85 percent of our India revenue is through channel partners: Joybrata Mukherjee, HPE 

In an exclusive interaction with CIO, Joybrata Mukherjee, Director of Sales, Channels, and SI Alliance at HPE, talks about the evolving channel frameworks.

Joybrata Mukherjee, Director sales, Channels, SI Alliance, at HPE, has been heading the channel program for five quarters now. In an exclusive interview with CIO India, he talks about the growing market and evolving partner framework. 

Edited excerpts:

1.    It’s the second year of HPE’S new partner-ready framework. Can you explain it in detail? 

We keep on meeting the partners, take their feedback and every year we come out with a partner-ready framework for that financial year. We incorporate a lot of feedback input from the channel partner as well as what we see in the industry overall. We also see what is our focus in our macro level business as well. We then design the partner-ready framework accordingly. So every year we come out with a brand-new partner-ready framework collating all these work areas. 

2.    Post the HP/HPE split, what was the immediate reaction from your channel partners? Were they positive or confused? Usually with acquisitions, splits, and mergers, there’s always confusion on the partner side. Are there going to be any changes? 

This is my fifth quarter as a channel leader with HPE. I manage the entire indirect sales which are our channel partners, as well as distributors, all sorts of system integrators, and aligned partners. Key learnings from my channel partner interaction in the last five quarters is that most of the top partners we have – we have about 70 platinum partners, 70 gold partners, silver and business partners – have been with us for a very long time, some for 20 years, 17 years, 15 years. It is a relationship built on trust. Partners trust HPE. Whatever we promise, we deliver. That’s the kind of respect the partners have for us. I have spent about 17-18 years in HP – then I went ahead and met the partners, the feeling was very positive. We respect the relationship, we trust the relationship, there’s a lot of credibility and credential. That’s one part, there’s a lot of trust in the relationship. 

Number two is that none of our partners second guessed. When we come with a partner-ready framework, its various attributes, and performance criteria, we make a simulation of how much we can earn. Because of the trust, there’s a lot of comfort. We will be able to make that kind of money and basis that they work on their cost structure. We went through a lot of integration, we went through a lot of mergers and acquisitions. Despite that if you see last five to ten years, our top partners have remained the same. I can say this with a lot of conviction because in India today, about 85 percent of our overall revenue comes through channel partners. With the exception of our global accounts, where we sign the global contract, almost everything else comes from partners.

Simplified products, partner training

Recently we have completely simplified the server and storage range of products. We have reduced the number of configurations and SKUs for our partners. We have enabled the partner, trained them, so that they will be able to understand the customer’s requirement and configure on their own.

3.    Since you spoke about platinum and gold partners, does that mean HPE has certification-based partner program? 

Basically our categorization of partner depends on a few things. One is the performance in terms of overall revenue. There’s a certain threshold for being a platinum partner, a certain threshold for being a gold, and silver partners. Everybody below that is a business partner. That’s a top-line based revenue threshold.

We also recognize partners who may be in a smaller location, who are more of a regional partner where they have a dominant share of wallet. For example, some partner in Gujarat, who is very successful in Gujarat, and is not very keen on coming out of Gujarat. We actually make them apply as partner though they may not meet the overall threshold. Because they are very successful at a particular location, we make an exception and make them the highest category partner.

There are also criteria in terms of certifications basis our overall business prioritization and overall focus on technology. We do have a certification program. Partners need to qualify in terms of getting certified in various areas to be able to apply for gold or silver partner. Finally it comes to the leadership and we assess that. Then we take a call. We do have exceptions. If somebody is very strong in two areas, and not very strong in the third area, we put them in a higher category; but we give them indication to improve on that area.

4. What is your main focus as a company currently?

If you look at the top strategies of HPE, globally, we believe that moving forward, the world will be in a hybrid model. There will be public cloud. There will be private cloud. There will be on-premise. All enterprise will be a hybrid environment. We are building portfolio of both products and services to be the best technology provider in the hi-tech world.

We also believe that Edge will become more and more important going forward. There will be centralized data center. Outside the data centre, in various remote factories, branch offices, sales offices, there’s a lot of intelligence that will be there. Decision will be taken at the edge. Hence with our Edgeline products, and Aruba, we are creating a strong portfolio in the edge, so that critical decision can be taken on the edge without data flowing into the datacentre and coming back. That’s where the IoT voice becomes functional. That’s our second priority.

