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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

HPE SMB go-to-market – a paradoxical problem but partners to the rescue

In response to my question, “what defines HPE’s SMB go-to-market strategy?”, Tim Peters, Vice President and General Manager, SMB, put it eloquently, “local empowered presence as a business solution provider through the largest partner network”. Perhaps, therein lies the paradoxical problem. HPE GreenLake and Ezmeral are top discussion topics amongst partners, enterprise customers, media and analysts. But none of these are yet available and targeted towards the SMB customer. Regardless of having a wide portfolio of SMB solutions, HPE’s SMB go-to-market messaging strategy is getting drowned under the onslaught of “return to software” shift. As a result, channel partners have become the most important conduit for information source and SMB solution selling. But data also shows that 70% of an SMB buyer’s journey is complete before first contact with a supplier (channel partner or direct vendor).

Partners resolving the paradoxical problem

The paradoxical problem that HPE faces relates to marketing to two bookends of market segments – enterprise with a software solution approach targeting developers and IT buyers and the SMB customer with a yet to neatly defined as-a-service offering where the primary buyer is the business management. As HPE continues to design GreenLake enabled offerings for the SMBs, utmost reliance on partners is important. Partners contribute to creating, shaping and defining demand – in some cases by making customers aware of a new category or product, in others by helping to define solution requirements or specifications. To achieve partner success within the SMB market, HPE is focused on reducing friction across its enablement initiatives. Launched three years ago, HPE has brought to the forefront its enablement program Pro Series – Sales Pro, Tech Pro, Marketing Pro. Partners can tailor their experiences based on SMB market segment, a robust program for channel partners for a unified learning experience and digital marketing. (More on this in a future Techaisle Take analysis). So the question is, is HPE relevant for SMB customers?

Is HPE relevant for SMB customers?

Yes, despite an intense focus on the enterprise segment, HPE is one of a handful of vendor suppliers with a dedicated SMB executive team, and a partner organization, under Paul Hunter, that is stepping up its commitment to SMB channel partners.

Enabling Digital transformation

79% of SMBs are on the road to digital transformation. The roadmap to successful digital transformation begins with the creation of a sound physical infrastructure - the ‘building blocks’ or ‘foundations’ of business infrastructure. The most advanced and digitally transformed SMB firms are looking to improve their ability to effectively manage IT delivery into the future – cost efficiencies, operational excellence, innovation, business growth, organizational productivity and IT’s speed and agility. HPE solutions lay the foundation for effective, agile, secure modernization and transformation.

I like that HPE does not have a catch-all process for selling digital transformation solutions to the SMB customers. There is a deliberate process to empower partners to understand an SMB customer's workloads and digital transformation stages before recommending, architecting, deploying and managing digital transformation solutions to deliver business outcomes.

Adopting Hybrid IT

Techaisle research shows that SMBs use a mix of public, private and public clouds – and that businesses often use two or three of these approaches simultaneously but they are definitely settling on the “best approach” which is hybrid. Workloads on hybrid has gone up by 30% in the last one year and basic hybrid deployment is expected to increase by 56% in the next one year. Hosted infrastructure will likely see a growth of 131% in the next one year.

HPE has several offerings for hybrid environments, including HPE OneSphere, HPE ProLiant for Azure Stack and Cloud-Ready Storage. Specifically, for SMBs, HPE has a set of five hybrid cloud solutions. Built upon the core features of HPE ProLiant Gen10 servers and Microsoft Azure services, these hybrid cloud offers provide a path to SMBs to enhance productivity, improve IT service delivery and manage cost efficiencies. The offering includes – Hybrid Remote Workers, Hybrid File and Backup, Hybrid Virtualization, Hybrid Development and Test, Hybrid Database.

