Hewlett Packard Enterprise chief executive Meg Whitman laughs when asked how her life has changed from five years ago when she took over what was then a debt-ridden Silicon Valley behemoth with me-too products and a demoralised partner network. "My life is better," she says.
Whitman said she is having "way more fun" today running HPE as a smaller, nimble and more agile company with a reignited innovation engine and a charged-up partner community. "I may be the only CEO in America who thinks it is actually fun to have a smaller company as opposed to a bigger company," she said in an exclusive interview with CRN USA.
It's a long way from the dark days of five years ago when Whitman took the helm of a US$127 billion Silicon Valley dinosaur with US$12.5 billion in debt and a future that was at best uncertain. At the time, Whitman, who had made an unsuccessful run for governor of California in 2010, said she took the job to turn around a Silicon Valley crown jewel that had lost its luster. "I believe HP matters – it matters to Silicon Valley, California, the country and the world," she said upon accepting the job.
By all accounts, HPE – which will be about a US$30 billion company after it completes the spin-off merger of its US$20 billion enterprise services business with systems integrator CSC – matters again. In fact, partners say both companies are innovating at a breakneck pace on both the product and channel fronts since the historic split into two independent Fortune 50 companies last November.
One sign of that innovation – the development of the fast-selling HPE HyperConverged (HC) 380, which was released earlier this year via a development cycle that went from idea to full-fledged product in just five months. Prior to the split, it would have taken two years to bring that same product to market, said Whitman. "That never happened before at Hewlett-Packard," she said.
"The cycle time on products is much more compressed than it has been in the past. That's important for the partners who now have the most up-to-date offerings on a more rapid cycle than they had in the past."
That faster pace of innovation at HPE, which is growing again for the first time in five years and now has US$5.5 billion in cash, will be front and centre at its Global Partner Conference. At the top of the list of new offerings: an Aruba mobile-first, cloud-first campus, branch and internet of things platform backed up by a new Partner Ready for Networking channel program. Aruba is also unveiling new pay-for-usage/device consumption models aimed at driving lucrative recurring revenue for partners.
Whitman said the Aruba offensive, which is taking its toll on networking rival Cisco Systems, represents the kind of breakthrough innovation that is setting HPE apart from competitors playing catch-up in the wake of the dramatic changes it has made in the business over the past five years.
"I think we are a couple of years ahead of some of our competitors on efficiency and how we run our company," she said.
"You saw Cisco's results [which included a major restructuring in the most recent quarter with plans to eliminate 5,500 positions, about seven percent of the workforce]. They are doing some of the work we did almost four or five years ago. So I think we have got a head start."
At the same time competitors are scrambling to retrench, HPE is sharpening its focus on business-outcome-based selling with partners.
At the Global Partner Conference, HPE will unveil 11 new competencies designed to drive even further transformational consulting over the next several years: data management infrastructure and architecture; application development and transformation; risk management and secure design; incident recovery; threat detection and response; data discovery and assessment; data analytics and business insight; IT automation and orchestration; campus mobility; intelligent workplace; and digital collaboration.
Partners that achieve the competencies will be singled out to work more closely with HPE's direct sales force to drive more business-outcome-based engagements. "We are aligning our program to the way customers are preferring to consume IT and how they are using their IT investments across a blend of capex and opex," said HPE vice president of worldwide channel marketing Chris Ogburn. "This is going to help partners move to how customers are buying not only at the CIO level, but the line-of-business level."
With that in mind, HPE is also for the first time ever supporting multiple partner business models, including service providers and software providers, under the Partner Ready Program. The change is aimed at helping partners make the transition to the cloud era with more support for cloud consumption models and line-of-business selling.
Finally, HPE is doubling down on new social media marketing tools and resources for partners—another sign of the all-consuming focus on helping partners win new business. "With the divestiture of [Enterprise Services] we are a 100 percent partner-focused company," said Whitman. "We have no businesses where the partners are not deeply involved, even HPE Financial Services. There is more and more work we are doing with partners to help them provide their customers with a consumption-based pricing model."
The five-year plan: creating a new hype
HPE's channel-strong approach to the business began in earnest at Whitman's first Global Partner Conference as chief executive five years ago. In fact, Whitman recalls reading the "riot act" to sales reps and partner business managers in an all-hands meeting at the show after seeing a survey that put the company at the bottom of the list in partnering scores. "We are just not going to run the ship this way," Whitman told employees.
That "pivot hard back to the channel" in those early days has provided the foundation for the HPE turnaround, said Whitman. "Five years later we are at the top of the partner surveys," she said.
In fact, one of the pillars of a detailed five-year plan that Whitman delivered shortly after taking the top job was a no-holds-barred commitment to selling through partners. "We had sent more than mixed signals to the partners," Whitman recalled. "I think we kind of told the partners, ‘You are actually not that important and we are more of a direct company.'"
At her first partner conference address, Whitman made sure it was clear to both partners and HP sales and partner reps there would be no more wavering with regard to channel commitment. Then she laid out the plan to remake the company with a turnaround plan that she architected, communicated and delivered upon every step along the way, hand-in-hand with partners.
Among the mainstays of that five-year plan: a hefty investment in both new research and development to drive innovation—the lifeblood of the company—and new sales tools for partners.
The coming battle with Dell-EMC
The HPE strategy to get smaller and move faster in the enterprise market sets up an epic battle with Dell, which as of press time is finalising the largest acquisition in IT history—the US$67 billion acquisition of storage market leader EMC and its virtualisation subsidiary VMware. The blockbuster deal creates a US$75 billion behemoth with 200,000 employees.
Whitman sees the Dell-EMC integration giving HPE a competitive advantage as it moves faster to deliver more technology breakthroughs, like the Synergy Composable Infrastructure, hyper-converged infrastructure and next-generation technology services.
"I'm certain they'll bring some new technology to the fore, but their major play is a cost takeout play because they are running a private equity play," said Whitman of the Dell model going forward. "[Private equity firm] Silver Lake owns 25 percent of that company. Silver Lake is going to get their money out of this thing. The way you justify a deal of this magnitude is you have to sell off assets to pay down the debt, and you've got to rip costs out."
Whitman said Dell making the strategic decision to go bigger is a risky strategy given the ever-increasing pace of change. "The market is moving at lightning speed. Agility—the ability to develop new products in five months—is, I think, going to be a really important factor in degree of success," she said. "And we are not distracted by all the integration of a big company."
When asked directly about her plans for the future and whether she is committed to continuing to lead HPE, Whitman said she is having fun running the smaller, more agile and innovative company. "I feel like we are making real progress," she said. "So I don't have any near-term plans. We'll see what happens over the next couple of years. I originally told the board I would stay five years. Obviously, I will stay longer than that."