Saturday, September 9, 2017

HPE – styling itself to better suit NonStop users

There has been a lot written about HPE of late following the completion of the spinoff – mergers. For the NonStop community, distractions of the past are now behind HPE and this is good news for the NonStop community!

It was back in the mid-1970s when I established my first company, Uralla Holdings Pty Limited. Uralla (and yes, another Australian Aboriginal name) sat atop a rather complex setup that included such companies as Advanced Technology Computing as well as a family trust. At the time, it made a lot of sense and to paraphrase the Eagles’ Joe Walsh yes, “I had accountants (and I paid) for it all!” While not setup to minimize taxes it did help even if in the long run, when all was said and done, I paid a lot of taxes indirectly through leases and purchases as well as the income I shared with others; strange as it may sound, in Australia this was common practice among almost all IT professionals.

When I elected to provide analysis and to write articles and blog posts, creating a company seemed a natural thing for me to do and as a result, Pyalla Technologies was born. It was only recently I caught up with how similar Uralla and Pyalla sound so I am now left to wonder, what happened in my youth to so influence me. Whatever it was the formation of this LLC gave me a vehicle that allowed me to establish business relationships with my clients. Without exception, I am always asked about my company structure and given the nature of my business model, my clients have all come to appreciate this style of operation and the reduced workload this places on them and their staff.

Today, there are many options open to companies and we are hearing a lot more about just how they go about their business. When it comes to HPE, for instance, how many of us had even heard of the term, spin-merge, before it was included in the announcements by HPE that it was divesting itself of its services and software business?

In doing so, and adding weight to what exactly a spin-merge implied, HPE retained a majority, albeit very slim, interest in the partner it worked with as part of the spin-merge. Furthermore, it unlocked considerable value to then-HPE shareholders even as it lessened its own need to fund business entities where margins were always under pressure. Smart? Among the financial community it certainly encouraged them to stay invested in HPE but among technologists, spin-merges of services and software seemed a little odd given how many industry analysts predicted that future growth for technology companies was going to be fueled by precisely these types of businesses.

However, for the customer, HPE’s stated objective of offloading non-core software together with underperforming services while focusing on infrastructure and platforms gave them a strong sense of wellbeing as they became better informed about the strategy and vision of the new HPE. Simply being customer-driven (on the needs of its enterprise customers) looked good in slideware but when it came to specifics, proved to be too broad a vision; customer-driven, as we all now know, is all well and good if you can articulate where you are headed.

Otherwise, no matter how big a vendor you are, you can quickly flounder and be tugged in every direction influenced solely by the customer you last visited. Technology customers absolutely want to know where its vendor-of-choice is headed and just how effective they will be in translating strategy and vision into real products targeting their needs!

Until we heard references being made to spin-mergers, it wasn’t a common term. Spin-offs into new companies that are in turn made up for two or more parties that merge to create a new company place huge demands on the participating companies to be fully in synch with the mission outlined for the new company. With HPE it would seem that they indeed got the ingredients right as I haven’t read one negative response.

For a while there, Dell was suggesting HPE was headed in the wrong direction but soon after, Dell offloaded its own software business mostly, it turns out, to trim the servicing of the debt it took on to go private and then to buy EMC. And the debt the new Dell EMC is carrying is quite a sizable millstone around its neck despite what positive news emanates from the company – who plans to grow a company by first taking on billions of dollars in debt?

No, the path HPE has successfully negotiated has a lot more upside than what many pundits first predicted. Even the recent slide in the stock price was purely an adjustment recognizing the additional value HPE shareholders would realize. As I recently advised my clients, the drop in the price of HPE shares was little more than a market adjustment to the changing world of HPE as the spin merge announcements become reality.

As one publication described it, “this plunge wasn't due to some unfavorable business development. Rather, it was driven by the completion of a planned spinoff and merger of the enterprise computing specialist's non-core software assets with U.K.-based Micro Focus International.” The results of which was that, “HPE received a $2.5 billion cash payment, and its investors received 0.13732611 American depositary shares (ADSs) of Micro Focus for every HPE common share held as of its record date on Aug. 21, 2017. Based on Micro Focus' closing price at $29.50 per share yesterday that equates almost exactly to the per-share ‘decline’ we saw in HPE stock today. In short, the transaction is effectively a zero-sum game for HPE investors, who now hold roughly 222 million Micro Focus ADSs representing 50.1% of its fully diluted ordinary shares.”

In this case and particularly for the NonStop community, HPE’s execution proved to be beneficial to all and gives HPE a better opportunity to not only fund its strategy and vision but to better reshape itself product-wise to better suit the needs of its customers. With the removal of the distractions that otherwise occupied the attention of many HPE executives they could now focus on middleware and platforms and in particular, the transformation to hybrid IT and the empowering of the edge.

As Whitman said, in her briefing to analysts following the publishing of the Q3 results as well as the completion of the spin merge with Micro Focus, “With that transaction now behind us, we have the right strategy and the right portfolio to succeed in today’s environment. Our strategy is clear, to make hybrid IT simple, to power the intelligent edge and to provide the services to make it all happen. It is based on what customers are asking for today and where we see the market moving.”

Yes, HPE is part of that right portfolio (of products) to succeed in today’s environment and this is something the NonStop community shouldn’t lose sight of – whether a user or a vendor, NonStop isn’t “non-core” but rather, another right product for HPE! Of course, we would all like to see a higher profile for NonStop develop as well as to see it occupy more of center stage at major HPE events. However, this may indeed be developing. As much as I champion the attributes of availability and scalability at every opportunity, perhaps the real differentiator for NonStop, particularly as NonStop develops momentum atop virtual machines, is NonStop SQL/MX (NS SQL).

With many of the unique features once only a part of Neoview together with a more complete “Oracle compatibility” option, HPE’s continued investment in NS SQL isn’t happening by accident. HPE has a need for NS SQL internally and it sees NS SQL support of DBaaS as something customers will benefit from as they move to hybrid IT. Furthermore, the work being done in support of blockchain – the port of the R3 Corda to NonStop – is layering the distributed immutable ledger right on top of NS SQL. And for all the right reasons – combine NonStop and NS SQL with blockchain technology and you will provide a very serious solution that absolutely better suits today’s customer’s needs.

HPE is reshaping itself from a business perspective and on a personnel basis as well. There will be a lot of organization changes taking place before we head into the start of HPE’s next financial year some of which have already leaked to the press involving the sales organization. HPE is also reshaping itself from a product portfolio bases and the good news here is that NonStop made the cut – not just NonStop but critical middleware including NS SQL, TMF as well as TS/MP (formerly, Pathway). What’s not to like about all of this?

From my perspective, very little but it will always come back to how well HPE can execute but if the style of the company now being projected continues to better shape it to suit the needs of its customers, the NonStop community should be the last to complain. Look around, when it comes to the right strategy and the right portfolio, isn’t this a big change from the past to know that it includes NonStop? HPE’s spin merge may have the heads of other technology firms spinning but for the NonStop community what it really represents is the creation of a strategy and vision focused solely on where HPE needs to go and with that, as a community, aren’t we the happier to read of this?

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