In addition, HPE has solutions tailored for small businesses. Leading with its HPE ProLiant MicroServer Gen10 Plus featuring remote management and security capabilities. The solutions include Office in a Box, Scalable File and Backup as well as Edge to Cloud for simplified access to cloud services.

hpe smb solutions

Deploying Hyperconverged Infrastructure

Techaisle data shows that HCI adoption is within the top ten IT priorities for SMB customers. Although a distant third in HCI deployment, HPE’s SimpliVity solution has been growing at the edge for SMBs. It requires only 2 nodes to start, does not require separate storage and backup, and restoration can be done from a point in time. HPE’s dHCI is ideal for SMBs who want their compute or storage or network to scale independently. The entire environment is managed through vCenter and monitored through InfoSight making it easy for SMBs. It separates compute and storage so that they can grow independently giving the SMB customer flexibility of HCI.

Implementing Networking

Aruba Instant On announced last year, is suited for 100 users and below, extends to 7 switches and has both wired and wireless unified management through Aruba Central. However, it is only offered as a subscription service. John Moran, Sales Director, North America, HPE Aruba, points out that HPE has not come across Cisco’s Meraki Go in a competitive environment. I believe it is because Aruba Instant On is truly meant for the midmarket customers whereas Meraki Go is for the small businesses. Many SMBs still prefer outright purchase rather than subscriptions.

Is there a missing middle – midmarket segment?

Ignite Midmarket initiative, announced at HPE Discover in 2019, seems to have retreated into the background. As per Antonio Neri, President and CEO, HPE, midmarket initiative is still active and very important to HPE’s success. Within the HPE GreenLake Cloud services, HPE has designed 17 pre-configured offerings, available in small, medium, large pre-configured services which can be installed within 14 days. Some of the services are suitable for the midmarket segment.

HPE GreenLake Hybrid Cloud is of huge interest to the midmarket segment because it offers the promise of consumption-based cloud solution for on-premise scalability, security, performance and cost management without over-investment in infrastructure allowing cloud management of both public and private resources from one console. HPE is extending its GreenLake offerings for the midmarket for quick deployments of workloads with right sized and ready to go storage, compute and virtualization. For midmarket firms which do not own and manage their own data centers, HPE has partnered with Equinix and CyrusOne to offer co-location solutions. To help its channel partners that serve the midmarket segment, HPE has developed a new quoting tool that reduces quote time from 18 hours to 15 minutes.

HPE’s everything-as-a-Service enablers

HPE GreenLake

It is no secret that HPE has strategically dived into its swim-lane with a commitment to offer “everything-as-a-service” by 2022 - entire portfolio through a range of subscription, pay-per-use and consumption driven offerings. HPE GreenLake, which offers a flexible alternative to traditional on-premise IT hardware consumption, is the foundation for HPE’s as-a-service strategy. HPE’s GreenLake platform hosts servers, storage and networking in-house while retaining connectivity to multiple clouds overlaying with its own software and services. Cray acquisition in May 2019 is enabling HPE to offer HPC as-a-service for some of the most demanding workloads. HPE says that GreenLake has 90%+ customer retention rate (99% in July 2019).

HPE’s vision is to become the Edge-to-Cloud Platform as-a-Service company with a focus on customer use cases and solutions and HPE Ezmeral is core to its strategy. HPE already competes against Dell in storage, servers, and networking, with Cisco in networking, and with Lenovo in servers and NetApp in storage. With the launch of Ezmeral, HPE has expanded its competitive footprint to include VMware Tanzu and Red Hat OpenShift, but HPE is quick to point out that Ezmeral is the only solution with built-in persistent storage. VMware and Red Hat are also partnering and HPE is working with both to define where Ezmeral can really add value. As customer traction is increasing, the competition is also stepping up, specifically, Dell Technologies On Demand, Azure Stack, AWS Outposts, Lenovo TruScale Infrastructure Services.

Once HPE launches GreenLake for SMB segment and provides access to GreenLake Central to MSPs and channel partners we could very well see a welcome arrival of HPE's everything-as-a-service strategy into the SMB segment.