The third priority would be to integrate all this with our strong services which includes our advisory and consulting services. We also have an offering on the consumption model. Then we have our mission-critical support service. Our partner program is also more or less around these three areas. 

Partner of the future

We are doing a unique exercise with our top partners. We call it the ‘partner of the future’. We give them one month of prep work and then three days’ workshop. We have started about 6–8 partners in the country. One partner will build a strong security practice, and go to the market with security practice as their core competency. There are partners who decided to get into IoT. So this is something we are doing for our partners to move forward to add a lot of value.

5. You said that your partner framework is regularly updated with constructive feedback from partners. Can you tell me 3 major shifts that your partner program might have had over the years? With the technology landscape changing, how has the partner landscape evolved over the years? 

Our partner framework is pivoted around our overall strategy. On our Hybrid IT platform, we have value products and volume products.

Volume product is basically the proline servers, where we are the market leader. One is that on the volume product and hyperconverged etc, our direction is to have channel-led motion. It will be a no-touch to low-touch motion from HPE. Entire sales will happen moving forward through our indirect channel. Hence there’s a lot of focus on the coverage and how we sell our entire volume portfolio with our channel partner is one of the criteria of the partner-ready framework .

The second criteria of the partner-ready framework is that in enterprise customer we have our top partner upline and gold partner as well. We do a long term solutions-based sale and outcome-based sale of our value portfolio and services portfolio. That’s where our top partners are embedded and engaged into selling our value portfolio and services portfolio to the top enterprise customers. Hence, our top partners and our entire partner-ready framework is built around a lot of focus on our value added services portfolio. These are the two specific focus areas: one is no- and low- touch coverage, and the other is the value portfolio.

6.    How is HPE’s channel program benefitting small and medium businesses?

For HPE India, SMB and mid market is the fastest growing segment. Approximately 25 percent of our overall revenue happens from there. If you look at our overall channel program, the direction is that SMB and mid market is a channel-led motion. That’s the way our partner-ready framework has been designed. We believe in simplification. Recently we have completely simplified the server and storage range of products. We have reduced the number of configurations and SKUs for our partners. So our partners are much comfortable with configuring those SKUs and upload the configuration as per the customer’s requirement. We have enabled the partner, trained them, so that they will be able to understand the customer’s requirement and configure on their own. That’s on the volume and coverage side.

Overall on the SMB front we are seeing a lot of interest around hyperconverged. Moving forward SMB will be the segment of choice for hyperconverged to be deployed all across. Across India we have selected 30-odd partners in the SMB space. We have enabled them on hyperconvergence on our industrial leading SimpliVity product.

We have also invested in our marketing development fund in terms of creating a demo pool across the country. With all these partners, we have POC and demonstration equipment which are positioned across India, across the entire geography so that we can create that demand and requirement. What we’ve been seeing last few quarters is a huge growth in the overall opportunity and also some great success stories and references being created by these partners. 

HPE’s 3 key focus areas

Hybrid. We are building portfolio of both products and services to be the best technology provider in the hi-tech world.

Edge. We’re creating a strong portfolio in the edge, so that critical decision can be taken on the edge without data flowing.

Integration. Integrate all this with our advisory and consulting services, consumption model, and mission-critical support service.

7.    What would you advice to those who are going through mergers or acquisitions or splits, to design their channel program, as your channel program has been immensely successful?

A few criteria that work with the channel partners:

What you say as an organization, you deliver and are consistent about it. For you to be successful with the channel, there has to be mutual trust. That’s the first thing. Building that mutual trust takes time. You have to be consistent, you have to deliver what you say. You have to be black and white, no grey areas. You need to create that framework which is completely based on performance. Performance should be the primary criteria. Performance has to be defined for that partner. In which geography he is operating, what is the overall scope, what is the TAM for him, what is the share of profit, what is the solution area he is trying to develop etc. Basis all these criteria, you have to create a performance framework. Then you have to compensate him basis his performance. That’s really important. You have to create and articulate that framework at the beginning of the year and consistently deliver.

If you look at the overall channel landscape in India. When we started 20-25 years back and now; if you see the customers’ buying pattern has changed. Previously they used to buy products from our channel partners with basic features. Today they expect the channel partner to add value and their procurement has been outcome-based. Today most of our value added sellers are seeing a value added system integrator’s role because most of the MNCs like HPEs and IBMs of the world have come out, have vacated that space. Also the large Indian SIs they are focused outside India. There’s a huge space in country, which is the system integration space or the value added system integration space, where our channel partners, emerging SIs are playing. That’s a pretty big market. Creating those values within the organization, creating those solutions expertise--whatever they select to be in--is important. ‘Me too’ kind of a story will not help them in future. They have to develop their skill set overall and then go to market and deliver.  

