Close on the heels of HP CEO Meg Whitman's financial update earlier this month, Steve Dietch, VP, worldwide cloud, enterprise group at HP, who was on a whirlwind trip of the ANZ region, and Keith Watson, MD of HP NZ, spoke to Computerworld NZ on the company's role in the delivery of the 'new style of IT' and the transformation of its go-to-market strategy.
Q: What are the reasons for your current visit to New Zealand?
Steve Dietch (SD): I am visiting both New Zealand and Australia. I have two roles at HP. One is as the VP of worldwide cloud and the second one is focusing on the transformation of our go-to-market for cloud. I have come down to meet customers here; we had a successful CIO event yesterday. And to meet with the local teams. I do that very often.
This is my first trip to New Zealand in several years. I visit Australia couple of times a year. I am on the road globally most often.
New Zealand is a forward-thinking country. Customers are thinking about the new style of IT and the next-generation moves, so I want to be down here. We want to understand what our customers are saying and doing, and share with them my global insights. I would like to know what they are doing as well. We can learn from that.
Keith Watson (KW): Steve has been our keynote speaker at our executive forums where we get a group of CIOs and COOs together, typically on a six-monthly basis. We have different keynote speakers and they fly down for these events.
Q: Can you speak a bit more about the transformation of HP's go-to-market for the cloud?
SD: I can't share any details right now. As you have heard from Meg Whitman, we are in a five-year transformation right now. We have just completed year two. We had our analyst meeting last week where we announced a whole bunch of progress that we are making and our guidance for next year. We are going through a set of transformations as an organisation and broad corporation. And one [part of that] is how do we engage customers in a more efficient way to help them in their journey to the new style of IT. That's not just cloud, that's big data, that's mobility, that's security.
I happen to be focused on the cloud and what I am working on is a complete transformation of how we engage our customers in an efficient and unified way from a HP perspective.
Whatever they are doing on this journey to the new style of IT, the operative word is journey. Nothing happens overnight.
Q: This new style of IT – how will it 'transform' IT and will it be different for enterprises and SMBs?
SD: In many cases, the objectives are the same, depending on the segments you are looking at – whether it's driving agility, flexibility or driving new business opportunities. You want to get to market faster to deliver to customers, or, if you are a public sector entity, to your constituencies. Or you want to lower cost. Generally everybody has the same broad sense of objectives. Hopefully people will remain focused in picking the right ones.
Whatever they are doing on this journey to the new style of IT, the operative word is journey. Nothing happens overnight, as much as we would like it otherwise. If you look at the cloud, this is going to be a journey over several years – five to 10 years – where people are all ultimately going to move to the same destination but they may do it in a different way, they may take a different path.
Q: What is the destination?
SD: The destination is hybrid delivery. From HP's point of view, every company mid-size and up will move to a hybrid delivery strategy.
Q: How far along are companies on this journey?
SD: We are very, very early. There are a lot of customers that have started to kick the tyres with hybrid. We are probably in chapter one of the book now; we are just starting. There are a lot of CIOs and IT organisations that are still formulating strategies of how they move to a hybrid environment. That is the foundational element to better utilise big data, better utilise apps and more cloud services, better able to deliver to the mobile workforce. It is all intertwined, but I would say the next 10 years will be unbelievable – unbelievable in terms of the transformation you will see in IT.
KW: I think Steve's right. NZ is in chapter one. These are early days. What a lot of people have done is taken their traditional infrastructure and virtualized it. But not many have put what we would call the cloud OS and automation tools on top of the virtualization to get true cloud. We have made available NZ cloud services to our clients and to our channel partners as a service they can use via a portal. And we have given them a number of different options and ways that they can use that.
We are rolling out phase one of NZ cloud services. We have got an anchor, a major client, as part of that. That's gone reasonably well. We are still in the implementation phase.
The other area where we have had quite a bit of success in NZ is with Orion Health. They have essentially adopted the whole HP cloud stack. I mean the converged infrastructure, the virtualization layer, they are working with a hypervisor provider, and on top of that a HP cloud system. All of the automation stack on top of that, and they are running that from NZ. It is actually quite a good NZ story [about] centralised management of private clouds, since healthcare has such specific security and sovereignty needs associated with it. Most of the data needs to be in-country.