Hybrid Cloud focus

Public cloud, private cloud and hybrid cloud approaches each offer unique business benefits to the adopting organization. While public cloud can deliver rapid scale for temporary workloads or support smaller businesses that find appeal in OPEX procurement models, private cloud can deliver scale at better cost in some circumstances, while hybrid cloud offers better, faster access to formerly siloed sources of information. In each case, cloud capabilities, including automation, programmability, self-service access to on-demand resources and consumption metering, can help transform IT from a cost center to business enabler.

HPE has an alliance with Google to adopt Kubernetes in hybrid cloud environments and extend reach of its software-defined infrastructure for building private clouds to legacy ProLiant servers, HPE Nimble Storage dHCI and HPE Cloud Volumes Block. HPE is giving its customers an option of deploying on-prem servers with virtual machines with either a VMware vSAN storage software or the HPE SimpliVity hyperconverged infrastructure platform. Additionally, customers have the option of deploying Kubernetes on bare-metal server. HPE is also embedding its HPE OneView IT infrastructure management and HPE Composable Fabric networking solution to create a composable rack environment. HPE’s partnership with Nutanix provides an integrated hybrid cloud as a Service (aaS) option by leveraging Nutanix’s Enterprise Cloud OS software, AHV hypervisor and delivering the solution through HPE GreenLake for a fully HPE-managed hybrid cloud.

The scene stealer - Ezmeral

No doubt Ezmeral was a scene stealer at HPE Discover Virtual Event. It is a complete software portfolio spanning container management, AI/ML and data analytics, cost control, IT automation and AI-driven operations and security. It is expected to speed innovation, transform applications and data from edge to the cloud. All of these are within the planned technology adoption path and essential to enabling digital transformation for 83% of midmarket firms to reduce IT deficit and deliver previously unimaginable business outcomes. HPE’s initial focus is the enterprise segment. I strongly urge to not leave the midmarket segment behind. It is the true battleground segment.

Related HPE Techaisle Takes

HPE ProLiant MicroServer Gen 10 Plus focuses on SMB Digital Transformation
HPE boldly pivoting headlong into post-transactional market
HPE addressing SMB and channel partner Hybrid IT demands
HPE vs Dell SMB IT solution stack
HPE – doubling down to be SMB’s IT partner of choice
Dell, HPE, IBM, Cisco competing for global SMB US$1 trillion IT Spend
Hyperconverged Infrastructure on a high-growth trajectory within SMBs and midmarket firms

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HPE ProLiant MicroServer Gen 10 Plus focuses on SMB Digital Transformation

On 11th March 2020, HPE announced its latest Small Business Solutions, leading with its next-generation HPE ProLiant MicroServer Gen10 Plus featuring remote management and security capabilities, with a choice of Intel® Pentium or Intel Xeon E processors. Solutions tailored for small businesses includes Office in a Box, Scalable File and Backup as well as Edge to Cloud for simplified access to cloud services.

Tough economic times bring investment decisions into sharp focus. The result is typically lower investment levels. It also sharpens medium- and longer-term priorities. That leads to smart investments. But also, investments made at this time become longer term drivers of investment for adjacent areas. Techaisle believes that the recent economic implosion acts as a catalyst for such action and change among SMBs. In a digital economy, SMBs are able to expand reach and engagement with customers and prospects, while also locating and integrating with suppliers to improve scale-out options. 79% of SMBs are on the road to digital transformation. The roadmap to successful digital transformation begins with the creation of a sound physical infrastructure - the ‘building blocks’ or ‘foundations’ of business infrastructure. Core infrastructure devices need to be kept in sync with the requirements of digital transformation initiatives; servers, storage, networking and security need to advance with the needs of the organization. The most advanced and transformative SMB firms are looking to improve IT sustainability – their ability to effectively manage IT delivery into the future – customer intimacy, operational excellence and IT’s speed and agility. And they are seeing better business outcomes than those which are not fully committed to the core physical infrastructure modernization.

HPE solutions lay the foundation for effective, agile and secure modernization.

