Yes, there was a lot of cheese
But the remaining pieces aren’t all about hardware, or so says Anna Pinczuk, global senior veep and GM of HPE PointNext – formerly Technology Services – the advisory, professional and operational services division, which turned over $7bn in HPE’s fiscal ’16 that ended in October last year. The Register met with the exec to press the flesh… so to speak.
El Reg: What is the point of PointNext?
Pinczuk: With the DXC spin merge, it was important for us to come out and say, ‘Look, we’ve got huge services capability already, we’ve had a foundation of consulting services, of support services, and advisory transformation services that we’ve been doing around two areas: hybrid IT and the intelligent edge’. We are about a third of the company’s revenues, which is big, I am talking to lots of customers and partners and they don’t know that.
We are about half of the company’s profit, and about 25,000 people. Our goal is to concentrate on customers migrating [from on-premise] – digital transformation, but really the angle that we have is more around hybrid IT. How do customers go from the traditional environments of data centres to public and private cloud? What does that mean and how do we enable that transformation? And the second key area is around digital experiences, so if we look at edge solutions, some of the things we’ve been working on are around public venues, intelligent workspaces, things that are Wi-Fi and location-enabled to allow companies to do things differently.
El Reg: Does it matter that HPE doesn’t have its own public cloud?
Pinczuk: What I am hearing from our customers, is that on the one hand there is a great desire to partner, so for example we’ve been working really closely with Azure in particular, and AWS, and Google have come to us, and believe it or not IBM. Everybody is coming to us. And customers say, ‘look the nice thing about you guys is that you’ve been my data centre player’.
Many of the customers want to figure out how to go on that journey to the cloud. One of the first steps is to go to a private cloud environment and as we do that they also say ‘can you help me navigate workloads across the public and private cloud environment.’
It helps that we are agnostic, and we can take their interests at heart and look at the whole solution. The second thing is we have a new offering – I call it new but I think it’s been around for four years, but it’s been growing. The reason I say [it’s new] is because we are at an inflection point in terms of how customers want to buy, so we’ve been seeing our Flexible Capacity offer grow. It’s a pay-as-you-go model where we work with the customers to look at their solution and offer it to them as a managed capacity-type service. We monitor that capacity and are able to flex that capacity up and down. Composable Infrastructure (Synergy) can be part of it, any part of our platform can be part of that solution. We take those platforms and also offer them to the customers in a consumption-based model, so it feels like a public cloud solution on-prem.
El Reg: Why are IBM, Google and AWS coming to you?
Pinczuk: A lot of that is driven by customers. Microsoft is the one that I’ve been most engaged with in the background – customers want to have an Azure stack, or a public cloud or private environment, and be able to navigate this transition to either Office 365 or whatever they are doing in a public environment. So I think they [customers] are coming to us with a view to looking at particular applications and figuring out how to navigate that divide. In some cases they are coming because of their applications – they are saying ‘I have SAP, I have Microsoft, I am trying to do certain things like Docker-based containers/ dev ops and want to do it in my public or private environment’. They are coming to us to help them design this with ease, and [asking] ‘how do we make the choices of what applications stay on private versus public’.
El Reg: Is there a lot of cynicism regarding consultancies?
Pinczuk: Let me take it to conversations I am having with customers – I spent time with 20 customers, and the conversation that I’m having is that ‘I’m trying to do certain things in my business’, one of the examples was retail stores that are not as popular because of malls and online shopping, so I am talking to the customer about how you enrich the retail store experience with Wi-Fi and location services so that they can provide new experiences to the customers.
Imagine you go into a GAP store and are able to see what is on sale, promotions and things like that. The customer needs to work with third parties, and people like ourselves to figure out how to build that solution. That is a practical solution, I think there is a little bit more cynicism where it is a little more ethereal. Where people get excited is at that transition point between the strategy – like a business outcome that they want – to the actual execution. That kind of consultancy is very much in demand and that is what we do.
Management consulting or more high-level consulting, I leave that up to you, right. I was having another conversation with an energy company that is looking at smart meters, smart devices, how to take all that data, how to have fast access to that data, provide reports to the end user. So I am seeing very practical applications of companies trying to figure out how to have fast access to data, the move to DevOps, and how to have more agility in terms of application development environments, how do I make choices about what they put in the cloud. In Europe, part of the discussion is around GDPR, data governance, and data nationalism. [Customers want to know, how] do I build capabilities and where should my data and storage be?
El Reg: Up until Q3 last year, Technology Services, as was, hadn’t grown since 2012. Why has the order book started to grow again?
Pinczuk: It was a couple of things, our business is composed of three or four elements – one is the attach to the product business and that is the area that had seen some decline; there’s been some decline on the product side, and when we sell, we sell some of our support services as attach services. If you have less [hardware] units to attach to, then you will see a little bit of a decline from the attach perspective. As the company looked at that, we started to emphasise more what I would consider consultative and non-attach services.
There’s been some decline on the product attach, [but] the business [has] started to focus on this so we are increasing attach, the service intensity that we can give to our installed base. That could be optimisation, migration, or services that have to do with remote proactive monitoring, supply chain related services. And from a consulting persecutive, we’ve started to see more growth in our consulting portfolio as well.
