Chris Morgan assessed his success in executing on his priorities in this first year on the job, and considers the channel impact of Nutanix’s emphasis in 2016 of the big picture beyond simply saving money through hyper-converged solutions.
A year ago, Nutanix appointed Chris Morgan as its Vice President, Americas Channel and Distribution, where he headed up the company’s channel strategy and execution in North America. Morgan came to Nutanix from NetApp, where he spent seven years as senior director of worldwide service provider strategy and programs He talked with ChannelBuzz about his first year on the job, and the degree to which the company satisfied the objectives he set when he assumed the position.
A major priority has been the improvement of Nutanix’s channel operations capacity. Morgan said that has been an issue, because while Nutanix’s acceptance and growth in the market means that the company is no longer a start-up from that perspective, they are still a young company, and still in the process of developing their operations tools. That’s especially the case because Nutanix’s business has grown so fast that its channel infrastructure was hard-pressed to keep pace.
“I call us a teenager,” he said. “We are capable, and smart and creative, but we can’t drive, and we can’t vote. “From a solutions perspective, we are grown up, but from an operations perspective, we still had some growing up to do.”
Morgan said a key piece of the puzzle was hiring Paul Mayes away from NetApp as Senior Director Americas, US Federal & EMEA Distribution.
“He owns channel operations for me,” Morgan said. “We now have great insight into the joint work we do with our partners, how we enable partners and how we invest in them. That has gone from a beginning stage to fully operational. We will have full quote to cash capability with our distributors globally by the end of next quarter. EDI will follow a quarter or two thereafter. So the whole transactional process will have gone completely electronic from start to finish in relatively short order.”
Morgan stressed the remarkable speed of Nutanix’s progress here.
“I’m very happy with our progress in the last nine months,” he said. “At NetApp, it took us years to get EDI in place. Here, we will have gone start to finish in just under a year, from having no distribution quoting capability to full EDI.”
Morgan emphasized that the incremental nature of typical Nutanix transactions makes this capability more important for them than for most datacentre vendors.
“We have a much higher transaction approach because of how customers buy from us,” he said. “It’s rare when customers buy one big order from us. They buy one piece to start out. Then they expand, and buy another order, and then they buy another order. It means we have to have really good processes in place.”
When he came into the job, Morgan also made it a priority to scale better with partners. That’s an inherently tricky process, because while Nutanix – like most vendors – wants to develop partner loyalty and skills to the point where the partner makes a decision to lead with them in most cases, market conditions also mitigate against that.
“We aren’t trying to be Cecil B. DeMille, with a cast of 35,000 in our channel,” he said. “Our objective is to work with partners who lead with Nutanix in some portions of their business. We know every partner has a legacy business to some degree, and it would be arrogant for us to say they can’t do that if they want to partner with us. There is generally a compelling moment which makes partners decide that they want to be a strong strategic partner with Nutanix. Sometimes a legacy vendor has pulled business from them. Sometimes private equity has come into their company and they need to grow faster. But there is generally some moment when a partner decides to increase their commitment.”
Nutanix has always sold through a 100 per cent channel model. However, the complexity of their solution has also meant that Nutanix’s own sales people and engineers have had to carry the ball with most customers, with the partner’s main role sometimes being limited to making the introduction, Morgan would like to see that change, but is realistic.
“Perhaps the top 20 per cent of our partners are at a point where, while they are still co-selling with us, they are at the point where they can do a pitch qualification, and execute a proof-of-concept,” he said. We are seeing a kind of division of labor between partners who are good at hunting new logos and those who are good at harvesting existing customers. I don’t know if it’s essential at this stage to have partners who are truly independent. Joint selling is still important. Our 4.6 release had hundreds of new things in it, and it is very hard for partners to absorb all that.”
Morgan noted that beyond those top partners, commitment and expertise from the channel is even less advanced.
“Beyond our top 20 partners, we have a very long tail, of partners who do maybe one to two transactions a year with us,” he said. “That’s all customer driven, where customers go to their VAR and say they want some Nutanix.”
Morgan admits these market forces aren’t likely to change.
“You’d love to be able to reinvent the 20-80 rule, but you have to deal with the gravitational pull of reality. Partners have other relationships. In addition, while customers ask partners ‘how do I go to the future,’ partners ask the same question. For those who haven’t had that moment where they commit to us, they try to do play all sides for a while.”
A year ago, Morgan also made it a priority for Nutanix needs to create new innovative go-to-market models, where he said they are making progress.
“Technology can be packaged in many different ways,” he said. “We can be bought straight up, with Lenovo or Dell, or as a service provider offering. That requires driving a proper distribution strategy to unlock that core value in more value-added ways. We have also added new leader for our service provider business.”
Morgan said this element of the go-to-market strategy has implications for his own role.
“I spend 30 per cent of my time with product management and product marketing, to get the appropriate channel behind the product,” he said. “That’s unusual for a channel leader.”
Morgan also noted the channel implications of Nutanix’s emphasis on its ‘big picture’ strategy in 2016. They have changed their positioning from selling a hyper-converged product that saves customers lots of money, to advancing a much larger vision, incorporating their fabric and hypervisor introduced over the past year, which will ultimately lead to an Amazon-like private cloud. Often, the channel prefers the more short term, meat and potatoes value proposition. Morgan said that’s not the case here though.
“They know they need to be able to explain to their customers what the new architecture will do for the next 20 years, and they know it better be as compelling as hell,” he said. “They know it has to go beyond putting disks and servers in the same box and putting some old code on top of it. This larger vision is worth the change in business and the changed approach asked of the customer.”
Morgan stressed that Nutanix here is doing what IT companies have promised for many years, but seldom delivered.
“I think that customers have not received the value that the IT marketing machine promised,” he said. “Orchestration never really worked. It was always a science project. Private clouds didn’t dovetail with ROI. Our broader vision makes it clear that things will change there, that ROI will happen. This year has been about telling customers and partners that, and that we are actually going to get there, with an enterprise cloud that actually works, and isn’t just a collection of disparate pieces.”
While customers need to see this, Morgan indicated that partners do as well.
“Partners need that 10-year vision, to know where this is all going,” he said. “When you have a payload like Nutanix, they have a lot of value to sell, especially when they have a lot of services above the hypervisor. We’ve seen momentum from partners who really went to be all in with us grow because of that story.”