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How Businesses Aid and Advance Their Transformation with Tech Asset Management – Futurum Tech Webcast Interview Series
by Daniel Newman | June 15, 2022

On this special episode of the Futurum Tech Webcast – Interview Series, I am joined by Gerri Gold, Senior Vice President and Chief Operating Officer for HPE Financial Services. In order to be successful in today’s economy, organizations have a lot to juggle. One area that is often under-explored by the business leaders is the return on technology assets. This requires a holistic view of the entire tech stack and to know when, where, how to invest, and how to optimize. In this episode, Gerri and I explore how tech asset management can make a difference for organizations and their transformations.

In our conversation we discussed the following:

  • A dive into what is top of mind for executives today
  • Insight from Gerri on how global events and our current business climate are impact technology choices
  • How moving to as-a-Service can help organizations
  • A look into why businesses should look at assets and asset value across their tech landscape.

It was a great conversation and one you don’t want to miss. To learn more about HPE Financial services and their initiatives, check out their website here.

Watch my interview with Gerri here:

Or listen to my interview with Gerri on your favorite streaming platform here:

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Disclaimer: The Futurum Tech Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Hey, everyone. Welcome to the Futurum Tech Webcast. I’m your host, Daniel Newman, principal analyst, founding partner at Futurum Research. Excited for today’s great conversation, where we’re going to be talking about what’s going on in driving organization and transformation through the effective utilization of tech assets.

I’m going to be joined here by Gerri Gold of HPE, and I’ll introduce her in just a second, but a little bit of background. In order to be successful in today’s economy, organizations have a ton to juggle. Coming out of the pandemic we have new challenges and pressures. But one area that is often underexplored by business execs, leaders, CIOs, and CFOs is the return on technology assets. It’s got a big impact. It requires a very holistic view of the tech stack. And companies have to really think about when, where, how to invest and how to optimize.

We’re going to dig into that today. So without further ado, HPE’s Gerri Gold. Gerri, how are you?

Gerri Gold: I’m good. How are you, Daniel?

Daniel Newman: It’s great to have you here. It’s great to see you again. We’re talking offline in the backstage, the virtual backstage, about getting back to physical. It has been a few years. I do love though that we are able to so quickly get together on video, but I am really looking forward to seeing you in person at an event in the near future.

Gerri Gold: I think we will in the next, hopefully, six weeks or so. We’ll hopefully be able to see each other. I’m looking forward to it myself, getting out and about, and up close and in person.

Daniel Newman: Yeah, absolutely. The quality of the conversations, now that I’ve gotten back in person quite a bit in the last several weeks, I definitely missed that. So I’m looking forward to doing that with you. But I’m looking forward to a quality conversation here as well. Now, before I do dive into this whole string on return on technology assets, give everybody out there a quick introduction. If it’s the first time that they’ve been on our show or they’ve seen you, I’d love for them to understand a little bit about your role at HPE.

Gerri Gold: Sure. I am Chief Operating Officer, Senior Vice President at HPE Financial Services. So we have the responsibility for helping customers really accelerate their digital transformation, bringing about all sorts of financial and asset management solutions. I’m really looking forward to being here today.

Daniel Newman: Yeah, it’s great. I do remember the first time I came out and visited, I learned so much about the business, HPE Financial Services. It’s a unique business, doing some very innovative and interesting things. Of course, tech companies can be so large at times certain portions of the business, people aren’t necessarily always aware or they’re not necessarily following parts, pieces, depending on where they’re procuring what their technology needs are, but you really have a business that could enable, help support, and scale every company in terms of meeting various goals. Everything from how to be more efficient and utilize assets better, all the way to what you guys talk about with the circular economy and sustainability, which has become a huge topic, especially over the past couple of years.

So I want to start off, let’s start with the big picture. Just in general, you as an executive senior leader, what do you think is top of mind right now for business leaders and top tech executives?

