11 Reasons HP's ServiceOne 2.0 Powers Partner-Customer Cloud Transformation

A New Services Framework To Deliver Cloud Computing Transformation

Hewlett-Packard on Tuesday unveiled ServiceOne 2.0 -- an ambitious new channel program aimed at rewriting the rules on how customers and even partners tackle the cloud computing challenge. Here are 11 reasons ServiceOne 2.0 -- with HP Flexible Capacity-- raises the bar in the HP cloud computing battle against Cisco, Dell and IBM.

HP Flexible Capacity Rewrites Rules For Cloud Transformation For Customers

HP's new Flexible Capacity offering -- the centerpiece of ServiceOne 2.0 -- opens the door for customers to free up a significant amount of working capital by putting in place minimum three-year, private cloud Infrastructure-as-a-Service deals with flex-up bursting or flex-down capabilities. The agreements are based on the same monthly fixed fee, pay-as-you-go model that has fueled public cloud adoption. Partners expect annual customer savings to start at 10 percent to 20 percent annually and go higher. That is cash customers can use to drive business growth, even starting a new line of business.

A Strategic Relationship Based On Business Outcomes

Partners said the three-year minimum Flexible Capacity enterprise agreements open the door to tighter, more strategic relationships with customers. The outsourcing agreements move the cloud conversation from a transactional product discussion to a strategic relationship focused on business outcomes. The Flexible Capacity deals are expected to drive significant business gains for customers and longer-lasting, more strategic relationships between customers and solution providers.

Partner Cloud Computing Gains Without The Pain

The biggest bang for partners from the multi-year, Flexible Capacity deals may come from the fact that partners will be paid for the enterprise outsourcing agreements -- which could average several millions of dollars over the course of four years -- up front on net margin in a traditional capital expenditure IT project model. That saves sales reps from taking the huge financial hit usually associated with multi-year, recurring revenue cloud deals.

A Flexible Model For Private And Public Cloud

One of the major benefits of the Flexible Capacity model for customers is the ability to take advantage of on-premise, private cloud security and compliance at a pay-as-you-go fixed monthly fee, while at the same time opening the door for customers to take advantage of bursting capabilities into the public cloud with HP Helion. That kind of flexibility for both on-premise and off-premise cloud computing capabilities poses a big threat to public cloud providers like Amazon Web Services.

HP Datacenter Care -- A Recurring Revenue Model For Partners

Partners get the best of both worlds with the Flexible Capacity deals because they get paid on an up front, net margin traditional infrastructure purchase model with rich recurring revenue model opportunities centered around offerings like HP Datacenter Care and HP Proactive Care Services. In fact, partners said they expect significant recurring revenue from the Flexible Capacity deals.

T he Ability To Deliver HP Datacenter/Proactive Care Services

HP is putting in place new services delivery opportunities for partners with HP Technology Services offerings like Datacenter care and HP Proactive Care Services. Services offerings sold and delivered by 2,600 ServiceOne-certified partners are growing fast and are driving one third of the overall Technology Services sales, said HP Vice President of Global Channel Services Dave Twohy. He expects ServiceOne 2.0 to fuel even greater ServiceOne sales growth.

Channel -- Direct Sales Compensation Alignment

HP has taken away what may be the biggest obstacle to success with New Style IT programs by carefully aligning compensation of HP's direct sales reps in the field, including HP Technology Services reps, with the channel. Partners said HP reps, including HP Technology Services and HP Financial Services, are compensated on the multi-year deals.

"We are confident this is going to be a success because HP has gone out of their way from an end-user rep perspective to TS to HP Finance to the channel, to make sure that compensation is aligned," said Mark Dallmeier, vice president and CSO/CMO at Tempe-Ariz.-based HP Platinum partner IT Partners.

An HP Advantage Versus Cloud Competitors

Solution providers said HP is the first infrastructure provider to pull together a channel program that gives partners the ability to craft multi-year outsourcing agreements side by side with an infrastructure vendor with robust service delivery and recurring revenue opportunities for partners.

Mike Strohl, CEO of Concord, Calif.-based HP Platinum partner Entisys Solutions, predicted that HP cloud computing competitors will be forced to respond to the new Flexible Capacity model. "HP is the big winner here," he said, "This is designed to deal with real needs customers have today. I think everybody else will get into this game in one capacity or another."

Using HP Flexible Capacity To Move From Integrator To Cloud Service Provider

HP Flexible Capacity can also be used as partners to transform from a traditional infrastructure integrator to a cloud service provider. HP Vice President of Global Channel Services Dave Twohy said the same breakthrough cloud computing economics that an internal IT department leverages with Flexible Capacity can be used by integrators. HP has so far done about 10 of those deals in Europe but none in the United States.

"We are working with partners to determine if the workload they are bringing online is sufficient and whether they have sufficient resources to make a three- or four-year commitment," he said.

HP Back-Up Services Offensive With New Services360 Tool

HP is backing up its ServiceOne 2.0 effort with a new HP Services360 tool set for faster sales proposals and services price quotes around offerings like HP Datacenter and HP Proactive Care Services offerings. Services360 is being currently being piloted by a select group of partners.

HP Vice President of Global Channel Services Dave Twohy estimated the tool set will lower the cost of sales by as much as 50 percent for partners. The Services360 offering provides partners and HP sales reps with the same training, sales methodology and tool set to manage services proposals, contracts and renewals.

Driving Big Revenue Gains For Partners

HP Platinum partners are predicting that Flexible Capacity enterprise deals will drive anywhere from 20 percent to 50 percent sales growth over the next two years.

Dan Molina, CTO at San Diego, Calif.-based Nth Generation Computing, No. 352 on the CRN SP500, called the HP offering one of the most creative channel offerings he has seen in nearly 25 years in the IT business. Nth Generation, for its part, is already working on three Flexible Capacity deals. Molina expects Nth Generation to add at least $6 million in sales from Flexible Capacity deals in 2015.

"It's a win-win-win for the customer, HP and the partner," he said.