year. And SimpliVity and Nimble are adding more technology muscle to the company, he said. "They are both innovative, successful technologies," he said. "They are strong solutions for particular workloads. It means we get to sell more of what's on the bus from our trusted strategic partner."
For Whitman, the future belongs to the fleet of foot. "It is going to belong to the partners who are fast," she said. "It is going to belong to the disties who are fast, and it is going to belong to the vendors who are fast."
Moving fast is just what HPE is doing now that it is laser-focused on a hybrid IT/intelligent edge strategy. In the first eight months of its fiscal year that began Nov. 1, in addition to completing four acquisitions from start to close at a blistering pace, the company completed a spin-off/merger of its $20 billion enterprise services business — moving 100,000 employees off its payroll — finalized preparations for the spin-merger of its legacy software assets, rebranded and launched a new services business called Pointnext, and implemented a new business-outcome-focused sales organization targeting vertical markets under a single chief sales officer.
The HPE of today is moving at a pace more akin to a Silicon Valley startup — even if it is still a $30 billion company — than a legacy infrastructure technology provider. It's a long way from the $127 billion dinosaur with 325,000 employees and $12.5 billion in debt that Whitman took the helm of in September 2011. As if to drive home its entrepreneurial edge, HPE also is playing a bigger role in the hyper-growth-obsessed Silicon Valley as a global disrupter through its Pathfinder investment and partnership group — chartered with making investments that connect startups to enterprise customers — with a focus on leveraging HPE's partner network.
Among the HPE investments and partnerships are some of the most promising and disruptive technology providers, including Chef, Docker, Mesosphere and Hexadite. "We now have a reputation in the valley among the VC community of being the best partner for these enterprise companies," boasts Whitman. "We can do these investments of $5 million to $10 million in weeks — not years. We definitely have a reputation for, ’Wow, these guys know what they want, they get it, they do the due diligence and then add value to the company.'"
Now that HPE is moving fast, it is time for partners, which account for about 70 percent of HPE's sales, to "lean in" to the disruptive HPE portfolio to drive growth in hybrid IT and intelligent edge, said Whitman. "We have the best traditional data center products and the best software-defined data center products in the growth areas so they can grow," she said. "And then we have got a whole new growth area for them called the intelligent edge, whether that is Aruba or IoT offerings."
Innovation Acceleration On Display
The full breadth and depth of HPE's technology portfolio — and its channel model breakthroughs — will be front and center at the Discover conference being held June 5-8 in Las Vegas, which for the first time also includes HPE's Global Partner Summit.
Make no mistake about it: HPE is pursuing hybrid IT with a vengeance, delivering new infrastructure offerings designed to provide better security than public cloud providers at a 50 percent savings. At the same time, it is accelerating on intelligent edge, driving its mobile cloud-first approach to the core of the network and expanding its location-based application services for an IoT world.
Among the biggest breakthroughs are major investments Whitman and her team began making from the outset of her tenure that are only now starting to bear fruit. That includes a multi-year investment in bringing to market a silicon-based security offering that HPE said delivers the world's most secure industry-standard servers. It also includes improvements to HPE's Synergy Composable Infrastructure offering and products aimed at driving even more sales growth for Aruba.
The new HPE silicon root of trust — with security protection, detection and recovery embedded in silicon — will be part of every HPE server going forward from the entry-level ProLiant 100 all the way to the Synergy Composable Infrastructure product. The encrypted silicon detects malware and can securely restart a system and recover the firmware back to its authenticated state after a denial-of-service attack or security breach.
The HPE security breakthrough is unprecedented, said Tim Peters, vice president and general manager of HPE's ProLiant rack and tower servers and SMB solutions. Look for server competitors to be "scrambling" to catch up, he said.
The silicon-based security features strike at the heart of the No. 1 concern of every customer buying public or private cloud, said Peters. "They want a secure environment, their data protected and they want to preserve the continuity of their business, whether they are a small business or a large business," he said.
