HP brings "cloud economics" to enterprise network procurement

News Caroline Donnelly Dec 13, 2012

Hardware giant launches pay-per-use procurement programme to make it easier for enterprises to carry out network upgrades

HP claims its new pay-per-use networking programme will allow enterprises to apply the principles of “cloud economics” to hardware procurement.

The hardware giant took the wraps off its HP FlexNetwork Utility Advantage Programme yesterday at an event in central London.

The scheme will see HP partner up with communications service providers to supply networking kit to customers on a pay-per-use basis.

This, the company claims, should put a stop to firms investing in network capacity that isn't used.

Speaking at the event, Mike Banic, vice president of global marketing at HP, explained: “In some places of the network, the infrastructure is overutilised...and in other places it’s underutilised. In other words, it doesn’t fluctuate with the needs of the business.

“These are an important set of opportunities for us to address.”

Traditionally, network investments have always been considered as a capital expense that’s been “carried on the balance sheet,” he said.

The programme aims to change that and free up funds that can be reinvested in “innovative” IT projects. It will also help firms meet the demands placed on networks by cloud, BYOD and unified communications.

“The programme we’re announcing takes advantage of the entire product portfolio that makes up the Flex Network architecture,” said Banic.

“[It is] designed to enable communications service providers to deliver pay-per-use managed LAN offerings that allow HP to address the needs of enterprise clients, in many case the global 1,000 clients we want to earn more business from.”

Although, during a media Q&A session at the event, Nick Watson, vice president of HP Networking for EMEA, said the pay-as-you-go elements of the programme would make it a good fit for SMBs too.

“When we started looking at this, people kept telling us this really is a small-to-medium business [-focused] model...and will only appeal to smaller customers,” explained Watson.

“If you think of a small business, it could be a branch of a [larger one], but the irony is that the interest we’ve had has been from hugely towards the biggest companies, which isn’t necessarily [the way we thought this would pan out] when we first started.”  

The programme will only be offered to customers through HP’s service providers, as the firm has no plans to offer it directly.

“For years, the issue has always been the communications service providers have never wanted to put this on their balance sheet in the first place. What they’ve wanted to do is find a partner who will partner with them,” he said.

He also stressed the pay-per use programme will not affect HP's business model, which has traditionally been based on hardware sales.

“This [will create] an annuity stream [of revenue]...and we are expecting this offering will prove so strong [the recurring revenue business model] will really start to work [for HP]," added Watson.