First Impression

HPE ProLiant MicroServer Gen 10 Plus and companion offerings should be no-brainer for small businesses and channel partners. Techaisle data shows that 83% of SMBs consider technology contributing to business success but they also find technology to be kinetic, complex and risky. Regardless, 31% of small businesses want to modernize IT infrastructure and HPE offerings help in overcoming cost of implementation (34%) and security concern (32%) inhibitors of embarking on IT modernization initiative. Techaisle data also shows that a growing percent pf SMBs are using both on-prem and cloud servers, but hybrid is where they are headed. Workloads from public clouds are transitioning to hybrid clouds with 70% of small businesses are either implementing or planning to use basic hybrid cloud with workloads assigned to different cloud/on-prem environments. Techaisle segmentation data reveals that there is a higher demand for on-prem solutions within SMBs that are intermediate and mature cloud adopters as well as those who are in the basic and advanced IT maturity segments. HPE ProLiant MicroServer Gen10 Plus and Office in a box can also be easily adopted and deployed by the Pre-IT maturity segments and passive cloud followers.

HPE ProLiant MicroServer Gen10 Plus

About the size of a typical hardcover book (4.6-inch x 9.65-inch x 9.65-inch) and as quiet as a library (36db) the server packs enough power and storage for a small business prompting HPE to call it “small and Mighty”. The form factor size is volumetrically 3X less than that of Dell PowerEdge R240. As-a-service server pricing starts from at less than US$20 per month. The list price varies from US$$709 to US$899, for Entry to Performance level configurations.

Three key features of HPE ProLiant MicroServer Gen 10 Plus worth calling out are:

  1. HPE-exclusive silicon root of trust that provides 360-degree protection, detection and recovery from malicious cyberattacks. Techaisle SMB security adoption survey data shows that for 53% of SMBs cyberattack security is either the most critical or among the top three critical issues facing their organizations but 78% are not confident that they can recover from a cybersecurity incident. With HPE silicon root of trust they may have one less issue to worry about.
  2. HPE ILO 5 that delivers server health and operations insights with secure remote monitoring and management. With an average of 3.8 IT staff within upper-small businesses, SMBs need help in remote monitoring of IT infrastructure. Manageability is an important solution selection criterion for SMBs which typically have relatively small IT workforce but expansive IT/digital transformation goals. In this environment, it is essential that solutions work seamlessly and without a great deal of hands-on management.
  3. HPE InfoSight for Server that predicts and prevents IT disruptions before business operations are impacted. In the context of growth, cloud is seen as a means of facilitating expanded reach. And SMB cloud adopters are looking for capabilities that contribute to growth: 79% report that cloud enables them to be more agile in their business operations. Cloud built on a strong core technology is not only an essential IT infrastructure but it is also an imperative business infrastructure.

Pre-configured small business solutions on HPE ProLiant MicroServer Gen10 Plus

Office in a box: is a pre-configured solution that includes HPE ProLiant MicroSever Gen10 Plus with built-in security, Aruba Instant On (wireless access point), and HPE RDX removable disk system which can be scaled when required. It is ideal for very small businesses, small offices, small workgroups for up to 10 users. Office in a box also comes with Windows ROK (Reseller Option Kit) and storage controller. Pricing starts at US$125 per month. As per Techaisle’s SMB buyers’ journey and technology research data, nearly 2/3rd of small businesses use existing IT budgets and about 1/5th use CAPEX dollars for IT purchases. For these small businesses, HPE has a list prices for Office in a box. For example, a configuration consisting of MicroServer Gen10+, 4 1TB drives, iLO enablement, Next Business Day support, one Aruba WAP (wireless access point), the list price is approximately US$3,500 before discounts. Only 3% of small businesses have full-time IT staff (Source: Techaisle SMB and Midmarket research) and very small businesses manage workloads with a much smaller staff, typically comprised of IT generalists, and have limited infrastructure resources available for exploration. There is a very short line between acquisition and deployment of new technology and they have fewer chips to place on the table, and need to quickly reap return from their investments. Office in a Box is suitable for both segments of small business – with internally-managed-IT and un-managed-IT.

