Scott Vogel: HPE Partners Can Make More Money Selling GreenLake Than Traditional Capex Infrastructure Deals

Hewlett Packard Enterprise's (HPE) breakthrough GreenLake Flex Capacity model has changed the channel landscape by making it more profitable for partners to sell pay-per-use on-premises deals than a traditional capex infrastructure deal, said Scott Vogel, partner business manager for HPE Pointnext Services for distributor Synnex's account team in a solutions track presentation at XChange 2019.

With estimates that 40 percent of enterprise IT infrastructure spending will be consumption-based by 2020, HPE has changed the on-premises pay-per-use profit proposition for partners with an unprecedented 17 percent up-front rebate on the initial committed value of the multi-year deals, said Vogel.

[Related: HPE's Scott Ramsay On The Secret To GreenLake's 300 Percent Channel Sales Growth Rate]

"You are going to make a lot more money [with GreenLake] than you would on a conventional [IT] purchase," said Vogel, a 30 year IT industry veteran who started with HPE in the outsourcing business. "With the 17 percent rebate, you are going to realize most, if not all of it, in the first year. You own the billing and margin and the relationship. We are working in the background doing the solution, crafting the spreadsheet and scope of work. We are not interfacing with your customer."

The beauty of HPE GreenLake Flex Capacity – which provides a public-cloud-like experience on premises – is it gives partners the ability to add their own managed services and to control margin and pricing for the life of the contracts, which run from three to 10 years. Partners make recurring revenue monthly for the term of the contract.

The prepackaged, pre-priced HPE GreenLake Flex Capacity offerings with pre-built statements of work are available from HPE distributors. Those offerings include HPE ProLiant For Microsoft Azure Stack; HPE Synergy 480 Compute Modules; HPE ProLiant BL460c server blade; HPE 3Par StoreServe 8440, 8200, 9450, 520; HPE SimpliVity 380 and HOE DL380/385 Servers. All of the packages include HPE Datacenter Care.

Some of the most popular HPE GreenLake Flex Capacity deals have been storage-based infrastructure-as-a-service deals.

HPE partners submitting GreenLake deal opportunities fill out a registration form in Salesforce.com, and the deal is then vetted by an HPE Pointnext rep, said Vogel. HPE works proactively with the partner and customer to craft a statement of work and then the solution provider applies their services and adds their margin, said Vogel. "You determine what you want to charge," he told partners.

Key to partner success in the GreenLake pay-per-use model is properly qualifying customers, said Vogel. Among the qualifiers: forecasted growth of 10 percent year over year. "If there is no growth it doesn't work," said Vogel.

One of the secrets to HPE success with GreenLake – which grew in the channel at a 300 percent clip in the most recent quarter – is HPE's Cloud Cruiser software metering platform and portal. That real-time portal provides detailed insights aimed at driving big cost savings by continually rightsizing a customer's IT environment. That Cloud Cruiser portal is HPE's "secret sauce," said Vogel.

Richard Fly, director of federal sales for BahFed Corp. a veteran owned $45 million government focused solution provider, said the The GreenLake model is particularly attractive for government customers who want to maintain secure infrastructure on-premises.

"The federal government customers want to maintain a hold on their data," he said. "There is always going to be massive restrictions on what data they are willing to put on a public cloud. Having this on-premises is a huge advantage. The difficulty with the government is it has always been designed around the capex model."

Fly said HPE has been a "phenomenal" partner for BahFed Corp. over the last 14 years. "They are probably better than anyone else based on their dedication to the channel and the willingness of their account managers to work with us," he said.

Blake Schwank, CEO of Colorado Computer Support (CCS), Colorado Springs, Colo., said he is impressed by the HPE GreenLake pay per use partner proposition. "This is innovative," he said. "It's great to have an on-premises option. We're definitely going to take a look at this."

Partners sticking with the old on-premises model are facing the same kind of downward spiral that led to the demise of Tower Records and Blockbuster Video in the wake of the online streaming model for music and films, said Vogel.

"We all have a way of ignoring paradigm shifts even when they are afoot," said Vogel. "I am from California so there could be earthquakes and mudslides, but people think that happens to someone else. It doesn't happen to you. That's not true."

Vogel's final message to XChange partners: "It's not rocket science. You can do it. You can make a lot of money doing it. This is the wave of the future. Do you want to be ahead of the curve or trying to play catch up?"