Gerri Gold: It’s a great question, but it’s a big question because it’s kind of like, what’s not on top of mind in 2022? Because when you think about it, just from whether you go geopolitical, economic, environmental events. There’s the war in Ukraine. There’s still COVID going on. There’s climate change going on. Think of all the repercussions and all of the results of those. Whether it’s inflation, energy costs, supply chain constraints. Think about the new trends towards ESG. You just mentioned sustainability and everything that… everybody wants to be sustainable and focus on ESG, and it’s gone from being a nice to do to actually a prerequisite and an imperative, but there’s tons of new regulations around it. Or think about, and you and I were talking a lot about working at home, working at the edge versus working in the office, the whole new hybrid work environment, and the implications from the hybrid work environment on our talent and our talent skills and our talent shortages.

So there’s just a whole slew of issues that you have to think about as a business leader, whether you rely on a business leader, whether you’re a CEO, whether you’re a CIO. The interesting part, and the world that we’re all in is underpinning all of this is, let’s face it, technology is going to be key to manage and support all of these issues and opportunities in order for a business to be resilient, to be relevant, and just to be competitive in this world. Technology has to be thought of a little bit differently because it really needs to be thought of as being something that is extremely flexible. Because what’s today’s issue? That’s going to go away in two months and could be another issue tomorrow. So you constantly have to be pivoting towards what’s next.

One of the biggest observations, especially in my business that we know of and we see, is customers never have enough money and, surely, never have time to implement what they need to as they respond to what’s top of mind.

Daniel Newman: Yeah. There’s a lot to unpack there, Gerri. I could take that in about 15 different directions. I think the senior executives, and basically funneling all the way through organizations, are really thinking about everything from what does work look like now that the pandemic’s over? What technology do we need to be investing in? You’ve got new pressures coming in and mounting. Things like cybersecurity have come into focus. Completely above where they ever were. Now that you’re seeing breaches, some of the data points I’ve seen on just the volume of breaches that are attempted in a given minute, hour, day, it’s almost unbelievable. It’s shocking.

So these are all things, what does work look like? What should we be investing in? What’s the technology? How do we become sustainable? What about diversity? What about equity and inclusion? What about, of course, returning to shareholders? Because all these things you want to, to your point, “spend money on,” do they actually return to the bottom line? And when do they return to the bottom line? And if so, how do we communicate that to the street in a way that they’re going to be satisfied that we’re checking the boxes, we’re doing it meaningfully. And at the same time, we’re not going to damage the returns that people are looking for with that money.

Of course, I would add to what you said, Gerri, we’re kind of entering a new era in the economy. We had this COVID economy, which in the beginning was really scary, and then actually became quite a boon for tech. It became a bit of a tailwind because companies started investing big. You saw chip companies, software, hardware, infrastructure, all get big tailwinds. But we also created this out of control inflation. Now, we’re in an interest rate rising environment, which means that every company has to think a little bit different because that tends to take off the value of growth. So there’s so many things that are all going on concurrently that companies are dealing with. So yes, you started, you wound me up.

Gerri Gold: Now, this is what we want to talk about because it’s fascinating, isn’t it?

Daniel Newman: It really is fascinating. I spend so much time thinking about this. But I love one thing you said, I want to reiterate this. I hope you’re going to talk more about this. Technology will solve all these problems. I’ve had several conversations with CEOs and top executives across the tech space. I actually say tech is deflationary. I know people tend to not always understand what it means, so I’m just going to say really quickly. When you have tight labor, you have businesses that need to continue to grow, you have demand that’s still very high, but you have costs that are out of control, technologies, things like automation, to be able to aid in workflows that are challenging or that can enable you to up level your employees and get automation to handle processes. Things like that are deflationary.

Also, eliminating cybersecurity with AI. When you would eliminate risks and ransomware. All those things end up being a cost and a burden on society, which drives prices up. When technology solves it, you can bring prices down and you can continue growing, which is what we all want, including our 401(k)s and retirements and everything else. Grow, grow, grow. So with all this in mind, in your mind, how is all this affecting the technology choices for these executives, for these businesses?