That’s what we are aiming to be. For the last one – one-and-half years we are doing a unique exercise with our top partners. We call it the partner of the future. We give them one month of prep work and then three days' workshop. What is the partner area of strength? To move forward, in this world of outcome-based selection, what are the various strengths they have to build? We have started about 6–8 partners in the country. As an outcome of that workshop we have gone to the specifics. For example, one of the partners is saying they will build a strong security practice. It includes perimeter security to identity management application, they will buy in all. They will go the market with security practice as their core competency. There are partners who decided to get into IoT and are specific on IoT. So this is something we are doing for our partners to move forward to add a lot of value. 

8.    Do you feel the line between distributors and value added resellers is blurring? Because even distributors are adding their own values while selling the products? If it is blurring, do you think a partner program like HPE's where you are upskilling and enhancing your top line partners can help channel partners distinguish themselves from just distributors?

In the India context, I don’t think it’s blurring because value added distribution per say as a concept is not visible in India. If you look at the top, large distributors in India, I have not seen that. Though they are focused, but as a concept, value added distribution has not happened. If you look at the overall share of revenue of the top four distributors in India, in terms of value added distribution, it is negligible. As we speak, surely there’s a distribution play and value added reseller play. We see a definite niche. We see a huge role the VAD can play, provided they transform themselves in specific areas where they want to invest. ‘Me too’ kind of distribution or product reselling will not keep them relevant, they will not survive. However, if they create a niche for themselves, surely there’s a big play. There’s a pretty large vacant market for them. 

VAD: There’s a large vacant market

Though the top distributors in India are focused, as a concept, value added distribution has not happened. If you look at the overall share of revenue of the top four distributors in India, in terms of value added distribution, it is negligible. As we speak, surely there’s a distribution play and value added reseller play. We see a definite niche. We see a huge role the VAD can play, provided they transform themselves in specific areas where they want to invest. There’s a pretty large vacant market for them.

9.    Going back to the partner program, you mentioned that new companies should base their framework on performance. But at the same time you said that HPE has revenue-based, regional partner based and certification based models. In today’s technology landscape, do you think your performance-based partner program is what the channel partners are looking at? Do you think we can eradicate the traditional platinum, gold, silver certifications and the levels? Purely go on how they are doing, to create a sort of a level playing field for all kinds of channel partners?
 

Yes. Primarily it should be performance based.You have to qualify and define performance accordingly. That is also a kind of an aspiration. If a partner who is very, very successful, who has been with us or the OEM for long and their share of quality is going up; they will always like to be treated specially. They will always like to have some kind of aspirational value to go up. Hence a simple categorization of partners at two or three levels always helps in creating that aspirational value so that partners continue to excel. 

10.    When you pitch the hybrid model to your customer, even now for that matter, do you see a lot of enthusiasm? Are they really looking for a hybrid model? Some buyers are still reluctant to talk about cloud even today. 

Across all segments, what I have seen personally is that any enterprise customer today when they take an ambition in their mind, it is established for certain kind of an application which is workflow, messaging etc, which is not really mission critical, which does not have a huge security threat, than the public cloud, and it actually gives the flexibility in cash flow etc. in deploying those workflows in public cloud.

However, some workloads which are mission-critical like ERP or core banking, enterprise prefer or it is a statutory requirement for them to still have it on premises than on the cloud, or captive infrastructure they build within their intranet. Today any large enterprise will have on premise, will have private cloud, will have public cloud. This is the workload and this is the statutory requirement. We feel the trend will continue for the next ten years. One of the biggest leverage for the customers to decide on a cloud, public cloud etc, is flexibility which helps them to deploy fast.

We can have a notion that for public cloud, the cashflow can be planned. It has a much lesser cost. But once you are doing analysis of a 5 year TCO, public cloud is not that economical. Today with the flexible model we have in private cloud or your on-prem infrastructure, which is modular, you can have the infrastructure which can be scaled up much faster. Again with public cloud, private cloud and on-premise, the boundaries are blurring. Hence moving forward surely we will have a world which will be hybrid.