5 Things You Need To Know About HPE Pointnext's GreenLake Flex Capacity Channel Model

Unleashing An On Premises Pay Per Use Services Tsunami

Hewlett Packard Enterprise's Pointnext team unit unleashed a a new version of its GreenLake Flex Capacity offering that brings the full force of the pay-per-use cloud model to partners selling on premises HPE infrastructure.

The new model gives HPE partners significant financial incentives to sell multiyear, on premises pay per use deals for top HPE infrastructure solutions.

With a hefty channel investment from HPE's Pointnext services unit, the new compensation model provides partners a whopping five times the rebate incentive that they would get in a traditional Capex deal. Here are five things you need to know about the HPE Pointnext GreenLake Flex Capacity Channel model.

Hewlett Packard Enterprise Vice President North America Channels Terry Richardson calls Flex Capacity business model breakthrough simply the most "significant" partner opportunity he has seen in 30 plus years in the channel.

"Those that are embracing this model are really differentiating themselves from the pack and they are contributing to an absolute surge in our business growing many hundreds of percent quarter on quarter. The fact is only HPE has a Flex Capacity offering. None of our traditional competitors do."

New Robust Compensation Incentives To Sell Pay Per Use On Premises, Multiyear Deals

Many vendors have come to the table with creative leasing or financing to combat public cloud offerings. Partners, however, say the HPE GreenLake Flex Capacity channel model is the first ever to provide robust financial incentives for partners to sell on premises, full fledged pay per use.

The public-cloud-busting GreenLake Flex Capacity channel compensation model provides partners with a whopping five times the rebate incentive that they would get in a traditional Capex deal.

The accelerated rebate program is aimed at providing a significant margin boost to partners compared with a traditional approach as they move to a pay-per-use consumption model and is designed to be break even in the first 12 months.

The lucrative terms are the result of a hefty investment by HPE Pointnext to help power the partner pay-per-use transformation.

’We have the industry’s first and most partner-friendly [pay-per-use] consumption model,’ said HPE Pointnext Chief Ana Pinczuk in an interview with CRN. ’We are enabling the channel to be part of the consumption solution. There is nobody else that is doing this in the industry.’

The initial GreenLake Flex Capacity services for partners are for HPE ProLiant Microsoft Azure; HPE Synergy 480 compute modules; HPE SimpliVity 380; HPE ProLiant BL460c server blade; HPE 3PAR StoreServ 8200; HPE 3PAR StoreServ 9450; and HPE StoreOnce 5100.

The Numbers Behind The GreenLake Flex Capacity Channel Game Changer

HPE Senior Vice President and General Manager HPE Pointnext Ana Pinczuk (pictured) says GreenLake Flex Capacity has been designed to make it more attractive for the channel to sell pay per use than a traditional capex deal.

The size of the rebate is about five times the size of a rebate partners would get in a traditional capex deal, said Pinczuk. "If on a traditional capex model, a partner makes 18-20 percent (margin) then on a GreenLake model they would make total margin closer to 30 percent," she said. "It is about a 50 percent potential increase in terms of how much money they could make."

In a typical $300,00 capital expenditure deal, partners would on average received a 15-20 percent margin on hardware and services, and a low blended rebate. Under that same deal with a GreenLake Flex Capacity per-per-use model, partners would receive an accelerated 5X rebate paid at the outset on the full value of the $300,000 deal.

Making The Channel Relevant In A Pay Per Use Market

HPE partners say GreenLake Flex Capacity for the first time gives them a powerful on premises pay per use alternative to public cloud vendor offerings.

In fact, partners say they are seeing on premises offerings come in at 40-60 percent below the public cloud models.

Al Chien, president of Campbell, Calif.-based Dasher Technologies, one of Silicon Valley’s top systems integrators, said the GreenLake Flex Capacity offering provides a major boost to the channel when going head-to-head against public cloud providers.

’We don’t have an offering like this today, so customers default to public cloud,’ Chien said. ’Now we have an alternative that we can offer so we can maintain the relationship with the client. This keeps us attached to the client and promotes our value to the customer. The intent here [by HPE] is to put the channel at the point of the arrow in a cloud consumption model.’

The GreenLake Flex Capacity business model innovation is unprecedented, said John Kolimago, executive vice president and general manager of the cloud solutions business unit at Anexinet, No. 208 on the 2018 CRN Solution Provider 500 and one of HPE's top Platinum partners. "This is a game-changer," said Kolimago. "I truly believe HPE is on the cusp of something great with this. Other vendors have always had creative leasing, step leasing and financing offers, but this is different. This is truly selling consumption-as-a-service. No one else is doing what HPE is doing with GreenLake."

An Opportunity For Partners To Offer Their Own Services With GreenLake

One of the keys to the GreenLake Flex Capacity pay per use channel model is the ability for partners to add their own services directly into the consumption based workload offers.

Under the terms of the program, partners can hold the paper on the deal, determine the margin and add in their own services. The GreenLake Flex Capacity model teams the financial benefits of the Capex model with a robust annuity stream.

"These (infrastructure workload offers) are the building blocks to a services portfolio that partners can utilize to overlay their own value," says Hewlett Packard Enterprise Worldwide Channel Chief Paul Hunter, who helped craft the new offering with HPE's worldwide partner advisory board. "We are creating one plus one equals three for the customers. We are providing the building blocks, the partners are building the houses and the customers are opening the front door."

The beauty of the GreenLake model is partners are on average seeing a 25 percent growth rate every year in the form of increased capacity.

The Future Is GreenLake -- More Flex Capacity Offerings To Come

The new HPE Pointnext GreenLake offerings for seven of the company's most popular infrastructure offerings is just the beginning.

"We're putting together the road map with the partners in terms of what is going to come next," says Pinczuk. What's more, she says, the Pointnext team can build custom offerings with partners.

"This is the sexiest thing at the company," says Pinczuk. "I'll tell you why it is sexy: number one it makes money for the channel. No. 2 it allows the partner to have a long term, multi-year relationship with the customer- not just to sell something up front and then go away. It builds that long term relationship. No. 3 it is a land and expand and adopt sales motion."

Mark Romanowski, executive vice president for Agilant Solutions Inc., the global digital transformation specialist headquartered in Port Washington, N.Y., says GreenLake Flex Capacity is the future for the channel. "This is a big deal," he says. "There is an as a service Tsunami that is sweeping the entire world. It's a completely different way of consuming technology and GreenLake allows us to be a part of it. It's really cool!"