HPE Set To ‘Limit’ Partner ‘Risk’ On GreenLake Deals

“There needs to be a time period where if the customer has not been consistently paying the partner, we will take responsibility for ensuring we get payment from the customer,” said HPE Global Channel Chief Paul Hunter. “That way the partner exposure is limited.”

Hewlett Packard Enterprise is implementing new terms and conditions on pay-per-use GreenLake deals that limit partner liability if a customer stops paying or defaults on a multiyear agreement.

“We’ll essentially limit their risk,” said HPE Worldwide Channel Chief Paul Hunter, speaking about the upcoming changes to the GreenLake channel terms for partners. “There needs to be a time period where if the customer has not been consistently paying the partner, we will take responsibility for ensuring we get payment from the customer. That way the partner exposure is limited.”

Hunter said the precise changes on the terms and conditions aimed at limiting partner “risk” are still being finalized. “We are still working on the exact wording on what the new clause will be,” he said.

[RELATED: Global Channel Chief Paul Hunter: HPE Is Doubling Partner- Focused GreenLake Sales Team]

HPE is structuring the GreenLake terms so that if there is there is any “variability in the payments that come from the customer to the partner” then the risk is limited for partners, said Hunter.

The change comes with HPE GreenLake just completing its fourth consecutive quarter of year-over-year triple-digit sales growth through partners.

HPE—which has been providing flexible multiyear pay-per-use deals for close to a decade—has not had a single customer default on a GreenLake deal, said Hunter.

“We have a big data set that says none of our customers have defaulted on payment,” Hunter said. “The likelihood of it happening is very small. That said, it is still a possibility and therefore a partner would have to consider it. If it happened to one and they are liable for the contract value and they are small, that is a big burden. That is why we have made the decision with feedback from the partners.”

Partners, for their part, said the change directly addresses any and all concerns on partner liability and liquidity in a GreenLake deal.

Scott Dunsire, CEO of ACP CreativIT, Buffalo Grove, Ill., one of HPE’s top partners, said the change is a big breakthrough that allows partners to commit to GreenLake without tying up their “liquidity or borrowing base.”

“This is a great move for smaller or midsize partners,” he said. “This shows that HPE has our back. It allows us to be more aggressive in going after these opportunities with our enterprise and midsize customers.”

Without the change, ACP CreativIT’s borrowing capacity could have been impacted, said Dunsire. “If we did too many of these contracts, it could have had a huge impact on our borrowing capacity,” he said. “Now we can do these deals without tying up our liquidity or borrowing base. This is exciting because we see the consumption model as a great option for our customers.”

Dunsire credited HPE Pointnext North America Vice President David Twohy for taking the lead on resolving the GreenLake liability issue. “We brought this issue up with Dave and he took care of it,” said Dunsire. “Without that change in terms, it could have had a huge impact on the success of the program. I am super impressed that HPE saw this from the VAR’s perspective and resolved it.”

Paul Cohen, vice president of sales for New York-based PKA Technologies, one of HPE's top Platinum partners, said protecting partners in the case of a payment issue makes the GreenLake channel model more “partner-friendly.”

“That’s a great change,” he said. “It’s a big deal. These are questions we had about GreenLake, and HPE is providing the appropriate response. The changes make it more palatable for us to pursue these deals. HPE is listening to partners and making it more partner-friendly for us.”

PKA Technologies’ GreenLake pipeline is growing and customer interest in the breakthrough pay-per-use model is on the rise, said Cohen. “We expect to have a robust revenue stream from GreenLake in early to mid next year,” he said.

Anthony Pisano, director of solutions architecture for NST, an East Northport, N.Y.-based managed service provider, said the change opens the door for smaller partners to pursue GreenLake deals.

“I commend HPE for taking action on this and limiting partners’ liability,” said Pisano. “It makes the channel pay-per-use model more viable. It allows partners to get behind GreenLake. The partner has to be behind this in order for HPE to be successful.”

Worth Davis, executive vice president and chief technology officer at Computex Technology Solutions, a Houston-based HPE partner, said anything HPE can do to improve GreenLake terms is commendable, but he does not see payment default as an issue.

“We have been dealing for years with HPE Financial Services and working through GreenLake deals, and this is not a concern,” he said. “I am all for anything HPE can do to shore up partner profitability and longevity. More is better. But we don’t see this as an issue.”

Davis said HPE Financial Services has done a stellar job determining the credit worthiness of customers. “HPE Financial Services is not going to fund a deal for a customer they are worried about making payments. They are not going to do a $50 million deal with a customer that can’t make the payment.”

A surprise bankruptcy is always a risk in any technology solutions deal—pay-per-use or capital expenditure, said Davis. “That is part of doing business,” he said. “We see this as part of our due diligence with regard to a client’s credit worthiness. People have to do business with people they know and trust.”

Computex has a number of GreenLake deals in the pipeline, said Davis. “HPE is doing a good job with GreenLake,” he said. “I think they are going to have to hire a lot more people in HPE Financial Services to keep up with the demand.”