Gerri Gold: I love this and I love what you just talked about. Again, we could go on for this for hours because it’s really a cool discussion. Your concepts of it being deflationary, it’s a really interesting concept, and you’re right. The reality of it is, and I can talk about my own personal business all the time and us looking at where do we bring technology first, there’s just so many opportunities. It’s almost breathtaking. We’ve been talking about talent, and I really love that conversation, and the new hybrid workforce. Think about the way the world was just a few years ago. You looked at colleague or employee experience, you looked at customer experience, and the two were… they kind of were aligned, but you looked at what tools could you bring to a customer? What tools can you bring to your employee? Well, guess what? That’s gone out the window for the total company experience. Knowing that you have to integrate the two.

Now, all of us have our workforces at the edge, in the office, and our customers’ workforces are at the edge and in the office. What that means is we need to create technology and analytics for a full seamless, seamless experience. That’s a large endeavor to undertake, but it’s only one of the priorities that you need to do as a business leader. So the real question becomes, to your point, there’s so much to do, what are the priorities and where do you make the choices and where do you go first? One of the things that really has become all the more important as you’re making those choices is to think about flexibility. Because in the past, you invest in a technology and it’s there for a very long time.

That’s not the case anymore. Now, you have to be flexible. You need to be able to pivot. And it’s clearer than ever. One of the things that we all need to be thinking about is how do you leverage flexibility through structures like hybrid cloud or through as a service? When you think of these as a service models, they give you a lot more of that ability to expand your budget, right? Because you don’t need as much upfront investment. It’s less capital intensive and you know what, you’re much more flexible to pay as you go.

So in all this bigness, you need to narrow it down to what are some of the things you can do. I would strongly look at as a service being a critical way to help us enable some of the enhancements, Daniel, that you were talking about from an IT side, when you make some of those technology solutions that you want to develop.

Daniel Newman: Well, we all know, Gerri, that the investment overall in technology’s going to grow. There’s varying degrees of numbers and how big the TAM is and how much it’s growing, but it’s going to be significant. Things like everything as a service, by the way, I think has something like a 28% CAGR over the next little bit less than a decade. But what we’re basically seeing here is that running applications cloud native, making it easy for people to be able to subscribe to things. But I actually think this has created a bit of a whirlwind of an effect, too, because we started off with certain software, maybe it was your CRM or your HCM. And you’d say, “Oh, I want to get a cloud native app,” you get a Salesforce, you get a Workday or something like that.

But what’s happening now is I think the access, which I still remember everything as a service, right? I still remember Antonio Neri, your CEO, getting on stage several years ago and basically making a proclamation that, “Hey, we’re going to move everything to as a service.” I remember sitting there, and I ended up writing a white paper about why this was such an important move for HPE. But I remember sitting there and first digesting going, “Wow, how are you going to do that with…” I was trying to think about some of the product lines, some of the big iron, like, “You’re going to make everything as a service?” I understood some of it. The more I started thinking, I’m like, “This makes a lot of sense though because this is really structural for companies. This isn’t so much just about the technology. It’s structural to how a company wants to function and operate.”

Right now, in this economic downturn, you know what the absolute biggest catalyst… and by the way, when I say economic downturn, I’m really talking about the markets. Because the economy at large in tech is still showing a lot of resiliency, so I want to make sure I’m clear about that. But the market downturn, what has become king is cash flow. There’s a lot of adjusted numbers, adjusted EBITDA, things where you’re taking out a lot of interest and amortization and depreciation, and you’re saying, “Oh look, we’re profitable.” But you’re not making cash. Well, cash has kind of become king.

Gerri Gold: Cash is king, yep.

Daniel Newman: CapEx is one of the things that’s really difficult on cash for a lot of companies, especially growing companies. So the idea of cloud and doing things cloud native and SaaS has always been great because it’s like, “Hey, as you’re trying to build a capability in your organization, if you can just swipe a credit card, spin up a workload, launch something and then build it. And then maybe at some point you move some of your infrastructure on-prem and you do some CapEx, but in the beginning you can do it really elastic.” That’s how businesses want to run on OpEx.

