In 2019, the phrase doubling down on SMB was mentioned several times, including the keynote address by Antonio Neri at HPE Discover. Fast forward to the present, HPE's SMB momentum is building. George Hope, a 22-year veteran with SMB channel experience, is the new worldwide channel chief. With more than a decade of SMB market understanding, Maciek Szczesniak is the new Vice President and General Manager SMB and Mid-Market. HPE's GreenLake, a flagship, "as-a-service" product, which offers a flexible alternative to traditional IT hardware consumption, is now available in a smaller starting capacity targeted at channel partners and their SMB and midmarket customers.
HPE is undoubtedly doubling down on the SMB segment. Last week HPE made several announcements:
- Smaller starting capacity for HPE GreenLake
- SMB FlexOffers program for SMB and midmarket customer
- Specialist support for HPE GreenLake and Storage portfolios
Smaller starting capacity for HPE GreenLake
HPE GreenLake packages now are available from as low as $70,000 with storage (HPE Nimble Storage) and compute (HPE ProLiant servers). The storage starting capacity is 15TB and compute at 4 servers. HPE will continue to offer a 17 percent reseller rebate to drive profitability with partners selling HPE GreenLake. In the coming months, HPE plans to expand to provide a lower starting capacity across the technology portfolio. The speed with which HPE is lowering the minimum threshold is commendable. In mid-2019, HPE had announced a $200,000 minimum targeted at midmarket customers, only a year ago.
The announcement is very significant in addressing the technology needs of SMBs and midsized businesses. Most SMB executives understand that technology plays a central role in their management processes. Many also realize that payback on any technology asset increases as one approaches full utilization and that economies of scale tend to benefit larger rather than smaller organizations. SMBs know that they cannot realistically target and reach optimal IT resource utilization. A small business has trouble consuming all of the new systems' capacity, meaning that they often pay for resources they are not using. Those that do get to full utilization have a different problem: systems that lack adequate storage, memory and compute capacity frequently crash. SMBs cannot rapidly deploy new servers, storage, and networking equipment. Even if they were, the SMB would know that it is paying some form of premium: an SMB will never get to the purchase volumes needed to warrant large scale discounts. Hence, HPE's GreenLake, with its consumption-based business model, is an excellent fit for SMB customers.
However, the awareness and advantages of a consumption-based technology acquisition model are limited and challenging within the SMB segment regardless of whether SMBs are the front-runners in cloud adoption. Techaisle data shows that as the complexity of technology increases over the next five years, most small and midmarket firms will not realize the return on investments for long periods or as their businesses scale. HPE and its partners are well-positioned in the market to gain from the massive shift to XaaS procurement models.
SMB FlexOffers program for SMB and midmarket customer
Channel partners are the primary conduit to HPE's SMB and midmarket success. Price-conscious SMBs are demanding agility from their channel partners in their digital transformation deployments of core infrastructure solutions. To meet the SMBs and the partners' needs, HPE debuted its FlexOffers program providing distribution and SMB-focused solution provider partners the ability to customize their built-to-order (BTO) products at bundled discount prices. Partners get the flexibility to select preferred options that, through dynamic attach-driven pricing, can help them access and ensure the best price. Besides, solution providers will drive quicker delivery times by leveraging distributor inventory, and distributors will benefit from an automated, simplified claiming process. In the initial phase, SMB FlexOffers include HPE ProLiant Servers and HPE Storage products. HPE FlexOffers is being offered through select distributors during the pilot starting in November 2020. Partners will leverage the iQuote partner portal that HPE has been refining for the last two years.
Specialist support for HPE GreenLake and Storage portfolios
However, selling "as-a-service" requires that channel partners invest in pre-sales activities. There will be a proverbial opening of floodgates of latent demand from channel partners with the new announcements. Recognizing the need, HPE is committed to providing specialist support for HPE GreenLake and dedicated pre-sales for the channel. HPE will also be providing training for partners to accelerate their HPE GreenLake knowledge and positioning. The additional support will be in the form of dedicated enablement initiatives, like workshops with experts, to help partners personalize their as-a-service journey.
HPE is serious about equipping its partners to participate in the "as-a-service" business model. It offers partners training on HPE GreenLake and an opportunity to self-assess partner "maturity" to shape their own consumption/aaS journey with HPE around their (and their customers') needs.
The shift to "as-a-service" has been in the making for a long time. In FY21, HPE plans to extend partner support and activation through unique and specific enablement initiatives piloted last year with a few partners, who also participated in HPE's "Consumption Advisory Council" meetings. An example is Advizex, an HPE Platinum partner for 35 years.
Not three years ago, the HPE Channel & Pointnext team started to help partners shift to consumption IT and HPE GreenLake to expand opportunities, accelerate digital transformation, and gain competitive advantage. HPE's team collaborated with Advizex on marketing initiatives, education, and dedicated workshops and enablement. This strategic effort allowed Advizex to assess their readiness to shift to consumption, identify the knowledge and actions needed, become proficient in selling HPE GreenLake and consumption IT ahead of the competition, and develop a strategic plan to drive consumption IT with HPE. Now, as HPE doubles down on HPE GreenLake specialist resources, it can extend this kind of support to all partners who decide to focus on HPE's consumption offering.
Solution providers and distributors will also have the opportunity to elevate their conversations and accelerate sales by working with HPE's "Storage Rangers" - outcome-based solution selling experts with a high degree of technical skills. These specialists will help partners enhance the request for quotation (RFQ) process to execute existing campaigns and initiatives.
Storage Rangers are funded heads (aka Champions, partner-badged) with a specific focus on storage. The geographies that have opted-in to the program have nominated a Program Lead (HPE-badged), and that is the go-to person if a partner wants to have a Ranger. HPE offers a specific training curriculum for Sales & Presales Rangers and local support to help them deliver on the request for quotation (RFQ) process and generate new business opportunities.
Each IT supplier is currently focusing on streamlining deal registration for its channel partners. Techaisle's latest global channel survey research of our 2400 partners shows that fees and activity-based incentives, solution development funds, and deal registration are significant enablement incentives for 40% to 50% of partners. Partners have an unmistakable idea of their criteria for partnerships - vendors that are easy to do business with, technical support, quality of partner programs, and those who offer end-to-end solutions that are easy to deploy, integrate are preferred. HPE is increasing its commitment to providing its partners with price and margin protection and new incentives as part of its deal registration program.
Final one-line Techaisle Take
Competition with Dell is on full display. There is no reason to ignore HPE as an IT supplier and a vendor partner for addressing the technology needs of the SMB and midmarket firms for better business outcomes.