El Reg: Antonio Neri (executive veep and GM) was saying that PointNext has to transform the portfolio, the business was, for the most part, a mission critical business but with the secular decline of UNIX, HPE had pivoted the portfolio from more hardware attach to more services attach?
Pinczuk: That is right. Is it done? I don’t think it is ever done, this is an ongoing journey. We’ll come out with new products, we’ve just acquired new companies like SimpliVity and Nimble Storage and that allows us to do new kinds of solutions. With SimpliVity, it’s software-defined storage, managed at the software layer across storage stacks that gives us new services opportunities, and then are SGI and HPC type applications.
We are also learning with our customers. We can’t afford to be static, we’ve got to go where our customers are going, so what I am finding is this huge TAM associated with applications that we are getting engaged in. I talked about smart meters, I talked about sensors, as companies start to put sensors out there there is more data to be collected – 14 trillion connected devices by 2020 – we are seeing the impact, that our portfolio will grow, associated with these new opportunities.
El Reg: Trade customers – the channel – account for 75 per cent of HPE’s total business, but with Tech Services it was 40 per cent. What is it now?
Pinczuk: I think it is still about that number. I am looking at that now. My perspective is that for the channel we’ve had a set of what I would consider core services; foundational services associated mostly with our support portfolio and with professional services that we call lifecycle services, like I mentioned; services that allow customers to optimise, migrate and invest in their installed base. We’ve been accelerating some new services like Flexible Capacity, we’ve got some great use cases for that, and as we educate the channel on those new services those will be huge opportunities for us because the channel can take the Flexible Capacity model. We can sell with them. We can sell through them. But they can take those models and have almost an easier entry point with customers.
El Reg: why has such relatively low amount of PointNext’s business gone through partners?
Pinczuk: I’ll tell my perspective but it’s a bit of a newbie perspective (Pincek joined in March). I’ve been exploring the Partner Ready for Services programme, that has been revamped in the last year and the Partner Ready for Services programme is about [nine] months old. So as I look at it, my view is it seems like we’ve had more disparate channel programmes throughout the world. Partner Ready has been an opportunity to consolidate that into a single programme. For me, it is super important, one of the top three initiatives right now is to look at how we are doing with Partner Ready for Services, and how to help our partner move up the stack. If we are doing mostly attach and installed base-type services and supporting lifecycle services today, my goal is to look at the introduction of additional services.
We want to focus on new business services as part of the Partner Ready for Services programme, Flex Capacity is just one of the solutions. I mentioned that we are focusing on hybrid IT and edge so you can imagine over time the edge solutions that we have and professional services area are ones where I am talking to partners about in terms of how to scale.
El Reg: Are channel partners ready for this transformation themselves? Very few seem to know a great deal about Docker, Chef or Puppet Labs.
Pinczuk: I know. I have a perspective that there is a spectrum of partners, all the way from people that recognise that the way to add value to our customers, especially in the consumption economy as we move forward, is that there is an opportunity for partners to attach themselves to the consumption play like Flex Capacity and be able to provide value added services on top of that. There is a set of partners that are going in that direction and there is a set of partners that may be laggards in that space, and what we can do is maybe help them understand the opportunity and how they can benefit from these transitions.
El Reg: Can you put a figure on the amount of business that HPE would like to do through third parties?
Pinczuk: I have an aspiration in my head, a number. A lot of the opportunities that we have are in the channel, and while we have a great installed base and relationship with customers, the way to scale is through partners and the channel. They can accelerate growth with us, that is the way we are going to move faster, but we’ve got to be more crisp with our offer, help them with education services, choose the right [technology] partners and grow methodically.
I am seeing a lot of interest from partners that are seeing interest from customers in the mid-market and SMB. Many of those customers want ease of use, they want help, and so there is an opportunity for the channel to play a huge role in working with us to simplify this transition to hybrid, to simplify what we can offer and take some of the services that we offer for enterprises, maybe the high-end that Enterprise Services used to do, and figure out how to make that more simple and consumable.
El Reg: Doesn’t it make you less competitive working with trade customers that are reselling professional, consultancy and technical services?
Pinczuk: No, because I think part of it is, how do we take the IT and capabilities that we have and create an agile channel, a partner set that is excited to work with us and deliver the services as we would deliver. I’ve had experience doing that in the past, it gives us the opportunity to be more competitive, we are not going to have the reach to every part of the world, this gives us the ability to leverage skill sets outside of the company for things that match our portfolio.
El Reg: MS Azure, favourite public cloud vendor of choice. Customers come to you for consultancy on AWS, et al?
Pinczuk: We’ve got certain relationships that are in a sense premier relationships but at the same time we are very customer focused, there’s customers that we work with that already are AWS customers and the solution that we need to do is work within their environment and help them match the application or workload to the environment they have. Our goal is to be customer-centric and work with whoever the partners are. Look, we do multi-vendor too, so part of our solutions is working with customers where we’ve got other people’s equipment in there, we support it, it’s not always the preferred thing, but we do that. ®