VMware cuts partners in on ELAs, services

VMware says the company and its partners have to build closer customer relationships, outlines upcoming program changes to help partners make it happen.

VMware channel chief Dave O'Callaghan (left) and president and COO Carl Eschenbach (right).

VMware channel chief Dave O’Callaghan (left) and president and COO Carl Eschenbach (right).

SAN FRANCISCO – Vmware used its Partner Day at VMworld here this week to introduce some changes, both implemented and soon-to-be, that promise to cut partners in on parts of the business where they had been at a disadvantage before.

First and most prominently, Carl Eschenbach, president and COO of VMware, announced a backend rebate on partners’ registered sales that end up going through the company’s Enterprise License Agreement (ELA). Currently about 40 per cent of VMware’s business in any given quarter, ELAs combine VMware various VMware software and services with maintenance under a single agreement.

“As we move from being a single product company to a company with portfolios, partners want access to a lot more of our solutions, and they want it on a regular basis,” Eschenbach said. “Historically, we’ve almost put you in a box [on enterprise agreements] but we’ve come to recognize and enjoy that you can provide value to us and our mutual customers not just in SMB and the commercial segment, but in the enterprise itself.”

The executive said that going forward, partners will “keep the same benefits and the same kind of partner program” for business conducted on a transactional basis and that done via ELA, and announced a three per cent backend rebate on registered business conducted via ELA. Global channel chief Dave O’Callaghan added that the backend rebate was incremental to all partner program-based discounts and rebates for tiers, specialization, and deal registration. O’Callaghan also announced that the window for deal registration has been extended to 120 days, perhaps in deference to the more detailed sales process needed to complete an ELA versus the more transactional point product sales motion.

Terry Buchanan, vice president of technology at Zycom Technology, an Ontario-based VMware partner, said partners seeing “a lot of uptake” on ELAs, particularly around the company’s end user computing efforts. But the all-inclusive (and financed over time) nature of ELAs have proved a way for Zycom to upsell customers additional VMware solutions – for example those who couldn’t afford to take the whole chunk of vCloud or vSphere up front, but can afford additional vCloud or vSphere software when inserted into the ELA structure.

“We’re definitely seeing end user computing ELAs pulling vCloud sales, and that’s something we didn’t expect,” Buchanan said.

Still, he said ELAs have a lot of “cost pressures” on them for partners, and welcomed the backend discount as a way to boost profitability. Despite some challenges, he suggested that selling via ELA has some significant benefits for partners.

“It really boosts your stickiness, lets you bundle services and support into the sale longer-term,” Buchanan said. “It lets you figure out what your customer really needs, and then start staging how they actually buy.”

The company also announced the next step in its Value Channel program evolution, with O’Callaghan announcing that by next year’s Partner Exchange (typically in February), it will add partners’ professional services into the mix. While details were scarce, O’Callaghan did admit that “to date, we have been somewhat competitive to you” in professional services, and that the program would “construct a value channel around services in a way that no other vendor does.”

While this services announcement will be at the global partner program level, closer to home, VMware Canada is working on its own system to better recognize and include partner services in the mix, said Donna Wittmann, VMware Canada channel chief, and Shawn Rosemarin, executive director of architecture and professional services at VMware Canada.

Rosemarin said that in Canada, the company has “traditionally had partners delivering a lot of our services in concert with us,” and that now the company is putting “more structure” around how it does that.

“Our market has asked us to bring together the services channel and the reseller channel, and we’re adding a lot of formality to it,” added Wittmann.

Finally, O’Callaghan announced the launch of what the company calls Practice Builder, a redesign of its partner site and tools aimed to streamline partners through the process of partnering with VMware, “from enrolling with the company all the way through building a services partnership with us,” including attaining certifications, finding access to collateral, and spending MDF. O’Callaghan said Practice Builder is in response to his call to partners to get certified with the company and “build the perfect practice around VMware,” issued to the company’s partner base at Partner Exchange earlier this year.

“You went out and got your certifications, but the challenge was that we were very fragmented, with pieces of practice-building happening throughout the company and throughout our Web site,” O’Callghan said.

With it all under one roof on the VMware site, the company hopes to make it easier for partners to more closely align with the vendor, one of its big requests of its partner community.