The XaaS opportunity for partners: Is it infinite?
AUGUST 3, 2021 • BLOG POST • XAVIER POISSON GOUYOU BEAUCHAMPS, VICE PRESIDENT, WW SERVICE PROVIDER BUSINESS AND Cloud28+ AT HPE
IN THIS ARTICLE
- Customers are embracing vendor’s initiatives to shift toward recurring or subscription models and partners hold the key to the deal
- Partners are becoming Service Providers or XaaS aggregators to build their own provisioning capabilities based on HPE GreenLake
- Partners in Portugal, Brazil, Czech Republic, Poland and the US are already seizing the opportunities successfully
The partner landscape is taking advantage of XaaS models, Xavier explores the endless opportunities that can be embraced today
We are seeing more and more evidence that consumption-based, choice-centric business models are the future of IT services and products. According to Gartner®1, “by 2025, at least 50% of enterprises will shift toward operating expenditure (opex)-based storage consumption models, compared to less than 10% today. The overall IT market continues to shift away from capital and toward operating spending. In 2020, about 77% of IT spending was operational (opex), compared to 73% in 2016. This shift has been driven not only by infrastructure-as-a-service products such as public cloud, but also by customers embracing vendor’s initiatives to shift toward recurring or subscription models.” Here is how one of HPE’s partners did it:
The Partner Journey to XaaS
The partner landscape is taking advantage of XaaS models to transform. Survey findings from 451Research, part of S&P Global Market Intelligence,2 suggest that Service Providers will embrace the XaaS opportunity. 42% of service providers surveyed need to completely transform their own IT over 3 years, and 56% of them must do it partially. We believe the XaaS model will help them transform. There are 3 different components that encompass the XaaS journey:
1. XaaS offerings: IaaS, PaaS, SaaS, DaaS (Data as a service), Desktop as a Service and more are different flavors of what customers will refer to when purchasing XaaS
2. The buying process: pay per use, beyond the offering itself, is a buying process shift from capex to opex as the move to XaaS occurs
3. The responsibility shift: in the XaaS model, partners will potentially outsource Metering and Billing, Automatic Hardware provisioning as per the demand, and sometimes compliance processes, either to a Cloud supplier or to an existing HPE Installation with critical support services. Partners transforming to be Service Providers will be focused more on business and applications, size and usage commitment levels, security tools and practices, and vertical industry focused needs.
More and more Resellers and Value Added Resellers along with System Integrators are offering customers dedicated or mutualized infrastructure powered by HPE XaaS (HPE GreenLake). They are also taking the opportunity to transform to become either a Service Provider or an XaaS aggregator. We find these partners building their own service provisioning capabilities based on HPE GreenLake or partnering with various XaaS players (Hyperscalers or HPE GreenLake powered Service Providers to offer to their customers XaaS models). We’ve seen several partners engaging on these new paths, read about the Central European case below.
The Opportunity for Channel Partners
Datacenter consolidation & cloud migration are key trends in the market where System Integrators and Value Added Resellers are well positioned given the trusted relationship they have with their customers. Most of these projects will have an XaaS component that partners can use to differentiate themselves through.
- In some cases, the customers will want to stay with on premise IT in their datacenters and at the same time they will look for a cloud experience. Channel partners can seize the opportunity by positioning HPE GreenLake in answer to the customers’ needs.
- In some other cases, customers will ask to get rid of their datacenters for a given percentage of their IT. Channel partners can answer these latest needs by partnering with colocation services companies and sell to their customers an HPE GreenLake powered architecture, especially when the customers are asking for dedicated resources.
- Channel partners can also build their own cloud offering, powered by HPE GreenLake, and offer it to their customers directly.
- Finally, they can also partner with a National Service Provider powered by HPE GreenLake and provide a full answer to the customers’ needs. Channel partners have a full range of opportunities, beyond the primary one that would consist of reselling to their customers Hyperscalers public cloud services.
Channel partners are also the first IT advisor of the Commercial/SMB/MM segments. The COVID-19 pandemic has definitely accelerated the move to consumption based IT in these segments. In order to keep their customers, it is important that partners keep driving the conversation and do not hold back from the XaaS movement. This is a key reason why HPE has launched programs to connect the reseller community with HPE certified service providers across the world. Through Cloud28+, resellers can identify National Service Providers who offer channel programs enabling resellers to keep their customer relationships while offering end customers XaaS offerings from these certified HPE Service Providers, in trust. As every service company moves to XaaS, we can see a great example in this Portuguese case3 below.
The Endless Opportunities to Capitalize Now
As per my previous remarks, XaaS is a polymorphic model that can take many different and combined options. Yes, the possibilities are endless for channel partners, as the market progresses and the channel is capitalizing on the various opportunities it brings to them. Some of them will focus on a specific customer segment, others on given industry verticals or on new emerging technologies, and finally all of them have the opportunity to build a differentiated and competitive value proposition. The two use cases below showcase these different possibilities, and how all channel partners can capitalize today.
1 Gartner, Market Guide for Consumption-Based Pricing for Data Center Infrastructure, Daniel Bowers, Kiyomi Yamada, Henrique Cecci, Jeff Vogel, Robert Preston, Rob Schafer, Andrew H Kim, Suzie Low 1 March 2021 GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
2 451 Research, part of S&P Global Market Intelligence, Voice of the Services Provider - Workloads, Key Projects & Infrastructure Evolution 2021
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