The HPE silicon is even a big differentiator versus the scale-out architecture of public cloud providers like Amazon Web Services, which was hit by a major cloud outage in February, said Peters. In fact, he said, HPE's new Gen10 servers will be more secure than the public cloud scale-out architectures. "[HPE's servers with silicon root of trust] is a secure platform. This is a golden ring."
HPE's Synergy also is being updated with new capabilities that make it a more economical choice than public cloud, particularly for advanced services, said Paul Miller, vice president of marketing for HPE's software-defined group. Once customers start using advanced services, public cloud "bills go through the roof," said Miller. "Customers are getting very, very concerned about the costs they're paying and the costs they can't see," he said. "[With Synergy, they] can move very quickly on a single platform from DevOps into production. We're seeing this across multiple industries."
At Discover, HPE will step up the price-performance battle versus public cloud with a new Synergy software-defined storage offering that will allow customers to deploy an application through an HPE 3Par SAN. "For [VMware virtual machine] farms, which a lot of software-defined storage technologies use today, we'll have a better cost point and faster deployment than almost anyone else in the industry," promised Miller.
HPE also is providing a new GPU compute module for Synergy aimed at graphics-intensive applications like 3-D animation and architectural design. Finally, HPE is bringing 16-GB non-volatile memory modules to the platform, with storage increasing by 2.8 times, and adding partners Red Hat and Mesosphere.
Speed, Innovation And Partner-First
The rebirth of HPE as an enterprise force is a lesson in the power of microeconomics. Getting smaller has given it the purpose, drive and spirit that was lost in the slow-moving cargo ship that was the old HP. It also has reignited the company's innovation DNA.
The getting-smaller strategy has HPE making decisions at a rapid pace rather than the tedious calibrating that occurred in the old HP on how every decision would affect other parts of the company, said Antonio Neri, executive vice president, general manager of the Enterprise Group, the principal architect of the software-defined hybrid IT buildout and the driving force behind the SimpliVity and Nimble deals.
Neri, a 22-year HPE veteran, said it has been "refreshing" to have a singular enterprise focus. "It just happens to be the business I run, which makes it even more fun," said Neri. "I have to say just the time management and the focus you can bring to the conversation is unbelievable."
Neri, who feels "liberated" by the structure of the new HPE, said now is the time for HPE and its partners to execute. "I always say no good deed goes unpunished," he said. "It is true.
Before, we were part of a bigger organization, there were a lot of moving parts. Now I am the company. There is a saying, ’With power comes responsibility.' This is a very interesting time. Now we have a clear vision. We have a clear strategy. And we have an operating model that simplifies things for us to go execute."
The speed at which the new HPE moves has been particularly pronounced in the time to close of acquisitions like SimpliVity — start to finish in just four weeks — and Nimble — start to finish in just five weeks. "The speed of how we have been executing is fairly amazing to me," said Neri. "And, by the way, getting that message down into the field to our channel partners with the quality of the positioning of the products and what they need to do [to start selling] was also done very, very quickly. "
The decision to get smaller to move faster is diametrically opposed to Dell's strategy, he said. "If you look at Dell, they have done a consolidation play," said Neri. "We are doing an innovation play. They are levering up the company. We are not. We are actually creating value and differentiation and also a significant return for the shareholders. This is a totally different strategy than Dell-EMC."
As for Cisco, which also is acquiring software vendors at a breakneck pace, Neri sees it "pivoting" to a "different" strategy as the center of gravity in a mobile cloud-first world moves to the edge of the network. "Clearly, they have a profit pool and an installed base that they need to manage and transition over time," he said. "What I have learned is you can't be someone you are not."
Neri believes Cisco is going to be forced to make some of the same soul-searching decisions that HPE made with its enterprise services business and software assets. "Let them play where they want," he said. "I am very comfortable in our ability to compete with our portfolio and with the innovation that we drive."