NZ cloud services will see an expansion of its set of services. But right now, predominantly it's IaaS. You could buy bare metal, virtual machines and they go for about $80 a month or thereabouts. And you could add to that various sets of apps. The apps stack is dependent on the client at this point in time, but we will be running more generic apps stacks as we build the portfolio of solutions that we offer.
The relative percentage of traditional IT will go down but it will take years. It will take a long time.
Q: What is the role of the public cloud in hybrid delivery?
SD: One thing that people are going to take into consideration is traditional IT – it is not going away. Hybrid delivery is not just hybrid cloud it includes traditional IT. So you got private cloud, managed cloud, public cloud and traditional IT sides. A lot of people gloss over that, but as people move to the cloud a lot of workload and apps and services will never move off the traditional environment. All that – the systems, tools, processes – has to work together. A lot of people gloss over that when they are talking about the cloud: "Ah you don't have to worry about all that old stuff."
The world will spend a couple of hundred billion dollars on cloud next year. They are still going to spend nearly $2 trillion on traditional IT. So that is important. That is where our value proposition comes into place where we span across all four of those pillars.
So if you actually think about why someone would want to move down a hybrid delivery strategy, it is pretty simple when you get down to basics. A traditional enterprise customer is dealing with 3000 apps to run their business. A typical NZ customer, mentioned yesterday – about 1200 apps to run their business. IT budgets are probably flat. Pressure coming from business is enormous. How do I deliver more value? How I do not only support the business but how do I shape it? How do I do that in an optimal way? Even if I did rationalisation I have got it down to just 1000 apps.
What a customer needs to do, hopefully with our help, is they need to look at that 1000 apps from a portfolio perspective and segment that into SLA blocks. There will be certain apps that will be very attuned to the characteristics of the public cloud – not really core to the business, low cost, they want elasticity because the app is very unpredictable, they might be running a marketing campaign at the end of the quarter.
There will be a whole set of other apps that are very high performance, low latency, with privacy and data sovereignty issues that are never going to leave my data centre, but you know what, I want cloud features and functionality, shared access, self-service and so forth. That's for the private cloud and there are others that will go into private, but I want it managed.
Taking that methodical approach and figuring out what apps can go onto the best suited or optimal deployment platform is what hybrid delivery is all about. Coming up with the optimal mix of using public, private, managed and traditional - that's why customers want to go there. That's the way to better utilise your scarce IT resources and come up with a strategy where you can better address the SLAs of your customers and business partners.
Q: How do you see the role of traditional IT changing in 10 years' time?
SD: Unless you are a teenage CIO now, traditional IT is going to be important for a long, long time. How traditional IT percentage will look in 10 years? I wouldn't even fathom a guess.
The IDCs and Gartners state that overall IT spend is growing in the small single digits globally. But if you look at cloud, private cloud is going to grow 30 or 40 per cent next year. Public cloud will grow faster than that but you are growing from such a small base.
The relative percentage of traditional IT will go down but it will take years. It will take a long time.
Q: Knowing what they want to do with apps and segmenting delivery is a tall order for most companies. What are the challenges that they have to overcome on the way?
SD: If you asked CIOs or IT leaders, they would say that is what we need to do. But most companies, from my experience in meeting customers all around the world, they have a hard time figuring out where to start. It is a huge task.
First it involves assessing how many apps you have. A lot of people don't know what they have. So it starts with assessing and getting a good idea of your baseline apps. Then doing an assessment of what needs to be re-architected, what needs to be re-hosted, what needs to be rewritten and what's going to stay forever because it is just cost prohibitive or technologically just a 'triple flip with a half somersault' for moving it off a traditional environment.
Then you move methodically down with your segmentation and figure out with our strategy near or long term what buckets of apps you are going to focus on first.
What I told you is exactly the expertise that HP can bring to the table. From app assessments to the transformation aspect to the actual deployment on the different pillars of our strategy across public, private and managed.
Q: How do you ensure that your partners remain trained with all that is going on?
SD: Partner training happens on a constant basis. HP will deal only with small percentage of customers directly and the larger ones at that. Our thousands of VARs, our relationships with SIs, our distribution partners are all critical to the cloud roll out.
We have two fundamental programmes in place that support the partner community.
One is called Cloud Builder, version 2 of which will go live in November. That programme is solely focused on VARs, SIs other partners that want to help build customers a cloud environment – private, managed, public with services that go around it. We provide certification and incentives to make them want to do that on HP technology.