Scalable file and backup: is a pre-configured solution for centralized access to files for easy and secure collaboration. Scalable up to 16TB the solution enables secure onsite backup and recovery. Businesses are heavily invested in IT, with IT-dependent processes throughout their operations. This ubiquitous dependence on technology means that any systems failure will reverberate throughout all of a company’s daily operations. There is no way to disaster-proof against IT failure with insurance. Appropriate investment in IT backup/DRS, security processes, technologies and management strategies are the only ways to capitalize on the productivity benefits of IT without creating exposure to organizational paralysis in the event of a malware invasion, a hacker attack or an employee’s negligence or malfeasance. Techaisle’s SMB and midmarket security adoption trends research shows that 53% of small business and 48% of midmarket firms prefer less than 1 hour of backup recovery time. Not all SMBs have a backup/DRS strategy because they find it either too expensive or worry about security in the cloud or even find a solution too complex. HPE’s pre-configured solution addresses the needs and objections.

Edge to Cloud: is a pre-configured solution for remote office, branch office (ROBO) deployments. The solution includes optional cloud services for connectivity to the core data center.

Techaisle Take

Techaisle believes that the 34% of SMBs that are prioritizing growth are much more likely to thrive in today’s unpredictable economy than those that focus primarily on cost reduction or other ‘business as usual’ objectives. In the digital world, growth is more than simply increasing the top line. Today, growth is important to both expansion and to maintaining viability. Techaisle’s SMB research has found that the need to be more efficient in operations is the single most compelling reason for SMBs to embrace digital transformation. But there have to be points in the system where the capabilities of core infrastructure connect to the promised benefits of digital transformation solutions. The days of using lengthy, detailed cost analyses to justify new IT systems are disappearing in favor of a more agile approach in which businesses are encouraged to try new approaches and to rapidly wind down these initiatives if they do not deliver anticipated benefits. This may sound like a recipe for an out-of-control spending, but there are options that can protect the cost line. HPE ProLiant MicroServer Gen 10 Plus is one such options which is mind-blowing and should be a no-brainer.

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WW Midmarket Hybrid Cloud penetration has reached 37 percent and 17 percent workload

Techaisle’s SMB and Midmarket Cloud adoption survey of 3200 midmarket firms and 3000 small businesses globally shows that hybrid cloud has been gaining momentum in small businesses, and is already entrenched in the mid-market firms. Hybrid accounts for 37 percent of cloud using mid-market businesses today, up 28% from 2018, and is expected to capture a lot higher proportion of new spending in the next one year. Midmarket firms are moving from public clouds to hybrid deployments with current hybrid workload at 17%, up from 12% in 2018. The current penetration is the highest in the US but planned usage is highest in Europe and Asia/Pacific.

There is no clear trend on the types of workloads on hybrid environments which shows that most deployments are very specific to a customer’s needs and application delivery partner’s expertise. Typical hybrid workloads include ERP, HR, CRM, finance, operations, IoT, analytics, AI, Machine Learning, SAP 4/HANA deployments, disaster recovery, critical event management, mass storage, cloud security and cloud database. Both Azure and AWS are being used by over 90% of US midmarket firms. Red Hat OpenStack is the preferred private cloud platform for 74% of US firms and Red Hat Cloudforms is the most used cloud management solution by 80% of US midmarket firms followed by VMware vRealize. Hypergrid, Morpheus, platform9 and Scalr are in low single digits. Ansible is being used by most channel partners for orchestration and automation.

Corresponding Techaisle survey with partners delivering cloud solutions to SMBs and midmarket customers reveals that Azure Stack is the most popular platform because of Microsoft’s proactive engagement, powerful and extensive Microsoft ecosystem as well as deep product portfolio. Google Anthos and AWS Outposts are picking up pace. Interesting trend is being seen from AWS partners who are beginning to use Google Anthos instead of AWS Outposts. These partners are not only working with AWS native solutions, but offering cloud solutions which are based around other cloud platforms like GCP, Oracle or Microsoft. Some of these partners prefer to use Anthos because they find it to be more of an open technology and AWS Outposts and can be easily implemented across other environments. It gives them a wider approach in terms of compatibility. They have to pay a fixed amount when using using Anthos which is variable with Outposts. None of the application delivery partners are using tools and technology from only a single vendor. The use of Open Source is dominant.