Comfortable indeed. The HPE innovation offensive is being felt full force in the networking market where Aruba is giving Cisco fits with its intelligent edge mobile and cloud-first strategy. "Aruba has been an unbelievable addition to our portfolio," he said. "Aruba is winning and is winning big in the market, and the reason why Aruba is winning big in the market is because it is focused on experiences through a set of innovation that is very, very differentiated."
The Intelligent Edge: The Aruba Difference
Keerti Melkote, co-founder, senior vice president and general manager of Aruba, said HPE's acquisition of the company has had a profound effect on the HPE culture. "The innovation and customer-first approach to our culture is what I think is giving HPE more confidence that we can do more of these acquisitions like Nimble and SimpliVity and create this new stack that customers are looking for," he said. "And, most importantly, have the confidence that we can keep the talent — the innovation DNA — that comes from these startups as part of the HPE organization and make HPE a very innovative company moving forward."
Melkote, in fact, has become an "ambassador" of sorts to the newly acquired companies, providing advice on how to continue to drive innovation at an unprecedented clip, while taking advantage of HPE's enterprise channel muscle to dramatically grow the business. Going forward, Melkote said HPE will need to drive innovation both internally and through acquisitions to be successful. "This is the whole enchilada," he said. "We really need to bring organic and inorganic elements together and make it all work well together as one culture."
Rearchitecting The Sales Model
As HPE has rearchitected its software-defined portfolio, it also has revamped the go-to-market model with a business-outcome-focused sales organization. The sales force is now organized around four primary industries: health and public sector; financial services and insurance; manufacturing and distribution; and communications, media and entertainment.
HPE Chief Sales Officer Peter Ryan, a 37-year sales veteran who took on the new top sales job last July and oversees direct and indirect sales, said what hasn't changed is HPE's "unwavering" commitment to its channel partners. "We're still the only company that can claim that our focus on partnering, and being with partners, and generating business for partners, has never changed," said Ryan.
In fact, with the HPE enterprise services spin-merger, HPE is driving more partnerships with global systems integrators and with all manner of partners, said Ryan. "It's made it clear that we're a partner all the way with no overlap and competition," he said. "There's no ambiguity. It's clear that our No. 1 priority is to be the best partner in the market."
Ryan, who is pushing hard to get the sales force to work hand in hand with partners to break into new accounts, said HPE is gaining traction with partners because it has articulated its hybrid IT/intelligent edge strategy. "What partners want is clarity on investment strategy, clarity on the portfolio road map, clarity on the go-to-market strategy and how it embraces partners," he said. "And they also want to know that they're dealing with a company that will continue to bring them fuel to go sell because they need to build their businesses every quarter, every year."
Among the biggest sales drivers for the team, said Ryan, is Synergy, which is being embraced not only in the data center, but in SMBs as a blade replacement that opens the door to major digital transformation. "It's a new platform to be able to build new services on top of, and it's forward-looking," said Ryan. "The partners who are building skills and business lines around this are building their revenue streams for the next five to 10 years. This is a big deal in the transformation in the data center."
As for Aruba, which Ryan refers to as a "gift from the gods," it is continuing to drive sales momentum in the intelligent edge market. In the era of digital transformation, at least 40 percent of all data is expected to reside not in the data center, but at the edge, he said. Adding analytics from Niara, which HPE acquired in February, to the portfolio puts Aruba "miles ahead" of its competitors, said Ryan. "That creates opportunities for our partners to be relevant, helps them incrementally build their business and it shows our customers we have got their back when they think about security on the edge," he said. "We are going to bring innovation there that attacks the things that they worry about every day."
While HPE is driving highly differentiated innovation, competitors are behaving in an "economically irrational" manner, said Ryan. "Whatever the question is, price is the answer [for them]," he said.
HPE partners, meanwhile, are seeing "higher retained margins" and are driving more value for customers, said Ryan. "That is the key difference between us and our core competitors," he said. "It is just clarity of purpose and consistency of focus on the partners."
