We are transitioning to a Idea Economy

The Technology Services (TS) business for Hewlett Packard Enterprise (HPE) in India has two broad areas. One is technology support services—for whatever infrastructure it sells in the market, be it servers, storage, networking, software, etc. The second part of its business is technology consulting services. This involves working with customers across four broad transformational areas like hybrid infrastructure, managing digital assets, creating a data-driven organization and enabling workplace productivity.

In an exclusive interview with Dataquest, Rajesh Dhar, Senior Director, Technology Services, HPE India talks about the India operations and the company’s play in this part of the world. Excerpts

HP overall has been through a lot of transformation in the past two years. Is HPE aligned with the trends in the market such as new style of IT you have been evangelizing?

We are transitioning into a idea economy where monetization of an idea is shrinking and traditional ideas have to be modernized to handle the pace at which ideas are getting converted into business models. Hence for traditional brick and mortar organizations, the challenges that they have is digital disruption which we now call as the ‘Idea Economy’, is actually disrupting the more established brick and mortar models. If you look at hybrid IT, you will see most people talk about DevOps. Suddenly there is a focus on how quickly can you come out with an app, what used to be done in 9-12 months; today people are doing in 7-10 days.

Whether it is banking or its manufacturing or telecom, they are looking at apps. Apps from the time they get developed to the time they get deployed and the 360 degree automation needed to until the time the application becomes stable. That whole process is segregated in pockets with the development team, production team etc, today there is a very close 360 degree partnership along with automation has compressed the activity to 7-10 days. Even with analytics today, use cases are being developed in both banking and telecom to handle this digital disruption. Whether it is the New Style of IT or our focus areas, the end result is customers want IT to be more agile.

With the bifurcation of HP into HPE and HP Inc, what has been the feedback from your customers and what kind of reception did you receive from the market?

When you go to market you have to have razor sharp focus, so customers are appreciating the separation into Hewlett Packard Enterprise and HP Inc. What we do as an enterprise business which is storage, servers, networking, software, services and then if you look at HP Inc which is into PCs, tablets etc from a device perspective, majority of the customers have two different teams servicing those buying these two different technologies. So these customers are not experiencing a big change because they themselves are intersecting a line like this. Customers are very happy. Within HPE there is very sharp focus on enterprise and if you look at HPE stock, it has had a good run in the past 6 months. This is also an indication of how the market and analysts perceive Hewlett Packard Enterprise.

If you look at the last 12 months and all the disruptive trends, how do you see leading markets adopting radical technologies and moving to the next era?

When we take the top 200 or 300 customers in India across all segments—telecom, banking, manufacturing or public sector. You will see that there is either a discussion or customers have already started on the journey to the new style of IT. Let me give you an example of hybrid—let's demystify hybrid IT—we are looking at people who have started with consolidation, they looked at virtualizing and standardizing. So most of the customers today are in this space, they consolidate, they virtualize and they standardize. Now a lot of customers are now seeking automation into their infrastructure.

Most of the companies today create an infrastructure wherein they end up underutilizing the hardware and all the other aspects.  In this context, how does flex capacity come in and create a scenario of optimization? Can you talk more on that?

At a very base level what happens in a data center is if you need 100 units of infrastructure, you will always over provision 30-50 units because you don’t want to go through the process of buying again and again or deal with issues from a budgeting perspective. Secondly, you always foresee growth for your company and so at any point of time you will have 30-40% capacity in a data center, which is not necessarily getting used, and hence you have this whole setup with you.

Another context could be that you are actually at 90-95% most of the time, because of which you are not able to plan. You tend to have situations where users are complaining about the performance and are not able to keep up with the pace of the business.

So this is where Flex Capacity comes in?

Absolutely. What Flex Capacity does for its customers is that it provides a solution whereby you can pay us on a pay-per-use model. You will always have a 30-35% capacity lying in your data center for any unforeseen growth, which you will experience.

