 This is Dave Vellante of Wikibon.org. We're here in Irvine, California, live with siliconangle.com, servicesangle.com's continuous coverage of the HP services transformation, the services reality initiative. And we're here with Tracy Galloway, who is the vice president of Channel Support. And we're here with Puzant Osbug, who is with Prycon, a channel partner of HP's. Welcome. Thank you. Thanks for coming inside the Cube. Tracy, we've talked a lot today about the services angle. And we've touched a little bit on the channel piece. Now, when we were at the HP Voyager launch, we heard about services one, a service one, I guess it's called. Want to dig into the channel programs a little bit. Talk about what your role is, and then let's get into the program. Absolutely. So I'm responsible for the channel's organization across both North America and South America, and have the wonderful opportunity to work with partners like Puzant and Prycon. And primarily, what we're trying to do every day of our job is to make sure that we are providing enough portfolio options, enough service options, and a very robust opportunity to work with HP, both on a sales and a sales and delivery opportunity. And we'll talk more about that. But those are really kind of how we engage on a daily basis. Service one, I just want to chat real quick about that one, because that's something I want to tee up with you. Service one is our premier program in our technology services organization. And it really is the framework and the overarching program for how we engage with our partners and work with them. And it launched in November of last year, and so it's just been around for four short months. But we're already seeing lots of traction, and partners are really getting engaged with the service one program. OK, so if I understand that program, there's a lot of options that you as a channel partner have. You can do HP's brand, you can do your own brand, some kind of hybrid approach. So you're a service one. You take that program to the market. How do you, what does it mean to you, and how do you go to market with it? I think it's a very mutually beneficial program. And I think it increases the value and the level of service we can mutually, collectively deliver to our customers together. I see a great commitment from HP, from top to bottom, to the channel, and to this program, and to enable their partners in selling and delivering HP skewed part numbers. Service one opens up pretty much all services for delivery by their partners. And of course, there are specific training requirements. And if you achieve those, then it extends the partner's reach and the breadth of product and the services that they can offer their users, their end users. This allows HP and the partner to present a unified strategy and allows us to participate in the delivery of services. I think the beauty of the program is that we as a partner can choose to deliver with an HP branded name, or we can deliver our own brand with HP support. And the customer feels ultimately better and ensured that HP is behind the product. Yet they enjoy the familiar faces and their trusted advisor on their site. So first of all, how do you approach it? Do you have your brand and HP support? We are right now support. No, we are doing HP branded. OK, so your customers, they know you as the channel partner, but then you introduce HP to them. You say, OK, we now have HP services, and they like that. Obviously, HP is a big company. How does that all work? In the past, we've been servicing our customers by selling HP services to them. And HP's personnel would come and implement, and we would sell the hardware. Now we're able to tell our customer, you're going to buy this HP part number, but we are going to the installation, and the technician and our staff that is intimately familiar with your environment will be on your site, and we are your lead contact. However, we are supported by HP on the back end. So it's a win-win situation for the customer. So Tracy, we had Chris Riley on at the Project Voyager. You know Chris, he's the head of the North American Sales First, the storage division. And he was talking about the 100% channel program and for a variety of products. He talked about Service One. There seems to be a real land grab going on for the channel. It's quite interesting. You've got this oligopoly that's emerged with about four or five big players in the IT industry. You're the biggest. And everybody's really going after the channel. That must make you feel good. Yes, we are aligned with the best partner. Well, a lot of big companies falling all over the channel. What's going on there in the channel? How is the channel transforming? And why is there this fervor to get the channel loyalty in the channel really is sort of a misnomer? But what's going on there? Scope that out for us. Sure, absolutely. So I think first and foremost, it comes from top organization inside of HP down. Meg Whitman has brought in a brand new meaning for what partners are to HP. And we're supporting it. And I think HP probably has gone back and forth in the few years on where we stand with partners. Right now, we are 100% behind our partners. And I know that that's going to continue. So that's kind of the first thing. A top-down leadership strategy around the commitment and dedication to partners. The second thing is that we view our partners as truly an extension of our sales force. So it isn't HP against partners. It isn't HP and partners against direct. It really is now, and a true extension of our sales force. So we've done very unique things, especially in the services organization as well, where we're compensating both our direct sellers when they walk in with the partner. So we're trying to take any kind of competition out. We've also introduced what we call rules of engagement. So we really try to be able to define and work together better. But it is about HP touching more customers, working better together, and being able to grab a bigger share of the overall market. So what do you tell that channel partner that has seen many companies, not just HP, ab and flow, and there's skeptics out there saying, oh boy, okay, this sounds really good, and they're going to get me all excited, and what do you tell those guys? They're out there, and they're in their audience. Absolutely, and so I think it really comes down to, you know, you have to believe, right? You have to go back, and you have to stop, and say, okay, what are we doing to back up those statements? We're not just giving lip service right now. So service one is a very perfect