That is the advantage for the partners both short and long term, according to Ryan. That advantage includes giving partners more options to leverage HPE's Financial Services arm to offer public cloud economics with a private cloud offering in the form of HPE Flexible Capacity, said Ryan."It's pay-as-you-go,
Storage-as-a-Service, Network-as-a-Service, Infrastructure-as-a-Service, and we're helping our partners get there with a lot of interesting offerings," he said. "The reason that's great for the partners is it allows them to build sticky, long-term recurring revenue and margin streams. We're going to help them a lot there as we go forward."
The Ultimate Competitive Weapon
New HPE Global Channel Chief Denzil Samuels, former head of global channels for GE Digital who joined HPE just six months ago, said ultimately what differentiates HPE is its "partner-first" approach to the business.
One sign of that partner commitment is a stronger link between HPE's new Pointnext services organization and partners in the future, said Samuels. That includes HPE partners branding those services as their own, said Samuels, who is working closely with Ana Pinczuk, who joined four months ago as head of Pointnext. "We've got a real fresh view on how we are going to take services to market," he said. "Why wouldn't the channel actually brand some of our services? Why wouldn't we make it easier and easier for them to enjoy services success because that is also going to drive growth."
HPE's aim is to open up its "incredibly rich mix" of software-defined competencies and industry blueprints from Composable Infrastructure to intelligent edge skill sets, said Samuels. "That's how you scale, that's how you grow a market," he said. "We are going to look across that continuum and work with partners so they can rebrand them. It's a multibillion-dollar market opportunity, and we want to get it right."
To help partners "get it right" in a market where business leaders and IT buyers have completed 70 percent of the buying decision process before even speaking to a sales rep, HPE also is making deep investments in digital marketing services to help partners drive sales growth.
HPE Executive Vice President, Chief Marketing and Communications Officer Henry Gomez, who is overseeing the digital marketing offensive, said it's critical that partners take advantage of HPE's growing digital marketing tools and services. "If they're not with us — digitally in front of customers — we're in a world of hurt," said Gomez. "They've got to be there with us. So we are spending an awful lot of time on this. It is critically important to us. We're putting a lot of time and resources into educating, supporting and providing resources around digital marketing."
Those resources include a huge store of marketing content and collateral that can be branded by partners to use on their own websites or in blogs and social marketing campaigns. HPE has a Products & Solutions Now portal, a social media center, and even a marketing concierge service aimed at helping partners find content on HPE product and solution offerings.
HPE also has invested in marketing managers in the field to help partners get more digital game. "We are reaching out to all our partners aggressively to get them involved in digital, to see where they are in their journey, and to tie them to our programs," Gomez said.
At Discover, HPE is going to unveil a series of marketing road shows around the country aimed at creating more digital marketing-savvy partners. "Partners who are adapting and using these digital marketing tools are creating more pipeline, and that is giving them a higher opportunity to convert and drive more revenue," said Chris Ogburn, vice president of worldwide channel marketing for HPE. "It is specific. It is targeted and it is measurable. At the end of the day, it is all about driving more sales."
The Hybrid IT/Intelligent Edge Difference
Driving more sales is just what partners are doing now that HPE has staked out the hybrid IT/intelligent edge high ground. They said HPE's product portfolio is powering digital transformation for customers at a breakneck pace — even against public cloud.
"Our HPE hybrid IT sales have tripled in the first quarter, while our public cloud sales were flat for that same period," said Jim Bartis, vice president of sales for BlueAlly Technology Solutions, one of HPE's top enterprise partners, No. 198 on the 2016 CRN Solution Provider 500. "We have been involved with both the private and public cloud model for many years, and while there has been much more noise around public cloud, private cloud is growing steadily. Hybrid cloud is really where the market is today.