The other programme is for service providers. We call that Cloud Agile. We have almost 100 partners worldwide and these are service providers that are providing IT as a service that build their foundation on HP technology, and we are working with them on joint sales and marketing, and around new solutions and education training.
KW: We have appointed one service provider so far in NZ to work with us on Cloud Agile. But we have hosted three service provider forums and we expect to have version 2 of the Cloud Agile programme out in the early part of the new year.
Assessment services can be included within NZ Cloud Services as well. There is a whole set of work that we do – really from a discovery workshop, to apps assessment, to app transformation and migration onto the cloud services.
NZ Cloud Services, which was launched around six months back, is part of our ongoing discussions with service providers in the country. They have their own infrastructure, and, on many occasions, it's HP infrastructure. But we also back them up with white label services as well. So they can port or move workloads between ours and their own infrastructure and also share apps, that type of thing. There is quite a bit of work going into how best we can support those service providers.
You will see streamlining of the pursuit processes, to reduce overlap and redundancies. That does not mean elimination of roles. I will tell you 100% that it has nothing to do with the elimination of roles. That has clarity of roles, of what people are doing.
Q: What apps would you advice companies to hold in their traditional environments and which ones should they shift to other delivery models?
SD: It is an involved conversation. We have a framework that we use with customers, and it starts with what they are trying to accomplish, and how IT [and the business are aligned].
Second is looking at what constraints or considerations they need to look at in their business. So are they in a highly regulated environment, like BFSI and healthcare? Or are they in a low regulated environment, like high tech or manufacturing? That is a big consideration as it relates to what can and can't move.
You also look at the complexity of their data, and their tools and infrastructure. Can you break it apart? Can you move things? Are you breaking processes? And if you move something out to the cloud can you take it back?
Then there is the size of the business, legacy assets, the skills and maturity of the internal organisation to actually move existing stuff off or not. All these have to factor in. The thing you couple it with is: Are you looking at existing workloads or new ones?
You factor that all into the conversation in a very structured way and you get your answer of what you want to move.
The conversation is very different if I am talking to the CIO of a bank on Wall Street than when I am talking to a Proctor & Gamble. The conversation is very different.
Q: When is your transformation of go-to-market elements likely to happen?
SD: It is starting now. We are on a journey ourselves. We are a large, complex, Fortune 10 company, and anything you do takes time with methodical thinking. It is not a discrete set of actions. We are constantly looking at efficiencies and improvements in our go to market. We are not going to stop. This is just one of many endeavours that we have in play.
You will see streamlining of the pursuit processes, to reduce overlap and redundancies. That does not mean elimination of roles. I will tell you 100 per cent that it has nothing to do with the elimination of roles. That has clarity of roles, of what people are doing. Because if you look at any company, there are essentially different roles and responsibilities in the go-to-market pursuit processes; everything from managing the account which is a more generic, generalised sales function, to more specialisation. How does that work in concert and harmony, so you don't have a fragmentation in front of the customer? I can tell you that we have a laser focus on addressing that right now.
KW: In NZ, we don't have the degree of fragmentation that Steve is talking about. But we have moved to put a single focal point or person that leads our discussions with our clients and can be a resource. It is pretty much running a virtual team so that they can talk to each of those converged cloud models around traditional IT, private cloud, managed cloud and public cloud. A lot of our clients want to know the economics behind that. How do I make the choices? What are the trade-offs? There is a focal point now here in the company that can have those kind of conversations. That will be effective from 1 November.
Q: What do you think will be the next big disruptive technology?
SD: I don't know. I am not the guy at HP thinking about the next big disruptive technology. My focus right now is driving the cloud business, the hybrid delivery business. HP is absolutely the market leader in this.
This transformation is going to rock the world. I am not thinking about other disruptive technologies, because what you are looking at from a cloud perspective is going to be massively disruptive for established companies. We are levelling the playing field for mid-level companies by giving those folks access to data analytics tools that would be impossible in the past. I think you are going to see such innovation develop over the next five to ten years from people and come out of the blue that we have never seen in the past. That is where you are going to see the disruption - around business models, new ideas and processes that are enabled by this new style of IT.
Whether there is a new iPad or new i-something , I will leave that to super geniuses that are thinking about it right now. We have a job to do at HP and we are focused on it right now. We are one of the few companies that have a pure research lab left – IBM and us. We are spending money on it, they are thinking about some really cool stuff that will be very disruptive. Not my gig.