Closing the chapter on 2022 and looking ahead to 2023

DECEMBER 22, 2022 • BLOG POST • GEORGE HOPE, WORLDWIDE HEAD OF PARTNER SALES AT HEWLETT PACKARD ENTERPRISE

IN THIS ARTICLE

  • George Hope shares his 2023 predictions for the channel ecosystem
  • George reflects on his experience at key 2022 events including Canalys Channels Forums, HPE Discover Frankfurt, and Distribution Partner Conference

Sharing my thoughts on the future of the channel ecosystem

It is that time of the year. Time to look back and be grateful to see some of the key causes of disruption in 2022 in our rear view. But it’s also a time to look ahead with cautious optimism, something most of us couldn’t do less than a year ago.

Businesses have not stopped adapting to change. And it's been quite a ride for us, as the pandemic and its effects—including but not limited to supply chain constraints—made the pace of change challenging to follow. With the constant rise of new challenges, we recognize that this will continue into the near future and businesses will have to keep pace to thrive.

With that realization, it is more difficult than ever today to make future-looking predictions, but it is also extremely important to understand the market trends that are ahead of us. So, accounting for what analysts and experts are saying and what trends I have been discussing with our HPE partners and customers over the past few years, here are my predictions for 2023 and beyond. 

Prediction #1: Hybrid cloud is the name of the game.

I had the pleasure and privilege to discuss the evolution of cloud-first strategies at Canalys Channels Forums 2022, and how they are becoming the norm for businesses to transform, differentiate and gain competitive advantage. There was consensus around the need for thriving businesses to access and offer “a cloud experience everywhere” as our President and CEO Antonio Neri highlighted once again at HPE Discover Frankfurt 2022 earlier this month. IDC shares a similar perspective stating that "cloud is no longer considered a location but rather an operating model for future innovation. The agility provided by cloud methodologies enables organizations to quickly deliver at scale on rapidly changing requirements from internal and external stakeholders.”1

Enterprises today heavily rely on distributed and decentralized APIs for data sharing across development teams, partners, mobile teams, and back-office. Embracing the right hybrid cloud approach helps choose what makes sense for each component, task, and project a company wants or needs to tackle—and makes the cloud experience accessible for companies of all sizes, while ensuring security and data sovereignty.

Prediction #2: Optimized experiences and process automation will continue to be at the heart of business evolution.

IDC predicts that by 2025, 60% of infrastructure, security, data, and network offerings will require cloud-based control platforms that enable extensive automation and promise major reductions in ongoing operating costs.2 As we explore how the metaverse will shape our (very near) future and increasingly integrate artificial intelligence (AI) in every process and experience, adoption of technologies such as computer vision and deep learning will propel the supply chain forward. Driverless fleets, autonomous warehouse management, and simulation are just a few of the optimizations that will lead to a new era in smart logistics and global supply chain.

Gartner® has identified the top 10 strategic technology trends for 20233 and grouped them under the following three themes:
 

  • Optimizing IT systems for greater reliability, improving data-driven decision making and maintaining the value integrity of production AI systems.
     

o   66% of teams responsible for digital products are now also responsible for revenue generation. CIOs are looking for new practices and approaches that their teams can adopt to deliver that high business value, along with mitigating risk and increasing customer satisfaction. A digital immune system provides such a roadmap
 

o   Applied observability enables organizations to exploit their data artifacts for competitive advantage. It is powerful because it elevates the strategic importance of the right data at the right time for rapid action based on confirmed stakeholder actions, rather than intentions. When planned strategically and executed successfully, applied observability is the most powerful source of data-driven decision-making.
 

o   Organizations must implement new capabilities to ensure model reliability, trustworthiness, security and data protection. AI trust, risk and security management (TRiSM) requires participants from different business units to work together to implement new measures.