example of that. It is a program that enables partners, as Prasant was saying, to both sell and deliver. We're doing things in this program we've never done before. We're opening up HP's intellectual property to our partners. So when we're doing that, we're getting into a very trusting, open relationship with them, and we're allowing them to take our IP and then be able to deliver on that for us. So that's another thing. We're also setting very, you know, working with them to set aggressive service targets and goals, and we're paying out some of the highest rebates across all of our competitors in the industry. So I think that they can see, not only are we committed to, you know, the right words, we're backing it up with the programs, the dollars, the investments, as well as, again, sharing the intellectual property. So I used the term land grab before. You're doing more than an MDF land grab, for example. You're talking about integrating processes, sharing IP, doing training. Okay, Prasant, I wanted to ask you about the cloud, and it's shift gears here a little bit, because the cloud, everybody's talking about cloud, the vendors are talking about cloud, the customers, some of them are talking about cloud, some of them talk about IT as a service, but certainly guys like us, at Wikibon and SiliconANGLE, talking about cloud, what's your perspective as a channel partner? You sell a lot of hardware and software and services. The cloud is great because it's easy and simple and pay as you go and consumerized, all that stuff, but at the same time, oftentimes it's going to be delivered through a new channel. So what do you do as a channel participant who's been in business for a number of years? You're the president of the company. How do you look at the cloud and how do you capitalize on it? Is the cloud to you a threat or an opportunity or both? That's exactly, you took the words out of my mouth. I was going to say we're trying to decide if it's a great opportunity, for sure, it's a great opportunity, but you need to align yourself. A partner needs to align themselves, retrain themselves and change the way they operate in order to be able to participate in the cloud infrastructure and the coming. So there are several different ways the cloud, from what we understand, talking to our customers and our vendors, this is going to be at least a 10-year process. It's not going to be overnight. Our customers, they don't feel ready to jump onto the cloud. They are entertaining the idea first, the private cloud, which we can be a great part of building for them. And then the next stage would be a private and public hybrid cloud. And it's going to take about at least 10 years for people, if ever, to jump onto the cloud. So for us, for me, it's a great opportunity. We just need to retrain and change the way we sell to the customer. I wonder if you could chime in, yeah. Absolutely, and I think, you know, everything Pruzan has said is absolutely the directional where customers are going. But what they're interested in today is how do I make sure that I'm ready for where I want to go tomorrow? So when we look at HP and obviously with our partners, we're starting to say to customers, let's look at implementing a converged infrastructure today so that you have the capability, the growth, and the opportunity to move that forward and to scale up that path. If you so choose to move to the cloud or you're moving in small steps to a virtualized environment and then moving up to looking at an orchestration type of model where you're doing some things with more modularity. So I think everything that HP is doing is putting customers in at least the right path directionally to move to the cloud when they're so ready to do so. And if I may, HP already has an opportunity for the partner. They have a product called Cloud Workshop and they have already opened that up for partner delivery. So if you go through the necessary training, that's an additional opportunity for the partner to present the workshop to their customers. So this is an interesting topic. In some respects, your customers are in competition with Amazon. The IT shop is saying, all right, well, I can't just let my whole application portfolio go to Amazon. That's not going to work. I have to protect my organization's data, but at the same time, there's this tension. So you're talking about converged infrastructure, for example, Tracy, as being more cloud-like. So that essentially is putting in IT infrastructure that allows IT organizations to be more responsive, to be more agile. Do those worlds come together in your view or do they stay largely separate? You said it's a 10-year journey, but do they even have to come together? Maybe there is some kind of healthy coexistence. What do you think? They don't have to come together. What we're seeing is that the CIO of the company is becoming a services broker. He's going to be put in a position what to put on the cloud and not what to keep in-house in their private cloud. So eventually, every larger corporation will put some of their applications onto the cloud, but their most sensitive data is going to be remaining within the private cloud. So what's hot right now? I mean, the channel ebbs and flows with the hot trends, right? You guys, their customers say they have needs, you fill them. What's hot right now? I mean, obviously virtualization, cloud generically, but what are you guys seeing? I think services are hot right now. Customers, they don't want break fix anymore. They want preventive maintenance. They do not want things to break because as you know, as time goes on, everything is becoming critical. Nothing can go down. It could cost a larger company $10 billion an hour for downtime. So they want everything done beforehand, it preventively to avoid any downtime and generate HBs, generate infrastructure and the new services that they offer are going to minimize the unforeseen downtime. And I think that's where the opportunity is. The other thing we're seeing in the trends is a lot more of customers are looking for engagements upfront. Some level of consultative engagement is my environment ready. What kind of assessments do I need to be looking at that are short term that give me a confidence level that when I go in and put in my infrastructure I've got the right thing. So we're actually seeing kind of sales work in three steps right now too. Consulting piece upfront, moving into some level of architectural and then just as Poussaint says, make sure that it doesn't go down. So watch it, maintain it just like we're talking about with our new HP