For HP, it’s cloud or die

Toronto – Channel partners about a year ago had a word for HP’s cloud strategy, as it was presented to them at the Americas Partner Conference in Las Vegas – “cloudy”.

Several industry analysts and solution providers didn’t know what to make of the cloud strategy and demanded more details.

On Tuesday of this week, HP’s (NYSE: HPQ)newly minted cloud chief Patrick Harr visited Toronto to expand on HP’s cloud strategy to several channel partners, top end user customers and alliance partners. Harr’s message to this group was anything but cloudy. For HP, he said, “Its cloud or die.”

The strategy is centred around HP’s CloudSystem Matrix hardware and software which was announced at its HP Discover conference in the fall of 2011. The plan from HP Canada is to provide technologies and professional services to build private, public and hybrid clouds optimized for applications and services. This offering will delivered in a secure managed service across cloud and traditional IT service models through channel partners.

The channel end of this strategy will be the tough part as Harr said HP needs to empower partners through a new HP cloud ecosystem.

The goal here is for the channel to deliver context-aware, secure services to customers via a hybrid deliver model sourced across traditional, private and public cloud offerings.

Harr said he’s encouraging solution providers to create these private cloud marketplaces for customers, but he also announced HP will be unveiling its own Amazon Web Services type public cloud this year. Channel partners will be welcome to use the public cloud for whatever solutions are necessary for customers.

Harr, the vice-president of cloud solutions for HP, said business is outpacing the IT department and this new wrinkle is driving cloud adoption. “Business needs to drive revenue. They have a P (profit) and L (loss) and can no longer wait six months for a server. They have a new app that they need to release immediately because a competitor will release it before them,” Harr said.

Solution provider OnX Enterprise Solutions of Toronto was one of the first to receive the HP CloudSystem Matrix in Canada. Enza Alexander, executive vice-president for OnX, said Canadian customers are interested in a private cloud solution focused on Matrix because it’s open.

“HP was not first to market, but they were instrumental on the open nature that customers were looking for. It’s going be a major requirement. The market is telling us to manage that environment and HP has taken all of these elements into consideration,” she said.

OnX has branded its cloud solution “the OnX Cloud” and its federated hybrid model using multiple vendor technology, Alexander said.

OnX augments its margins by doing cloud and network readiness assessments. Alexander couldn’t pinpoint exact margins for HP.

“We’re betting on this. We just spent $20 million on our cloud and have upgraded it from tier two data centres to tier three. We’re confident it will take off in the Canadian market,” she added.

Sal Giulone, vice-president of channels for HP Canada’s enterprise servers, storage and networking business unit, said the ecosystem the company it creating with the cloud will be a full channel play as HP cannot service the market on its own.

“We’re committed to the channel in this space,” he said.

Giulone said that cloud margins will be more significant that those just off the hardware. He added that margins for solution providers selling into the enterprise will be less than those earned with SMB customers.

Harr said channel partners must move to services or be marginalized. He sees the cloud driving net new services opportunities for channel partners.

For example, HP CloudSystem Matrix is 10 cents per compute per hour, which compared to Amazon’s 30 cents can provide a significant margin opportunity.

Then there are cloud ready applications such as Exchange, Sharepoint and Office 365 along with and other SssS offerings that can be delivered by the solution provider.

The cloud broker model is another avenue for solution providers. Harr gave the example of a local grocery store taking inventory on a notepad compared to another store using a custom developed inventory system that’s in the cloud. That grocery store, through a solution provider, can resell that cloud inventory system to the other grocery store or another similar retailer to off-set costs.

“Instead of the cloud being a cost it can turn into a revenue generator for the customer,” he said.There will be challenges with customers attempting to enter the cloud, Harr said. Security will be the No. 1 issue, followed by performance and availability. Service level agreements will become a very important selling and management tool for channel partners.

Follow Paolo Del Nibletto on Twitter: @PaoloCDN.

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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