  • Scaling vertical offerings, increasing the pace of product delivery and enabling connectivity everywhere.
     

o   By 2027, Gartner predicts that more than 50% of enterprises will use industry cloud platforms to accelerate their business initiatives.
 

o   Gartner predicts that 80% of software engineering organizations will establish platform teams by 2026 and that 75% of those will include developer self-service portals.
 

o   As networks move beyond pure connectivity, they will provide insight using built-in analysis and low-power systems will harvest energy directly from the network. This means the network will become a source of direct business value.
 

  • Pioneering business model change, reinventing engagement with employees and customers, and accelerating strategies to tap new virtual markets. 
     

o   By 2027, Gartner predicts that
 

o   Over 40% of large organizations worldwide will use a combination of Web3, AR cloud and digital twins in metaverse-based projects aimed at increasing revenue.
 

o   More than 50% of the global population will be daily active users of multiple superapps.
 

o   Adaptive AI systems aim to continuously retrain models and learn within runtime and development environments based on new data to adapt quickly to changes in real-world circumstances that were not foreseen or available during initial development.3

Prediction #3: Business model transformation will lead every business to embrace service provision.

In a recent blog post, Xavier Poisson discussed how “everybody is becoming a service provider” and how partners are no longer defined by one persona, and that we are instead in an era of hybrid partners who act as resellers, system integrators, colocation companies, service providers, and in some cases, pure vertical industry players also act as service providers. With this shift, partners can generate additional revenue by offering a number of cloud features and functionalities such as governance and/or compliance, machine learning (ML)/AI, data analytics, cost optimization and management, and application performance monitoring.

During HPE’s annual Distribution Partner Conference (DPC) in October 2022, I sat down with many of our top distributors, and I was pleasantly surprised to hear that they’ve been focused on moving from a transactional to a strategic approach—previously called “the shift to value”. They confirmed their priority is on transforming to add capabilities and increase flexibility, and so they become service providers, service delivery partners, but also system integrators, and even OEMs.

Prediction #4: Partner ecosystems will raise the bar for business outcomes.

I second Canalys’ Jay McBain, who says that we have entered the “decade of ecosystems". According to IDC’s Jeffrey Hojilo, “Extending and opening innovation, collaboration, and cooperation with partners across an ecosystem inside and outside any given industry has become a critical strategy for executives and their organizations.” (…) “The world and industry landscapes are too complex, dynamic, and disruptive for any one organization to address on its own.”4 Most companies are already in the process of expanding their partner ecosystems to include regional and global system integrators, managed service providers, cloud hyperscalers, and a variety of referral and influence partners.

As businesses become increasingly interconnected in serving customers in a digital world—where nearly everything can be adjacent to everything else—a wave of new opportunities for innovation are opening up. This includes creation, integration and expansion of marketplaces and what Allan Adler, a leading ecosystems expert, has framed as a shift from go-to-market to go-to-ecosystem.

Prediction #5: Buying behaviors will continue to evolve in the direction of digital experiences and high-velocity selling.

Addressing this challenge calls for engagement with an expert to elevate the conversation—with customer needs and desired outcomes as the starting point. For businesses wanting to stay relevant, this will mean investment in qualified, specialized resources, as well as in helping their sales force develop talent and hone skills. According to IDC, most companies will struggle to find and retain employees with the right skills, effectively putting more pressure on remaining employees to meet expanding digital business requirements. Both businesses and IT providers will need to invest in technical, collaborative, and critical thinking skills development.4 Many distributors I spoke with during DPC also told us that they have hired or repurposed dedicated resources to develop our joint hybrid cloud business, and/or created dedicated departments of specialists who can have the right conversation with the right people at our partners.

Looking ahead

As stated during the Partner Preview session I hosted with Antonio Neri, and Maurice Martin, Vice President, HPE GreenLake Partner Ecosystem, at HPE Discover Frankfurt 2022, our edge-to-cloud vision and partner strategy addresses the above predictions and trends described.

