Antonio Neri: ‘Best Year Yet Between HPE And Channel’

“We made remarkable progress,” said HPE CEO Antonio Neri. “We solidified our relationship [with partners]. The channel understands that we are and will continue to be a channel-led company ... Our Net Promoter Score is twice as big as the next competitor.”

Hewlett Packard Enterprise CEO Antonio Neri said the edge-to-cloud Platform-as-a-Service powerhouse had its “best year yet” for channel performance with soaring GreenLake sales, big gains in partner profitability and a record channel Net Promoter Score (NPS).

“This was the best year yet between HPE and the channel,” said Neri in an interview with CRN after HPE closed its fiscal year 2019, ended Oct. 31, with gross margin up 270 basis points from the prior year. “We made remarkable progress. We solidified our relationship [with partners]. The channel understands that we are and will continue to be a channel-led company.”

HPE’s shift to the GreenLake pay-per-use model continued to pick up steam in the fourth fiscal quarter, with HPE GreenLake orders through the channel up a whopping 326 percent, said Neri.

[Related:Antonio Neri: HPE Set To Unleash ‘Next-Generation’ GreenLake]

With the shift to GreenLake and higher value software-defined offerings, HPE partners have experienced a 300 basis point improvement in gross margin year over year, said Neri.

That increase in partner profitability helped drive a five-point year over year increase in HPE’s channel Net Promoter Score (NPS), said Neri. “I’m really, really proud of that,” he said of the NPS score—a closely watched indicator of partner profitability and channel loyalty. “It was a record year. Obviously we have been very predictable…Our Net Promoter Score is twice as big as the next competitor.”

Partners are flat out “making more money” by teaming with HPE, said Neri. “Ultimately partners understand they can make more money with us,” he said. “In the end they need to make money, and they see Hewlett Packard Enterprise not only as a trusted partner that can grow with them but also as someone who provides them the ability to make more money. Ultimately we are better together in front of our customers. I feel pretty good about it. It’s the best year we ever had [with the channel], and there are still way more opportunities out there.”

Paul Cohen, vice president of sales for New York-based PKA Technologies, one of HPE’s original Platinum partners, said PKA is seeing the benefits from HPE’s channel-led charge. PKA is coming off double-digit growth in fiscal year 2019 and is forecasting double-digit growth once again in fiscal year 2020, said Cohen.

Cohen, in fact, said he is already seeing the benefits of the Nov. 1 HPE North America restructuring that moved Terry Richardson into a new role as North America East Enterprise Sales Chief and Leslie Maher as the new channel chief.

“Terry Richardson moving into the East sales role is a huge benefit to the channel,” said Cohen. “His influence on the district managers and the sales force is already being felt. Terry knows what its takes to expand and grow the business by leveraging the channel.”

Cohen said he is also optimistic about the HPE GreenLake sales offensive given the new sales resources being brought to bear on the pay-per-use model by HPE.

The appointment of longtime GreenLake strategy superstar David Twohy as vice president and general manager of the GreenLake North America business is a big boost, said Cohen.

“It gives us a lot of confidence when we go to sell GreenLake that we have the backing of [Twohy] and his team,” said Cohen. “That gives us the support and head count collateral we need to be successful.”

HPE’s Annualized Revenue Run Rate—a measure of GreenLake pay-per-use traction as HPE shifts all of its products to an as-a-service platform by 2022—is at $462 million with an anticipated 30 percent to 40 percent compound annual growth rate.

Among the big sales growth areas in fiscal year 2019 was a 39 percent increase in GreenLake sales; a 47 percent increase in HPE’s Composable Cloud offerings, which include HPE Synergy and HPE OneView; a 35 percent increase in HPE Nimble sales; and a 25 percent increase in hyper-converged sales.

Neri said the shift to higher value offerings helped drive a 20 percent increase in non-GAAP earnings per share for the fiscal year to $1.77. That translated into free cash flow from operations of $4 billion, up 35 percent from the prior year.

“We had a very good, strong year marked by strong execution,” said Neri. “We did what we said we would do. We grew in the areas that we pivoted the portfolio together with our partners.”

Overall for fiscal year 2019, HPE reported sales of $29.13 billion compared with sales of $30.85 billion in the prior year.

For the fourth fiscal quarter, HPE reported better-than-expected non-GAAP earnings per share of 49 cents on sales of $7.21 billion compared with 43 cents on sales of $7.94 billion in the year ago quarter.

Neri’s call to action for channel partners for HPE’s fiscal year 2020, which started on Nov. 1: “Let’s go faster together. The customers need both of us. The customers are looking for a combination that allows them to deliver business outcomes way, way faster than before. We have built a very strong foundation. Let’s go faster. The market is moving faster than we have ever seen it before. We need to accelerate the momentum.”