Lenovo is known for offering unique value proposition to its channel community – the company has always believed in empowering its engagement with channel community and helping them secure their future growth prospects.
Rahul Agarwal, India Managing Director & CEO, Lenovo & Vivek Sharma, Managing Director of Lenovo DCG India in conversation with Anuj Singhal from itVARnews.com at Canalys Channels Forum 2018 APAC in Hongkong.
Q1) In this era of business transformation, how has Lenovo transformed its business over the last few years? What has changed with respect to your strategy, especially when it comes to your data center operations? Could you give us an overview of your go-to market strategy?
Rahul Agarwal:“IT” is no longer just “Information Technology.” It is Intelligent Transformation, a transformation driven by AI and underpinned by three key building blocks: data, computing power, and algorithms. It is at the heart of everything we do at Lenovo. And thanks to our focus on Intelligent Transformation, we are now entering a new phase of growth, solidifying our position as the undisputed leader in AP.
On the PCSD front, we continue delivering on our Intelligent Transformation vision with newly launched innovations in Smart IoT. This includes driving emerging technologies such as AR, VR, and smart living, delivering innovations to Asia such as Lenovo Mirage Solo with Daydream, Mirage Solo VR headsets, Star Wars: Jedi Challenges headset, and ThinkSmart Hub 500 and 700.
Our clear mission, strategy, and strong execution capability are creating robust, sustainable growth—as such, we demonstrated solid performance momentum; strong double-digit growth for the third consecutive quarter globally at US10.2 billion.
Vivek Sharma: We are winning in the data center space, being the #1 supercomputer company in the world and #1 in customer satisfaction for servers and server reliability. We are continuously delivering future-proof, end-to-end solutions that deliver performance and agility; you can see this in our comprehensive data center portfolio. Our recent NetApp partnership has further helped us expand our storage portfolio, giving us 93% reach in the market compared to 15% previously.
Rahul Agarwal: We are always committed to helping our partners stay relevant and future proof their business, innovating to create best-of-breed programmes and improving our channel infrastructure, as well as empowering them with the tools they need to grow their business with ease. More importantly, our emphasis on customer centricity translates to us putting the needs of our channel partners at the core of our business, constantly seeking feedback that we can act on to improve and deliver greater partner and customer satisfaction.
Q2) Could you share your observations around HCI adoption in India? What makes Lenovo uniquely positioned in this space?
Vivek Sharma:What positions Lenovo uniquely in this space is that we have an end-to-end data center portfolio that spans servers, storage, converged and hyper converged, networking, hyperscale, software, and services. We have decades of experience innovating in the data center space. As new trends like software-defined and HCI emerge, we are well positioned to help customers embrace them efficiently and promptly. Lenovo DCG is experimenting with augmented learning and machine learning capabilities with hyper converged solutions to expand the possibilities of technology and discovering new storage models. We also collaborate with Nutanix on R&D and products. In addition, the two companies have launched a new hyper converged, software-ready product offering specifically for enterprise customers called Lenovo ThinkAgile HX Certified Nodes.
In 2017, we set a goal to become the world’s largest provider of TOP500 computing systems by 2020. We achieved this goal earlier this year, two years ahead of target. 140 of the 500 most powerful supercomputers included in the TOP500 are Lenovo installations, which means one out of every four systems (28 percent) on the prestigious list is a Lenovo solution. We also power the research of 17 of the top 25 research universities and institutions across the globe with Lenovo’s comprehensive HPC and AI solutions. In India, we have worked with The Liquid Propulsion System Centre – research and development center functioning under the Indian Space Research Organization, using Lenovo’s Direct to Node warm water-cooling technology to develop next generation earth-to-orbit technologies.
Q3)How is Lenovo experimenting with AI and machine learning capabilities with hyper converged solutions to expand the possibilities of technology and discovering new storage models? Additionally, what makes Lenovo’s solution a differentiator in the AI space?
Vivek Sharma:Our IT and Research teams partnered with Global Supply Chain to develop AI, improving our demand forecasting accuracy. We offer these solutions to other manufacturing companies such as Baosteel, China’s largest steel manufacturer, improving the demand forecast accuracy by 30 percentage points to nearly 90%. Lenovo DCG has committed $1.2 billion investment in R&D, to help bring AI to life for its customers. The major innovation which aims to make implementation of AI simpler for customers is Lenovo Intelligent Computing Orchestration (LiCO). LiCO is a software solution designed to overcome recurring challenges for customers implementing multi-user environments using clusters for both HPC workflows and AI development. At our four AI Innovation Centers (in Morrisville, North Carolina, Stuttgart, Germany, Beijing, and Taipei), customers are working with Lenovo and partner solution architects, data scientists and system engineers to develop their first use case with Lenovo clusters and test-driving Lenovo intelligent Computing Orchestrator (LiCO).
Q4) How is Lenovo helping channels transform with the changing business landscape? Please elaborate on your recent channel initiatives.
Rahul Agarwal:With 95% of Lenovo’s AP PCSD shipment coming through our channel partners, we are committed to helping them stay relevant and future proof their business. We understand their pain points, and are continually improving our infrastructure and processes, launching initiatives such as AP Lenovo Partner Portal to promote ease of doing business. We empower channel partners to grow their business through an enhanced reward structure and new business opportunities.