“Choice” is a key theme for us. It is at the heart of our strategy, and our commitment to partners and customers. We provide options to enable our partners to go wherever the market and the industry are heading based on where each of our shared customers currently is—or wants to be. Our goal is to provide partners with the flexibility to deliver anyway they need to, and at the same time recognize their unique expertise and capabilities.

With customer outcomes in mind, we help them stand out by leading with their own intellectual property (IP), building out their own managed service offerings, and adding more annual recurring revenues (ARR) to their balance sheet.

Our priorities will continue to be centered around offering choices to partners by enabling them to:
 

  • Evolve business at their own pace. With our stable and predictable HPE Partner Ready program, now including HPE Partner Ready Vantage, we provide a one-stop-shop for our partners to deliver the exact outcomes each customer needs, whether they focus on high velocity sales or solution and advisory-led sales—from edge-to-cloud. An extension of the HPE Partner Ready program, HPE Partner Ready Vantage is designed to support every partner’s as-a-service business growth and enable them to deliver value throughout the entire customer lifecycle. Whatever their current or desired business model, partners can increase their ARR by leveraging HPE edge-to-cloud solutions—powered by HPE GreenLake—to develop unique customer service experiences.

  • Partner with us and other members of our broad ecosystem as one team. We are flipping the script, partners are not “our” ecosystem—we are all members of the same mature, broad, connected ecosystem and laser focused on expanding collaboration with, and for our partners in the ecosystem. Opportunities span Partner Connect (enabling partner-to-partner and partner-to-customer connections leveraging over 100,000 contacts), “virtual” service provision of hybrid cloud offerings available and made possible by our network of local service providers, and marketplace integration.

  • Enjoy an enhanced experience. We have integrated partners end-to-end in our HPE GreenLake platform and we are strengthening our commitment to improving tools and processes by focusing on configuring, quoting, supplying, and also helping partners better serve our customers through AI & predictive analytics, developing proposals that meet their most pressing needs.

 

We commit to all of this while continuing to invest in enhancements to the HPE Pro Series to help partners refine their skills and connect them with the right experts to close opportunities faster, architect outcome-based solutions, achieve digital marketing proficiency, and ultimately stand out with expertise.

Lastly, but not least, our approach to sustainability with HPE Financial Services acts as a digital transformation enabler as it creates capacity for businesses. Businesses can take unutilized or under-utilized gear and turn it into dollars that help fund digital transformation. We’re building a circular economy with the complete lifecycle of our products to enable our customers and partners to thrive in a resource-constrained world. A key tenet of the circular economy is to keep assets in use longer through Asset Upcycling. Just last year, HPE Financial Services infused close to $500 million back into customer budgets with Asset Upcycling & Accelerated Migration solutions. In 2021, over 85% of tech processed in HPE Technology Renewal Centers was upcycled and returned to active use.

We’ve been successfully executing our strategy with partners and have seen some great results. As referenced during our post-Q4 Earnings partner webinar, we’re growing in nearly every dimension. Together with our partners, we continue to break records with HPE GreenLake—finishing FY22 with order growth of 71% Year over Year (YoY) and 16% Quarter over Quarter (QoQ)—our highest ever! In Q4, we saw the highest number of partners selling HPE GreenLake ever and scored a record in terms of repeatability. The number of partners with two deals or more is up 123% YoY, and the number of partners closing 5 deals or more is up 200% YoY—tripling the previous record. Now we’re adding a category for partners selling more than 10 deals, and we have a handful of partners that are approaching 20 deals! I am pleased to see growth across our partner ecosystem, and impressive HPE GreenLake growth; +97% YoY with our disty-led service providers, +112% YoY with our entire Global System Integrators (GSI) ecosystem, and +151% YoY with GSI that we actively manage.

Our innovation agenda continues to strengthen as we unlock superior outcomes and accelerate our hybrid cloud journey. Whether that innovation is via traditional infrastructure, workloads, new collaboration opportunities, or programs that incentivize partners in the right way, our partners are at the heart of our business evolution and I look forward to what we can achieve together as we strive to continue making a difference for our shared customers—every day.

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