For instance, if there is a 100 units requirement—we will give 130 units and you will be charged only for 100, and the balance 30 units is a variable at your disposal that as and when you use, you pay on pay per use basis. Customers like this because of the service model, and multiple advantages like

- It allows you to convert IT expense from capex to opex model. This is completely an opex model factors the following:

- Preserve cash. Because you pay only basis consumption, you don’t have to pay upfront. You can spend the money in the core areas of business

- Align with your growth. You don’t have to upfront invest in a growth that has not happened yet. Hence, your expenses are aligned with your growth.

From a CIO perspective, at any point of time, you have a 30% capacity with you. It avoids creating shadow IT because he is able to gauge this excess capacity to business.

How this concept has connected with the customers?

There has been feedback from many customers who went on the public cloud and ended up spending more money than they expected. Reasons could be many. They didn’t understand the contract, they dint have the in-house expertise to manage it. So they are coming back to traditional IT and owning it on their own premise. What you can also do in a limited manner, actually experience it through a test drive to see if a company can get used to a pay per use model.

These are some of the reasons CIOs are taking to this concept. Also, at a basic level it gives a business the agility, something that has to happen in two months, you take 9 months, then you will miss the business opportunity. Hence to compete with businesses coming up with new products and solutions every month, the excess capacity also gives you the flexibility and agility to drive the business.

We have seen fantastic traction with customers. In a single line, it is a public cloud experience with on premise IT. Without worrying about the security issues. You have your own IT in your private cloud and a portion of it gets converted as pay per use. It is like a controlled public cloud experience in your on premise IT.

Mission critical sectors such as BFSI, which are normally hesitant of moving to public cloud due to security issues, are they becoming candidates for this solution?

Absolutely. There is normally a strong reasoning behind why people choose to go on public/private cloud. Factors such as cost, level of comfort around security, etc. determine what should go on public and what should go on private clouds respectively. Legal frameworks surrounding data security, SLAs, etc, are evolving.

There is a need for CIOs to have the capacity and flexibility to scale up and scale down. This solution addresses the issue of agility and flexibility. It addresses the concerns of CFOs, CSOs, security vigilance officers, etc, about public clouds because it is on premise and they also wrap it up with datacenter care capacity.

How has the uptake of Flex Capacity been in India?

We started this a year back, not many people have this option across all—storage, networks, compute, software, etc. We spoke about Flex Capacity in a lot of forums - we had to get CFOs involved, because it is a discussion about going from capex to opex and a lot of that is not always understood by IT managers. They also tend to look at new concepts with a little hesitation. First six months, we engaged in multi city conferences where the audience was mainly CIOs and CFOs. We got a lot of appreciation from CFOs. In any business if you are able to align expense to the growth, then breakeven can be much faster on projects.

One of the largest SIs in the country is our customer and they are currently running on Flexible Capacity. Globally, the concept has been picking up and hence many companies have been moving to this. It is becoming easier to get customers here in India as well. Increasingly, customers are beginning to see the cost and technology benefits. Technology benefits like flexibility and agility are key features attracting customers. Traditional cycles that may be over 3-4 months, but being able to deliver the same in less than a week, is a huge advantage.

Idea economy has become the backbone of the business, so any agility/flexibility that can be introduced to the IT has to be directly beneficial to the business. Hence, acceptability has been high on this front.

What is happening on the security side?

There is a very strong discussion on security as everything becomes digital, we need to be extremely careful. It is not about if your business gets attacked by cyber criminals, it is about when. The approach should be protect, detect, correct and secure, which we discuss with CIOs too. We have a very strong security practice within HPE and we talk with customers to address their security concerns as they undergo the digital transformation journey.

What are your priorities for next 12 months?

Hewlett Packard Enterprise would like to be a preferred partner in the datacenter space. Flexible capacity as a solution is a key area for us. From consulting perspective as mentioned earlier include focus on hybrid infrastructure, security, data analytics and mobility.  Banking, telecom, and public sector are the verticals where we will be focusing the most of our energies.