Pure-as-a-Service Structured For Channel Profitability

‘We’re providing upfront compensation for multi-year minimal [Pure-as-a-Service] subscriptions from the customers. So that allows the partner’s cash flow to stay intact. And we have a very straightforward and simple process for smaller transactions as well. So it’s not just for large customers, it’s for small as well,’ says Pure Chairman and CEO Charles Giancarlo.

Pure Storage has structured its Pure-as-a-Service flexible consumption model not only as a way to provide business users with flexible ways to consume storage both on-premises and in the cloud, but as a way to increase the company’s channel partner profitability.

That’s the word from Mountain View, Calif.-based Pure Storage Chairman and CEO Charles Giancarlo, who Wednesday told an audience of solution providers during the Best of Breed Virtual 2021 conference that transitioning to a subscription model is no trifle for anyone involved.

“This transition to a subscription business is a big transformation, no matter if we’re talking about ourselves, our partners, the channel in general, because it’s a change not only in how we recognize revenue but in how we perform as an overall P&L and when cash comes in,” Giancarlo said.

[Related: Pure Storage CEO Outlines What It Means To Be A Software, Cloud Company]

Giancarlo appeared in a question and answer session with Robert Faletra, executive chairman of CRN parent The Channel Company and Steven Burke, news editor at CRN.

Giancarlo said Pure-as-a-Service is structured in a way that makes it easy for channel partners to sell.

“First of all, we’re providing upfront compensation for multi-year minimal subscriptions from the customers,” he said. “So that allows the partner’s cash flow to stay intact. And we have a very straightforward and simple process for smaller transactions as well. So it’s not just for large customers, it’s for small as well.”

Pure-as-a-Service, which was built on Pure Storage’s earlier Evergreen Storage service for automatically upgrading the company’s arrays as new technologies became available, has seen rapid growth over the past year, with the COVID-19 pandemic accounting for much of that growth and at the same time laying the foundation for future growth, Giancarlo said.

“With COVID, we found ourselves in an environment where customers needed immediate increases in their application environment,” he said. “And these were typically on-prem. But those very same customers might’ve had, in fact typically do have, a plan to move to the cloud over the next several years. So if you think about it from the customer standpoint, what do you do if you have immediate capacity issues today, but you want to move to the cloud in a couple of years and you’re concerned that your options today are to buy more infrastructure only to have it sitting idle in a couple-of-years’ timeframe and yet you still have a five-year depreciation period?”

Pure-as-a-Service is tied into Pure Storage’s unified subscription where it is currently an on-premises service model that offers Cloud Block Store in AWS and Azure so that customers can move data at any time from on-premises to cloud with no change in contract and no change in cost, Giancarlo said.

“[Customers] only pay for what they use when they use it regardless of where they use it,” he said. “So because of that flexibility and that financial incentive, because the customer doesn’t have to lay out a lot of money, it means that customers flocked to it during the COVID period. So we’ve seen tremendous growth. And now that they’ve tasted it and they realize that, ‘Wow, whether it’s on-prem or the cloud, I only pay for what I use when I use it,’ they love it. So we’re expecting it to continue to grow as COVID starts to dissipate.”

One channel partner that has already make Pure-as-a-Service a keystone of its services offering is Equinix, the Redwood City, data center services provider which is offering Pure-as-a-Service as part of its bare metal-as-a-service, Giancarlo said.

“The interesting thing about [Pure-as-a-Service] is it also allows managed service providers to very cost-effectively be able to go to market with a service offering without having to necessarily pay for all the CapEx (capital expense) right up front because we are in that battle with them as they’re developing their service offering for which they’ll be paid by the drink as well,” he said. “It’s a consumption-based model. But instead of having to build the entire infrastructure on a capex basis and then offering it as-a-service, we’re partnered with them offering it as-a-service as well. So we’re doing this with more than just Equinix, and we’re looking forward to working with many more partners in this model.”

Pure Storage’s Pure-as-a-Service offering fits five of the top six practices of Converge Technology Partners, said Archie James, vice president of business development of the Toronto-based solution provider and Pure Storage channel partner.

Those five are cybersecurity, hybrid cloud, advanced analytics, managed services, and secure storage networking, James told CRN.

“We’ve aligned our practices with how we believe our customers are doing their businesses,” he said. “And quite by accident, Pure is focused on the same challenges our clients see. Pure-as-a-Service lets clients go to the cloud as an operating expense. If they want managed services, we can do it. If they want it on-premises, we can do it. It’s aligned with our clients’ challenges. It’s very symbiotic to what we do.”

Target customers for Pure-as-a-Service include any business trying to move IT from a capital expense model to an operating expense, James said.

“And it’s right for anyone experience incredible data growth who are finding it difficult to manage the spikes in growth,” he said.

Pure-as-a-Service meets the needs of clients attracted to the benefits they get with a cloud model for their storage, said Jeanne Blachowicz, director of sales and marketing at AE Business Solutions, a Madison, Wisc.-based solution provider and Pure Storage channel partner.

“Pure Storage is adjusting to the situation by offering some of the same benefits and efficiencies customers expect from the cloud,” Blachowicz told CRN. “There’s no surprise. I think clients are looking for operational expenses rather that large capital expenses.

Blachowicz said Pure-as-a-Service meets the needs of midsized enterprises who either are looking to reduce capital expenses or who are finding a shift to the cloud is more expensive than anticipated.

“And for large enterprises, it provides a more predictable budget item while making it easier to manage large workloads, both those on-premises and those moving to the cloud to increase efficiency,” she said.