services portfolio. But data migration, data storage, I mean, all of that is just huge right now. I mean, you're talking about some consulting services I would think in the context of cloud that security services upfront planning, how to even prepare for the cloud would be top of mind on a lot of CIOs. Is that something that you've evolved to Poussaint? Is that capability that you see coming in the future? I think it's premature, not yet. But eventually we definitely see ourselves in consulting to our customers for cloud infrastructure and what path to take with HP. HP has announced some great products today and throughout the last couple of months to help customers ease into the cloud world. Okay, so my last question, Tracy, so when you talk to your channel constituents, what are the top, let's say three, two, whatever, five if you want, what are the top things on their minds? What do they want from you? They are always looking for HP to be a leader, to come out with something new that gives them an edge or an angle with their customer base. So that's kind of number one. What are you doing? What trends are you seeing? And what can you help us with as a partner to really get ahead of our competition? So that's kind of number one. The second thing they're looking for is overall analysis and data and information. So we're always sharing things back with our partner community of what we're seeing from an organization and where we're investing in R&D. So it's really, two or three things are always forward looking. Where do we need to be going and how do they need to be moving their organization? Something that we've seen and Pizant touched on it was we're seeing a very big transformation of our channel partners from, again, a very box led, I'm just going to sell a box and then that's it. That's not where the industry is going, as you well know, right? It is all going into a services led solution wrap. So it's hardware, software, services all wrapped together. And so they're really looking for HP to be a leader and help them get into those markets. And then the last thing I would say is they're also looking for HP to be a partner, to be there when there's an issue or a problem. And those kind of things we've, I think I've really gone to the mat with our partners with them and we've said, we are here for you. So it's the backup. Yeah, I mean, I hear that and I appreciate it because the things that you're talking about are not box mentality, they're business process integration, they're true partnerships, they're long lasting. Back to my earlier question about what about the skeptics? I think you are putting your money where your mouth is and that really is an investment. Much more so as I say than throwing MDF is still good. But you can't play that game, that's a zero sum game really. And we're actually investing in a different way right now. We're actually putting service champions on site with our partners to be able to help teach and modify the sales process. So we're looking at how can we invest in bodies to help you change the way your organization sells and put services up front and be able to bring with it all the products and solutions and software we need to have. So what again does a service champion do? A service champion goes into a partner organization and basically lives and works with them side by side. And we have seen, obviously we put a partner or a service champion on site and we would look for partner growth as a result. But those are kind of investments we're doing differently right now is how can we work with you and with your sales teams to invest and long-term growth so that our partners can be healthy and obviously HP can grow our services business as well. If I may add, as far as HP's commitment to the channel, we became a preferred service provider or a sell and deliver partner about four years ago. And we have seen our PRI score which is the way HP measures your services sales to your hardware sales. We have increased our, every year we have increased our levels and we have tripled our PRI scores. And we have seen, and I'm not saying it's not from just words that I heard from the executives. We have physically seen the level of commitment to us from HP increase as we increase our own commitment to HP and services. So it's reciprocal. So PRI score, I'm not familiar with that metric. What is that all about? Basically it measures the amount of services you're selling in relationship to the amount of hardware you're selling. So we at HP in the services division we obviously want to make sure there is a service level and we call it attached to a piece of hardware. And so that you are getting the full robust experience of an HP product. And we go back into partners and if they have a low PRI score or they're not selling enough services in relationship to the amount of hardware, we sit down and work with them. And our goal is to raise that number up so that they are able to experience again a more robust offering and be able to service their clients better. What does that mean for you, Puzana? Obviously it maybe gives you more profits from services but it also strikes me that it balances out your portfolio. You're offering a little bit more and reduces your risk. Talk about that a little bit. First of all, when we joined that program our PRI level was around 0.6 and they wanted it to be 1.2 for you to be an elite member. And today that elite member has transitioned elite work to an expert. So, with their 0.6 as for every dollar of product you're selling 60 cents. They have a different way of measuring it. It's not that simple. It's not that simple. It's just very complicated. But at the end of the day you need to increase that number. So HP came to us and we have a great team and they came to us and they showed us they helped us increase that number and we continually increased that number and we've seen the difference in our bottom line and our top line. We have never sold so much services before simply for the asking. Another new offering that they came out with about six months ago is proactive services. They came and explained to us and the benefits to our customer and we started selling that and we see the difference and we enjoy the benefits of that. Services is a profitable business. We've been saying that for a while. Yet it's transforming and those who don't hop on the transformation curve are going to get left in the dust. Tracy Puzant, thanks very much for coming inside theCUBE sharing with us your services and channel perspectives. Good luck with the program and good luck with the business. Thank you.