Another view of the data collected in the survey provides fascinating insight into the extent that midmarket cloud users are willing to align different delivery methods with internal requirements. Detailed analysis and segmentation of data reveals that there are pockets of demand (and overlap in these pockets) that exist for public, private and hybrid models in each segment.

Mid-market businesses
Looking at the mid-market segmentation, we see that larger firms are likely to employ multiple cloud delivery strategies. Overall, 51 percent rely on a single delivery approach for cloud, for example, 31 percent use only private. 29 percent of mid-market businesses use two different delivery approaches, with the most common being a combination of private and public models (but not in a hybrid setting). Firms in these overlap areas are not, on average, larger than those using a single delivery method, but they do face added complexity in that they tend to have more locations.

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HPE boldly pivoting headlong into post-transactional market

Recently concluded HPE Discover was different than most other analyst events in more ways than one. First, HPE announced that it has strategically dived into the cloud swim-lane with a confident commitment to offer “everything-as-a-service” by 2022. HPE has plans to offer entire portfolio through a range of subscription, pay-per-use and consumption driven offerings. It is a bold strategy and in direct contrast to its key competitors. Second, the phrase “doubling down” on SMB and midmarket segments was not only mentioned in the HPE Global Partner Summit on the mainstage, but also in the keynote address by Antonio Neri as well as by several senior leaders in their respective breakout sessions thereby targeting SMBs as a priority market segment.

Specifically, “everything as a service” or XaaS is a very astute strategy. As we near the end this decade, it is clear that the IT industry as a whole has been transformed by cloud - by the way it alters IT service delivery options, by the way it impacts the economics & resource requirements associated with that delivery, and by the applications and business opportunities that cloud unlocks for user organizations of all sizes and in all industries. We are increasingly immersed in a post-transactional market, where discrete sales of individual products or integrated systems are replaced by agreements to provide IT capacity and business functionality “as-a-Service.”

No segment of the IT market is immune to this trend. Sales of on-premise hardware and software are declining and will continue to decline; at the same time, leading web service providers, including Microsoft (Azure), Amazon Web Services, Facebook, Google and Alibaba, are building 40 percent – 50 percent of all x86 servers for internal use, and then providing access to these servers on a pay-as-you-go basis, and software developers are creating systems on these platforms to automate sales, marketing, finance, HR and other business functions.

Inexorably, the market is shifting from one defined by discrete purchase-and-deploy deals aligned with refresh cycles to one where businesses take a hybrid approach that blends a limited number of on-premise assets with a growing range of on-demand services. Although hybrid IT is inherently a more flexible and efficient way of providing IT services needed by businesses, it still requires effective planning to address important issues within business operations. There are many different types of hybrid IT solutions, but they all belong to one of three basic types: Solutions that respond to IT department needs, and are adopted by IT professionals; Solutions that address business management needs, where demand is driven by non-IT executives or staff members; Solutions that change both business processes and IT systems, and which require IT/business management collaboration for effective delivery. And these are the hybrid market segments that HPE plans to address.

But Antonio Neri’s ambition is far bolder and greater than simply pivoting to an XaaS business model. His promise is for a zero-friction future in a cloud-less world for all segments of the market. A strong foundation has been laid with HPE GreenLake, an outcome of its acquisition of Cloud Cruiser in 2017. At HPE Discover, HPE extended its GreenLake offerings for the midmarket to enable quick deployments of workloads with right sized and ready to go storage, compute and virtualization. For midmarket firms which do not own and manage their own data centers, HPE has partnered with Equinix and CyrusOne to offer co-location solutions. To help its channel partners that serve the midmarket segment, HPE has developed a new quoting tool that reduces quote time from 18 hours to 15 minutes. In addition, HPE also announced the availability of HPE GreenLake Chatbot - an artificial intelligence driven, automated chatbot that quickly answers partners' HPE GreenLake inquiries.

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