NetApp rebounds strongly in Canada as smaller partners come back

The growing flash businesses, strong partner services opportunities, and better leveraging of Arrow and Avnet have helped drive NetApp’s Canadian business in 2016.


Pete McNair, Canadian Alliances and Channel Sales Director, NetApp

LAS VEGAS – It has been a good year sales-wise for NetApp, and that has been the case in Canada as well. Less than a year ago, however the company was less than satisfied with its Canadian business. While they had a fairly high number of registered partners in Canada – between 150 and 170 – many were no longer active., and less than a dozen were deemed highly strategic to the business.

Pete McNair, a long time competitor of NetApp with IBM and then Avnet in Canada, was brought in ten months ago to run the Canadian channel. He said that even at this low point, there were signs of hope to build on.

“To get the channel to rebound, you do need some underlying loyalty, and when I took over and talked to partners, I didn’t find any who just said they don’t care any more,” McNair told ChannelBuzz. “They said that NetApp had been a good partner since they turned public and that they were dying for us to return to the marketplace. That kind of loyalty wasn’t the case with the other vendors. When I heard that, I knew the fix wasn’t that big.”

McNair said three things in Canada had fueled NetApp’s rebound – their growing strength in flash, the services opportunity, and more extensive and effective use of distribution.

“Flash has been absolutely instrumental,” he said. At year ago, NetApp’s flash business was growing, but the perception of them being a leader in the space wasn’t there yet. During the last year, IDC has NetApp all-flash shipments going from fourth or fifth in the market to second, behind only EMC, and ahead of all the startups.

“Ten months ago, we didn’t have the momentum in the market that we had now,” McNair said. “Now we are on fire.”

NetApp’s encouragement of partner-branded services was also significant.

“Our ability to push services to the channel has made a difference,” McNair said. “Other vendors have large services organizations. They don’t mind leading with the channel on the product side, but don’t like leading with partners on services. We will lead with partners in services if they have the skills and ability.”

The third factor, NetApp’s increased investment in distribution in Canada, is one area where McNair thinks he personally has been able to make a difference.

“The fact I personally understand the value that comes from value-based distribution, having come from Avnet, encouraged Arrow and Avnet to do some things they wanted to do,” he said.

While both Arrow and Avnet were NetApp partners before, McNair acknowledged they hadn’t been leveraged to anywhere near the extent of their capabilities.

“Distribution was definitely an underutilized route to market for us, so we worked to extend their reach and scale on our behalf,” he said. “We made a big investment in contra dollars with Avnet and Arrow and a significant investment with lead nurturing. Both Arrow and Avnet have developed lead nurturing campaigns. These make leads easier to close for the channel, so they invest more time and resources on them.”

With Tech Data recently announcing their intent to purchase Avnet’s distribution business, change is afoot there once that deal closes, but McNair thinks it will be a good thing.

“It will have lots of ramifications, but I think it will have a positive impact he said – not just for us, but for the other vendors in this space in Canada. There’s a good relationship between Rick Reid [Tech Data] and Brian Aebig [Avnet] and I think there will be some new dynamism as a result of this.”

McNair noted that NetApp’s rebound in Canada hasn’t come from more business being done by their most productive partners, but by more business being done by ones who had fallen off during NetApp’s hard times.

“I received many calls from partners who had sold NetApp before, but who went to the shiny objects with the startups as times got tough,” he said. “Our flash program, the services program that puts margin in their hands, the cloud play with providers like Azure and IBM SoftLayer, all helped to bring them back. That’s what has brought our sales up, that some of the smaller partners have come back. That ecosystem has come back. Today, our top 10 per cent of partners drive 62 per cent of our revenue, which is not a high number.”

McNair also noted that the total amount of business in Canada that has gone through the channel has increased.

“Our channel participation rate when I started was 78 per cent, and it’s now 84 per cent,” he said. “The east region [which includes Quebec] and Alberta are 100 per cent channel. 95 per cent of all our transactions are indirect. A few large deals are direct, which skews the percentage.”

NetApp has indicated that a channel-friendly Hard Deck is coming to North America, but that the named companies in Canada have not yet been determined.

“in Canada, we haven’t had that discussion yet,” McNair said. “The Hard Deck doesn’t preclude a partner from selling to those named accounts. It just says that these are the accounts where we want to go direct, but it doesn’t preclude the partner from going in and delivering value around something.”