But at the same time, like I said, some services are really easy, Gerri. They’ve been built that way from the ground up. But you guys are looking at a very diverse portfolio, tons of products, services, financial services capabilities. So when you say this, I guess I’m curious, in your opinion, is it easy? Is it really something that companies can do across their organization to realize all these benefits in a lot of different areas? Is it like hitting a switch?

Gerri Gold: Yeah. Yeah, it’s a great question. When you said something about Antonio and at HPE, our as a service is GreenLake. Just to echo your comment, Q1 was our second quarter in a row where our orders in our as a service model doubled year-over-year. So to your point, people are seeing that it’s valuable and it helps them really be successful. I would love to say, “Hey, it is like a switch and it’s really easy.” For new companies, born in the cloud companies, ones that don’t have a lot of infrastructure, I’m inclined to say, “It’s not that tough.” But most companies are not that way. Most companies have been around. Many of your large businesses and global companies. Let’s face it, we have huge IT asset estates across all equipment types: servers, storage, networking, handhelds, PCs, you name it, and across all vendor types, all brands.

That’s because we’ve lived a history and a world of, like you said, capital intensive, for the most part, ownership models, where the customers are depreciating all of their equipment three, four, five, six years, and sometimes even longer. That makes for a pretty complex environment because you’re a little bit restricted with all of that depreciation. It’s still costing you. And so that pivot is a little harder because you come with a little bit of a legacy. And so one of the things we’re really good at, and one of the things when you started this conversation talking about we’re a little different at HPFS around our asset management, is we really focus on how do we liberate and how do we help customers unlock themselves from all of their legacy estate and take what might be considered more of an anchor and turn it into something that we can actually get monetized and get some funds out of to help a customer make that pivot to an as a service.

If you don’t mind, I’m going to share with you just one quick example with a customer of ours, Worldline. Because here is a customer that is the largest European payment processor, fourth largest in the world. During COVID, as we were talking about, I mean, you could imagine they had to move on a dime. They had to grow significantly, scale up their electronic payments in a very safe and secure way. They knew that they would be able to do that through GreenLake, our as a service model. But in order to help them get there very quickly, we brought in some financial structuring, something we call accelerated migration, and we actually help them fund approximately 25% of this new platform through their legacy. So imagine that. Imagine creating 25% more capacity from your legacy platform. I think that’s kind of cool and mind boggling at the same time, how much that can extend your budget.

So between GreenLake and what we did at HPFS, we were able to help or align, pivot much more quickly. We helped them do it with no upfront investment. And then we helped them be able to have these huge cost savings across the board by leveraging an as a service model. It’s kind of a win-win. And it gets back to what you said. No, it’s not easy when you have lots of legacy equipment, but we can sure help take that legacy, mine it a bit, and use it as a way to make an opportunity, so that you can fund this new transformation and leverage the funding from your existing legacy platform.

Daniel Newman: Yeah. You kind of pointed to the need to liberate these enterprises in many ways, from the lock in that’s been created through legacy financial models, legacy tech investment, technology debt. It’s complicated, and you guys have a multi-pronged strategy to address this.

I guess that takes me to where I want to go right here is you start… whenever anyone talks about as a service, you think about maybe cloud infrastructure. You think about software. But you guys are providing almost financial instrument as a service for companies to invest in, up level their technology, cycle through tech. Again, even has benefits from an ESG and sustainability standpoint and how companies are dealing with that equipment. When you pull out 50 racks out of a data center, that stuff has to go somewhere, by the way. It doesn’t get turned into recycled boxing for your cereal. So there’s a lot that has to happen there.

So I guess from the standpoint of assets, how do companies look at them from a lifecycle standpoint to take advantage of what you’ve talked about from a consumption and as a service standpoint?

