HPE Lays Off Hundreds In North America, Doubles Down On ‘Partner-First’ Model

The “Partner First” plan – which integrates the North America inside sales team with the channel - is designed to provide tighter alignment with partners in a simpler and more streamlined go-to-market model aimed at driving growth in midmarket and SMB.

Hewlett Packard Enterprise has laid off hundreds of employees this week in North America as its steps up its “partner-first” go-to-market model for the start of its new fiscal year Nov. 1, sources told CRN.

The layoffs included a wide range of positions including partner business managers, sales leaders and direct sales reps, sources said.

[Related: HPE CEO Antonio Neri: 5 Bold Statements At HPE’s Securities Analyst Meeting]

Blocks and Files—a storage-focused news site—was the first to report the layoffs. The site said 500 HPE employees were let go in a major sales reorganization.

HPE would not confirm the layoffs.

In a statement provided to CRN, HPE said: “As we’ve previously announced, we are focusing our investments and realigning our workforce to critical core businesses and areas of growth that will accelerate our strategy. We are committed to making these necessary changes with empathy and transparency and ensuring impacted team members receive the support they need. These actions will enable us to become a more agile organization and advance our strategy to deliver everything as a service from edge to cloud so that we can help our customers and partners adapt to a new business environment and harness the power of their data wherever it lives.”

The layoffs come in the midst of a massive GreenLake cloud services sales blitz, with HPE tripling its channel investment to power big on-premises GreenLake pay-per-use sales growth. Sources said the cuts are part of a stepped up focus on HPE’s everything as a services edge to cloud platform-as-a-service sales strategy.

The sales blitz includes a sizable investment in new inside GreenLake sales reps charged with working hand in hand with partners and an increased account coverage model for partners, both aimed at driving new logo wins.

The “Partner First” plan – which integrates the North America inside sales team with the channel - is designed to provide tighter alignment with partners in a simpler and more streamlined go-to-market model aimed at driving growth in midmarket and SMB.

“We are opening up a lot more of the customer base to the channel as we head into the next fiscal year,” HPE GreenLake Cloud Services Business Group General Manager Keith White told CRN last month. “We are realizing they have the tools, resources and capabilities to really serve a much broader set of our customer base. I expect there to be a significant uptake with these customers going forward.”

Several channel sources called the new North America “partner-first” model—which reduces overlapping partner business managers and account reps—a logical extension of the HPE Next initiative launched in 2017 that resulted in a new internal compensation plan that reduced the number of sales plans inside HPE from 400 to 25.

One top channel sales executive, who did not want to be identified, said the new go-to-market streamlines a model that had lots of overlap with multiple product-focused account reps and even partner business managers. “There were just far too many people getting paid on a deal,” said the executive. “There were storage reps, generalists, multiple district managers. How do you sustain that in a COVID-19 environment? You don’t.”

The executive said he sees the new North America team led by new Managing Director Paul Hunter and seasoned channel leaders like HPE Vice President and General Manager Enterprise East Terry Richardson and HPE Vice President West and Central Peter Brennan doubling down on the channel with a partner-first strategy.

“The new HPE North America team knows the value of the channel,” he said. “People like Paul Hunter and Terry Richardson have channel DNA. They understand the value of the channel and the engineering talent that we bring to the market. I see HPE more aggressively embracing the channel’s sales and engineering talent. Paul and the new team he is putting together get it. “

The executive, who has been interviewing some of the HPE employees that were laid off for open positions at his own company, said he believes that ultimately HPE will have stronger channel presence and go-to-market alignment in the new fiscal year.

“I think that the changes HPE is making are going to make a difference,” he said. “I think they understand that they need to leverage the engineering, solution architects, sales and marketing of the channel to be successful.”

The North America cuts come five months after HPE revealed the next chapter of its Next restructuring initiative, targeting gross savings of at least $1 billion by 2022.

At HPE’s securities analyst meeting on Oct. 1, HPE CEO Antonio Neri told investors that HPE is making bold changes to its go-to-market strategy. “We are re-envisioning our go-to-market strategy to elevate the customer experience and accelerate our as-a-service mix, and will be making changes to these teams to provide a more seamless, holistic sales experience,” he said. “Our goal is to partner with customers to help them achieve outcomes that drive their individual, unique digital transformations.”

Neri said HPE is making “bold moves” across all of its business to “drive our agility, strengthen our capabilities, simplify our processes, and enhance our execution.

Even as it makes cuts, HPE is investing heavily in GreenLake training, enablement and sales resources, partners said.

“It’s all about GreenLake going forward. From presales to solution architects to delivery everything is going to be GreenLake-focused,” said the sales executive for another partner, who did not want to be identified. “If you are not making a difference in the ecosystem around GreenLake, you are not going to do well with HPE going forward.”

One channel source familiar with the cutbacks said HPE is laser-focused on helping its partners and customers adapt to a new business environment. “This is all about letting customers harness the power of their data wherever it resides,” said the source.

A separate channel source familiar with the HPE go-to-market strategy said the key is going to be whether HPE backs up the channel push with a stern hand for direct reps that compete directly with partners in the field.

“The key for HPE is getting everyone in the field focused on building pipeline with the partners,” said the source. “HPE really has to make sure that the partner-first mandate is 100 percent.”