While elaborating on how consumption of IT is enabling the infrastructure market, Vivek Sharma, Managing Director, DCG, Lenovo, spoke to Amit Singh on the need for channels to maintain a balance between the commoditized hardware and upcoming technologies like IoT, HCI, and hybrid cloud.
With the growing importance of software, services, and cloud computing, what is the relevance of IT hardware you see for channels in India?
The relevance of IT infrastructure has been debated for quite some time now. In the early days of cloud, people predicted that most hardware vendors will vanish. While that never happened, of course, many vendors have transformed. In fact, enterprises have not accepted the public cloud as predicted. Hence, enterprise data centers and the associated spending are going to be there for the foreseeable future.
According to a recent IDC report, the IT infrastructure spending will grow from $80 billion, spread across the public cloud (from hyperscale perspective), private cloud, HPC, and non-cloud data center infrastructure, to $93 billion during 2016-2020. And the interesting part is that IDC predicted an impressive growth in the public cloud (17 percent), private cloud (10 percent) and HPC (11 percent). Data center infrastructure will see negative growth of 4 percent during this period. However, it still accounts for the largest share.
Now, the issue is that will there be as much money in the hardware for channel partners? I think that most of them have been growing and some have been really good. Besides their major focus on infrastructure, many partners have taken up cloud as an additional business with their partnership with AWS or Microsoft Azure. The real opportunity for them is coming from the private and hybrid cloud because of improvement in the orchestration and management of the solutions in the hybrid stack. Hence the relevance of infrastructure and channels will remain.
I believe there is huge opportunity with upcoming areas and the channel will adapt to it.
How is the current consumption of IT affecting the infrastructure market in India?
The consumption of IT has definitely changed as some workloads are moving to cloud. However, customers are selective in terms of moving applications to the cloud. Most of them are opting for a hybrid approach.
Hyper-converged infrastructure, on the other hand, is gaining prevalence in the data centers. Moreover, the recent tie-ups between VMware-AWS and Nutanix-Google point toward the prevalence of hybrid cloud, wherein data centers will seamlessly integrate to the cloud. Hence, there is a big opportunity for infrastructure partners with HCI and hybrid cloud.
Moreover, a point which we can’t negate is that there is still a lot of legacy applications, which have to be made cloud-ready before moving to the cloud. Hence, in-house infrastructure is still a necessity; in fact, there will be lots of demand for data center refresh and greenfield projects.
Further, technologies like IoT, edge computing, AI, and analytics will bolster the infrastructure market. In fact, IoT and edge computing will be a natural extension for infrastructure partners. On the other hand, AI and big data/analytics will increase our need for infrastructure. Hence, there will be lot of innovations happening around system density and RoI. HPC, on the other hand, is now entering enterprises with automobile companies leading a good example of leveraging the technology.
Hence, future is still bright for infrastructure partners.
What is the transformation you witness among the channel partners to excel with their infrastructure business?
We are seeing the transformation happening among the customers as well as the partners. While the margins are low on the commodity hardware, partners are transforming themselves to sell solutions around technologies like HPC and software-defined infrastructure, which offer handsome margins. That balance has to be brought in by every partner.
This is true for any industry; application or solutions, which gave huge returns in previous years, may have become a commodity now. Hence, there is a continuous need to innovate and offer new solutions. We must also realize that however large is the level of commoditization, still, there will be some complexity at some layer, which offers an opportunity for partners. The need is to identify the critical area.
What are the steps you are taking to ensure your infrastructure partner profitability?
We are enabling partners through our training programs, which are designed to develop them on infrastructure and services as well as to develop them as service providers. We are highly proactive to help partners enable themselves in emerging areas and technologies. Currently, the enablement is in two parts: traditional data center infrastructure and solution-led infrastructure including HCI and software-defined infrastructure.
Further, for our DCG business, we have introduced a global channel program with the new partner portal for deal registration, collaterals, training, certifications, configurators and pricing tools etc. We have on-boarded over 700 partners on the global partner program in the last 6 months in India. These partners are split between platinum, gold, and silver depending on the size, revenues and the Lenovo business that they do.
With DCG, we are positioning ourselves as a trusted data center advisor to our customers and partners. Our GTM stands on five pillars: hyperscale, HPC, software-defined infrastructure, AI, and solutions-led data center offerings. In fact, we have committed over $1.2 billion on AI over the next five years and have created three AI development centers across the globe.
Further, we recently launched ThinkSystem and ThinkAgile data center portfolio which will act as the bedrock for the HPC-AI portfolio. The new completely redesigned ThinkSystem portfolio, based on Intel Xeon Scalable processors, brings the gold-standard for the industry under a single unified brand spanning servers, storage and networking systems. ThinkAgile is a completely new software-defined solutions portfolio built on the foundation of Lenovo ThinkSystem platforms: it adapts to changing IT needs while reducing complexity and cost created by silos in traditional IT.
This way, we are generating lots of opportunities for our partners to engage with their customers and ensure higher margins with newer and innovative solutions.