Gerri Gold: Daniel, you started the conversation on this return on assets, and that’s really what we’re getting to right now. It’s this concept that says whether you’re moving to an as a service or you’re transforming in any way, there’s a reality that, again, a business leader has to focus on too many things and never has enough money or time, okay? What we really believe we can bring value in is that cross section of financial engineering and asset management engineering to really maximize the value that we can bring to our customers.

Because there is no doubt that the observations I’ve had… and in addition to being COO for the company, I also happen to lead our global account segment, so I’m talking to global customers all the time. What I’ve observed is that technology is something that they have to have. They have to buy the assets. But they don’t really have the time, they don’t necessarily have the expertise to figure out how do they maximize the return on those technology assets. That is a real opportunity cost. When you never have enough money, the thing you want to do is take advantage of everything you have to invest in.

I see, and I’m sure you’ve seen it all the time, customers where they’re over-provisioning, right? They’re buying extra equipment up front because they don’t know when they’re going to need more and they’re going to need it on time. Especially when you have supply chain issues. Or they acquire technology for a specific solution for a line of business. And by the time that technology comes in and that solution’s ready to be put in place, the line of business has changed their mind and that’s no longer an important priority. What you have is all of these sunk costs, the sunk capital.

The reality of it is is how you maximize the return on assets. Is those assets… I don’t want to say they’re like a cat, it’s not exactly nine lives. But there are multiple lives that you should really leverage with that equipment that may be within your company or it may be outside the company. But there are multiple lives that equipment can be matched up against usage cases to really extend it and to get a much better return on asset. Which inevitably is going to bring a lot more benefit to the organization, a lot more economics. No pun intended, but one person’s old is another person’s gold. And so this is where, again, we come in and we look at quite a few different solutions. It’s something you said, our understanding of assets, combined with our financial engineering, is the keys to the kingdom.

So for example, so many customers have unused, some from these cases of over-provisioning, unused or underused technology, and we’re able to help them monetize it. Actually get value for it that can be put back into accelerating to new digital solutions. Or especially for the large customers that have lots of assets, this is where leveraging a virtual warehouse, helping to bring equipment back in from one usage case of a customer’s, then reconfiguring it for another usage case with that customer through a virtual warehouse kind of capability. Then there’s probably my most favorite one, which is certified pre-owned, or what I like to say is pre-loved technology. When I think about the uses on certified pre-owned, the potential’s pretty unlimited. Especially in this day and age, we have seen a growing use of pre-owned because of supply chain.

When you think of the supply chain issues now, actually we had a customer, Kern County in California, who we brought in certified pre-owned storage to help them accelerate their move to GreenLake. Or you see pre-owned being used when you want to get a better price point. Or you see pre-owned being used when you want to really… you have so much to do, but there’s certain applications that you need to expand and you don’t need the latest and greatest technology. So there’s a lot of opportunities to leverage, whether it’s asset upcycling, virtual warehousing, certified pre-owned just to name a few, in ways to create capacity and to help customers accelerate their transformation. I don’t expect customers to know all that. That’s the expertise we can bring to the table. That’s the value of what we can bring.

IDC, I just recently read a report that they published on circular economy principles. They’re saying over 60% of customers out there, of organizations, are either using pre-owned, reuse, recycling. That is a real growing trend. I’m seeing it with our customers in that whether… they’re going out now, and they’re asking for specific amounts of a bid to include refurbished assets. To something you’ve brought up a few times, it’s not only economical, but it’s sustainable. Because any notion of using used equipment or getting value for equipment and letting us put it somewhere else where somebody else is using it is keeping equipment in the circular economy, using it longer, and that all feeds into sustainability. So it really is a fascinating set of opportunities that we can help customers with.

Daniel Newman: You hit a lot of different things there. And so I’m trying to decide which direction to lean in. I will say, one, I do like the updated version of turning old into gold. Because I think the words historically have been less flattering. I definitely dig that. And two, when we talked about all the macro, I can’t believe I didn’t mention supply chain. Good, gosh. I mean, I spent unbelievable amounts of times. I think I was on TV like 50 times talking about the supply chain. It’s actually become so embedded in me, it’s almost like we’ve just gotten to a point where we’re in a constant supply chain crisis.