"The genius is HPE has moved out of things that were outside of the focus of most of the customers and the channel and doubled down on the segments where the market is going," he said. "Splitting up HP was a difficult thing to do, but now that HPE is 100 percent focused on adding value to its customers and partners and stakeholders, they are truly a force to be reckoned with." Bartis attributes the Cary, N.C.-based company's exceptional sales growth to HPE's hybrid IT/intelligent edge lineup. "The portfolio with SimpliVity, Nimble and Aruba is fantastic," he said. "It's interesting because we sold some of these technologies prior to HPE buying them but had marginal success. Prior to the acquisition by HPE, SimpliVity had compelling technology but there was resistance to buying it, especially from enterprise customers, because the future of the company was uncertain."
Now that SimpliVity is backed by HPE's financial, services and channel muscle and is being integrated into a full software-defined data center portfolio, customers are buying it. "The SimpliVity business is going to be huge for us this year," said Bartis. "SimpliVity was barely a blip on the screen before HPE
bought them, and now it is going to be a significant part of our business. SimpliVity makes HPE a significant player in hyper-converged. It is helping us sell storage, industry-standard servers and it creates an opportunity to talk about HPE networking." Bartis also is seeing similar sales growth from the Nimble all-flash portfolio. BlueAlly closed a $450,000 Nimble deal in the wake of the HPE acquisition and expects its Nimble sales to be up three-fold this year.
Mainline Information Systems, Tallahassee, Fla., a perennial CRN Tech Elite award winner, also expects to see significant Nimble sales growth. Mainline, in fact, was out in front of the all-flash technology shift well before it was on the radar of most companies or partners. So when HPE acquired Nimble earlier this year, Mainline Vice President of Storage Bob Elliott was ecstatic.
"With Nimble, HPE leapfrogged a bunch of companies in the storage marketplace," said Elliott. "It filled a huge hole and firmly established HPE as a full-fledged, soup-to-nuts storage provider with an unbelievable storage product line — not just a one-trick pony with 3Par. I really love the strategy. It was a brilliant acquisition, and we are in a position to benefit from it."
One of the biggest breakthroughs from the $1 billion acquisition: Nimble's InfoSight Predictive Analytics platform, which will be used to provide dynamic insight and intelligence to HPE's 3Par storage product and the full HPE infrastructure story, including OneView. "InfoSight is a superior technology and now
HPE gets to integrate it into the 3Par product, which is already a great platform," said Elliott. "They have effectively taken a Rolls Royce and purchased a Tesla to address the high-fuel-efficiency marketplace. So now they have an electric Rolls Royce that gets 200 miles on a single charge."
For Ashby Lincoln, CEO of Atlanta-based VeriStor, a top DevOps hybrid IT solution provider, it's Whitman's sharply focused hybrid IT/intelligent edge strategy combined with blockbuster acquisitions that is driving significant growth for HPE partners. "By getting smaller and getting more agile, HPE put themselves into a position to grab other technologies like SimpliVity and Nimble," said Lincoln. "All the acquisitions have been great. They have figured out a winning formula."
No Place Left To Hide
Over the course of a 38-year career, Whitman has taken on a wide array of mind-boggling management challenges. As the CEO of the then-fledgling eBay, she took a scattered startup from just $4 million to $8 billion in a decade. And over the course of six years at HP, she has taken a battered Silicon Valley icon that was riddled with lackluster technology and demoralized partners and created a much smaller and faster-moving software-defined disrupter.
It's a strategy that has made HPE partners big fans of the CEO. Whitman, for her part, said it's difficult to compare the HPE experience to the many other tough assignments she has taken on. "I am a big believer in situational leadership," she said. "You have to work your leadership style to the situation in which you find yourself. This has been a turnaround, and turnarounds are really hard."
What is exciting, said Whitman, is HPE is accelerating out of the turnaround. "I can feel it," she said. "It is just smarter, easier, simpler. You cannot underestimate the accountability. There is nowhere left to hide at this company. I see a perfect place. There is nowhere left for partners to hide. There is no place for HPE employees to hide. It just makes things far easier and, frankly, more fun because you can get stuff done faster."