Initiatives and activities for PCSD channel partners in India include:
- Quarterly rebate programmes: Channel classified across 3 Tiers – Platinum, Gold, and Silver category based on business volume with Lenovo, SOW, and trained sales forces. Each category has differentiated respective benefits
- Rewards & Incentives Rebate Structure: Higher rewards for focused products and categories, at the same time protecting channel partners interests in the case of business minor risk
- Lenovo Partner Portal: The portal creates a single window for all channel partner needs such as programmes, product collaterals, claims, performance, and rebate letters
- Online and offline training programmes: We enable through a dedicated team of trainers and an online training portal. Lenovo trains over 900 instore promoters on a quarterly basis and also conducts over 25 F2F classroom trainings every quarter
- Lenovo India has a Partner Advisory Council to take feedback from partners, understand partner challenges and grievances, and act on it
- New Digital for Retail programme: Lenovo India has rolled out an e2e initiative for driving digital adoption across its channels and improving digital profiles for its exclusive stores. Dedicated Digital Mastery training modules have been rolled out for the sales team and for store staff including digital adoption workshops in key cities
Across the region, we are also investing in a multimillion-dollar initiative over the next two years to revamp the entire end-to-end channel experience and stay ahead of digital transformation.
Vivek Sharma: Being a channel-first company, Lenovo is constantly innovating to create best-of-breed programmes and tools to empower our channel partners to do business with ease. Our channel transformation strategy is designed to make it easy for partners to grow with us through co-marketing, co-selling, and enablement. A few examples include:
- Digital Campaign Studio “The Power of Zero”:Lenovo DCG’s self-service digital marketing tool offers our channel partners access to solutions campaigns and co-marketing assets for their marketing efforts on our single platform Lenovo Partner Portal (LPP), in turn enhancing operational efficiency. Together, Lenovo and our partners can create and benefit from the best co-branded lead-generating campaigns, while helping partner speed up their go-to-market activities with customers.
- Lenovo Bid Portal (launching early 2019):This enhanced tool will contain useful pricing, quotations and deal registration information all on a single platform, minimising pricing turnaround time (e.g. generates quotes in less than 4 hours) while delivering channel partners a more streamlined and seamless experience.
- Lenovo Maestro (launching April 2019): Lenovo DCG is launching a mobile app platform for our partner audiences—to reward, inform and perform. Providing simple, transparent and measurable metrics across Sales, Presales, Marketing and more will enable channel partners to chart their growth better and reap greater rewards.
Q5) It has been clearly established over the past three to four years that the PC is far from dead. How do you demystify the growth of PC from India and global perspective?
Rahul Agarwal: The growth of PCs in the India market is significantly linked to its demand across multiple key sectors within the economy. One of which is the education sector where we are heavily investing in introducing new products under PCs. With the Government of India’s emphasis on education through technology, Lenovo has been partnering with different State governments to support various initiativesfor students, and have witnessed extremely encouraging growth.
Additionally, we have added close to 100 exclusive retail stores across the country this year on the back of how offline sales have driven growth for us in India. The rapid growth for PCs in recent years has also been due to customization,after understanding the specific requirements of customers and consumers, something that has been a key focus at Lenovo. The overall growth of the PC industry has seen a boost due to initiatives such as Digital India.
Being one of the only few players in the market actively investing in PC innovation—delivering new form factors, supporting new applications and experiences, and fostering collaborations—enabled us to drive growth. We see the results take shape; we are ranked #1 in global PC by both Gartner and IDC. We also achieved strong double-digit growth for high-growth segments including Legion gaming, ThinkStation workstations and thin and light Yoga, ThinkPad, and IdeaPad categories.
Q6) Lenovo and its extensive portfolio of PCs operate with varied GTM models encompassing Capex (traditional on-premise), financial services and PC-as-a-service (PCaaS). What’s been the response globally and in India?
Rahul Agarwal: We want to make it simpler for our customers to experience our products before purchasing. Our GTM strategy entails working with traditional channel partners, large format retailers, as well as key e-commerce players to ensure we are present at every customer touch point. The demands and desires of consumers are changing and diversifying at a fast pace. Consumers today are spoilt for choice. The challenge is to create something different and deliver a unique experience.
Overall, while the sales cycle in this model is longer, and it is still in its nascent stages, enterprises of all sizes have taken keen interest in the PCaaS model, or more popularly known as Device-as-a-Service (DaaS). Moving from a CAPEX to an OPEX model helps reduce financial pressure companies have been experiencing on their bottom lines when it comes to the heavy capital outlays required for PC purchases and repairs. DaaS not only offers PCs and devices to organizations for a monthly fixed fee, it also simplifies the entire process by services like configuration, deployment, asset management, and eventual end-of-life recycling of the fleet.
Ultimately, the success of a business is directly related to the effectiveness of its people to do their job. From a business perspective, we need to understand the organization’s strategic objectives, so we can align the service outcomes to them. Things like productivity, agility, attracting talent, and of course reducing risk are all usually high on the list at a corporate strategy level.