But I want to say there’s a good to this, too, Gerri. Part of the reason we’re in such a crisis is because demand is through the roof for technology. And so it’s not all because we don’t make enough. In fact, if you go all the way from the substrates and pipelines for semiconductors, all the way to the end products, most companies have shipped substantially more than before this “crisis.” What happened though is just demand went through the roof because tech is fire. By the way, I got fire from my 16 year old and I promised her I’d find a way to incorporate it into one of my podcasts, so…

Gerri Gold: Now you’re officially very cool?

Daniel Newman: I’m cool. You and I might have to TikTok our way out of this one. All right, so let’s wrap up with a little practical advice. We’ve hit a lot of things here. We’ve been really serious and somewhat playful at times. But in a serious note, everyone that listens to this generally comes back and says, “All right, I get it. You’ve sold me. Tech is important. It’s growing sustainability, financial responsibility, and operational efficiencies, blah, blah, blah, blah.” Okay, we’ve hit it. What do they do now?

Gerri Gold: Okay. So here’s what I’m going to say because my brain sometimes can’t remember too many things. I ask people to think of two things, reuse and reduce. If you can remember reuse and reduce, I think they’re two very practical tips. When I think about reuse, I’m thinking about what I spoke about with asset upcycling and leveraging the opportunity. Companies all have equipment, it has value. Let’s maximize the value out of it and be able to use that cash, that funding, that monetizing into new solutions. To give you a tangible proof point, in FY21, we actually fueled to the tune of almost a half a billion dollars of incremental financial capacity back into our customers’ pockets from a combination of our accelerated migration and asset upcycling. That is not insignificant. So people are doing it, customers are doing it, and it’s a real opportunity.

The second area under reuse is to think about, are you in that 60% category? Are you really taking advantage of your equipment? Perhaps when you no longer need it in one usage case, move it to another usage case. That’s where you get to extend it. You get to save your dollars for your other transformation or you really… call them in most important areas where you need new technology. That’s how you can leverage it in that area as well.

And then thirdly, I would ask you to think about that’s all reuse, reduce. When you think about as a service, and I’ll use HPE GreenLake as an example, the numbers show that those customers who have moved to GreenLake as a service model have seen a TCO savings of over 30%, as well as an energy savings of over 30%. I mean, you can’t beat those numbers. You combine that with the flexibility that it can give you, and it is absolutely an optimal choice. Think about the power of that. I mean, that’s just all economics to your bottom line and it’s also sustainable. It’s just simple areas that… and sometimes the most tactical and specific are the ones you can make the biggest inroads on. So I love the idea of having this right level of expertise. We can come in and help you take advantage of your entire IT estate.

Daniel Newman: Gerri, there was some really sage advice in there. I like it. You said two, you gave three, so that was like a bonus round, I think.

Gerri Gold: It was. Well, it was two under reuse and one under reduce. Yeah, yeah.

Daniel Newman: In synergy, they say one plus one equals three. So we’ll look at it that way. It was synergistic, and you hit on all the important points, right? More efficient, more sustainable, more transformative, more agile. All those great words that are written in business books that executives think about every day. How do I actually do it? There was the advice. So we know the market is going through seismic shifts right now. IT is a big part of it, how it’s procured, how it’s consumed. And of course, what I talked about how companies are able to leverage technology to be more effective in different economic circumstances. And of course, in the end, it’s about experience. We have a lot more of this to discuss because I think we’re going to be very interested to see how companies act as the economics change. Because like I said, we’ve had this endless tailwind. Might get a little slower, but I do believe the best companies are going to come out almost unscathed.

So Gerri Gold, time to wrap up. Want to thank you so much for joining me on the show. Going to have you back again soon, and I’ll see you, hopefully, very soon.

Gerri Gold: Thanks, Daniel. It was great to be here. Have a great day.

Daniel Newman: Bye, everyone.

 

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio