Tuesday, September 27, 2016

Changes in procedures, changes in models – at HPE, NonStop set for further growth.

There have been numerous posts following recent press releases from HPE concerning Enterprise Services and Software. But for the NonStop community it’s all smooth sailing and the news says it all; NonStop is an integral part of HPE’s vision to become a major provider of infrastructure and platforms!

After decades of flying every week to every corner of the planet I seldom board a plane these days. In former times, however, even when not on business the first inkling concerning potential downtime would see me scanning airline sites for deals and checking my mileage balance to see what options I had. Neither my wife, Margo, nor me were born in the U.S. and arriving in the U.S. after we had become adults, American holidays didn’t mean all that much to us so we seldom hung around to participate. For a number of years we flew to Singapore, just for Thanksgiving, to enjoy chili crabs on Singapore’s south east coast.

In those days of constant flying I knew by heart all the different procedures in place at airports. Updates to terminals and gates were a constant test of one’s perseverance but I always managed to adapt pretty quickly. And yes, time zones never seemed to affect me back then and no matter the time of day, you would likely find me working away in a hotel lobby somewhere in the world. However, when I do get to fly these days I am so out of touch with current procedures that travel is no longer enjoyable and even the simplest requests by the airline staff can lead to stress – something I simply never experienced all those years ago.

We are all creatures of routines. For us, following protocols and understanding procedures simply reflect the order we desire as we go about living our lives. However, when it comes to large corporations it is though we live in times where we have to prepare for change to happen almost as regularly as some of us take to the skies. For the NonStop community, this has been the case almost from the time of the HP / Compaq merger. It seems that almost with every quarter that passes there’s news of one kind or another starting with the big announcement that HP was going to release NonStop on blades to where we now have NonStop on x86 from HPE. Exciting news, of course, and the stuff that keeps us focused on just how well NonStop meets our business needs. And when it comes to organization, change is happening almost as often.

In the last couple of posts I have written about the most recent changes hitting the newswire. HP has split to become HP Inc. and HP Enterprise (HPE). HPE in turn has announced the retirement of Martin Fink, HPE CTO, and then proceeded to pursue “spin-merges” of both its Services and Software organizations. If you were a shareholder in the former HP and had elected to hold onto your shares then life has become very interesting indeed and opened the doors to more astute gauging of the value proposition of your holdings. And this is an important backdrop to any new discussions the NonStop community is now having when it comes to the future of NonStop.

In all the years since the HP / Compaq merger, financial analysts were at a loss as to how best to categorize HP. Was it a consumer company selling through big box stores? Was it a server and software company? Was it a growth company or was it a value company? Was it even just a finance company? Of course this inability to categorize the HP of that time led to stock valuations well below what otherwise may have been considered fair value. After all, if there was no other company in the same category, was it even a legitimate category? Clearly, HP had to do something to (a) unlock the true value of HP for its shareholders, and (b) manage the different financial models under which each business unit operated.

All too often discussions within the NonStop community centered on HPE’s investments in NonStop. These discussions arose following questions on whether NonStop was profitable or not and whether the revenue was sufficient to justify continued investments in NonStop. When a company makes $130billion in revenue, does a product line bringing perhaps one or two billion really warrant as much management attention as was needed? Did marketing and then again sales, really need to invest resources to support? Again, it came down to categories – just how big is the market for fault tolerant systems? Surely, near 99% availability was good enough!

The spin-merge of HPE Enterprise Services with CSC and then, just recently, the proposed spin-merge of HPE Software with Micro Focus is welcomed news to financial analysts and shareholder alike. When the dust finally settles sometime in 2017 and with no further roadblocks appearing that could delay the process, shareholders will be holding stock in HP Inc. HPE, CSC and Micro Focus – shares in companies operating in four well-defined markets; Consumer, Enterprise Infrastructure and Platforms, Services, and Software.

But again, for the NonStop community, this spin-merge of services and indeed software, didn’t involve NonStop. After a year or so promoting NonStop as the best software platform on the planet, HPE has acknowledged that NonStop isn’t a part of the “non-core software” that participated in the spin-merge with Micro Focus. As for Enterprise Services, these weren’t the services HPE needed when it came to supporting customer deployments of HPE infrastructure and platforms. Rather, that is the role of the Enterprise group’s Technology Services (TS) which remains an integral part of the new HPE.

If you missed it, the HPE News Release of September 7, 2016, HPE Accelerates Strategy With SpinOff and Merger of Non-Core Software Assets With Micro Focus - HPE to retain key software assets to deliver on the promise of hybrid IT is a must read for everyone in the NonStop community. It describes, in no uncertain terms, what HPE considers as its non-core software assets even as it asserts that those software assets contributing to the delivering “on the promise of hybrid IT” will be retained. NonStop is one of those key software assets according to Randy Meyer, Vice President and General Manager, Mission Critical Systems.

I referenced this News Release in my post of September 15, 2016, Changes for the better? HPE to focus on what it does best; infrastructure and platforms! However, what I want to make perfectly clear is just how important the organizational changes that came with the news that Software was following Enterprise Services in its own spin-merge. Reflecting the changing revenue model of the slimmed down HPE – now expected to be just a little less than $30billion and a far cry from a year ago when the much bigger HP generated revenues of $130billion – the priority has been to bring greater focus onto the infrastructure and platforms HPE believes will be key to differentiating its portfolio from those of its competitors.

“When you consider the non-core assets that are part of this latest spin-merge, it’s important to understand that they operated within different business models, with different business processes and indeed, a whole different approach to financials,” said Randy Meyer. “These non-core software products represented software that competed in the software business arena whereas the software assets retained all contribute to HPE being able to deliver on its vision of being a major provider of infrastructure and platforms.”

Furthermore, when it comes to organization, the Enterprise Group has announced the formation of three major groups: one focusing on software-defined and cloud technologies, one focused on data center infrastructure, and one focused on edge technologies and the internet of things. Additionally, there is also Technology Services as noted earlier that was already established to help all three of these groups deliver on opportunities that arise from sales of infrastructure and platforms coming out of the Enterprise Group.

“Mission Critical Systems is part of the newly formed data center infrastructure group (DCIG) and for a reason,” said Randy Meyer. “NonStop remains a value play within the data center where fault tolerance is still required for select markets. It is making a financial contribution to DCIG at a time when there is disruptive transition under way as we watch private clouds take off and the melding of traditional IT with private clouds provides great potential for NonStop development.”


There are changes in procedures even as there are changes in business models. In the coming quarters we will see the appearance of virtual NonStop (vNonStop) that will be provided independent of the hardware and the NonStop group is busily sorting out the processes that need to be in place for the NonStop community to be able to order NonStop as software only. In all likelihood, Technology Services will be looking to provide best practices to ensure NonStop as software lives up to user expectations when it comes to fault tolerance – reference architectures will be developed even as the HPE sales and marketing teams work to identify new markets for NonStop. Yes, NonStop is going to be a big part of HPE, something that NonStop community is only getting its first glimpse as HPE IT commits to running its DataBase-as-a-Service based on NonStop SQL on virtual NonStop.

So let me be as unambiguous as I can. In case you still need to be reminded of the pertinent points following these recent news releases from HPE. NonStop is not considered “non-core software” but rather, an integral component as HPE pushes deeper into the marketplace for infrastructure and platforms. Furthermore, the NonStop organization remains firmly within the Mission Critical Systems (MCS) group and as such, is now a part of the core group, Data Center Infrastructure Group (DCIG). Randy Meyer remains the head of MCS and as such, has the responsibility for NonStop – no change there. And finally, NonStop today is in good shape demonstrating quarter over quarter growth with margin sufficient to support further investments in the NonStop product line.

It’s probably not inappropriate to say that we are all as pleased as we are today to see that NonStop has survived – the hard work to turn the NonStop ship around and return it to profitability has been done. Attendees at last year’s NonStop Technical Boot Camp can all recall the challenge the NonStop team faced when asked to “fix it, or exit.” And fix it they did – NonStop X together with SuperDome X are running on the Intel x86 architecture and has proved to be a major positive turning point for NonStop. But it’s only the beginning.

The new HPE needs NonStop and the steps it has just taken to better address the needs of the financial industry and shareholders will be trickling down to individual groups within HPE and with that, for the first time in a long while, the NonStop community can rest assured in the knowledge that today, NonStop has become one of the all-important key software assets contributing to the delivering on the promise of hybrid IT!


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