NetApp reworks channel strategy to get its mojo back

Over the last year, NetApp has reshaped its channel strategy extensively, and will soon cap it with a new Hard Deck policy. Unlike a similar named policy of an old competitor, NetApp thinks this one will be highly popular with partners.


Bill Lipsin, Vice President of Worldwide Channel Sales, NetApp

When Bill Lipsin came to NetApp last spring as Vice President of Worldwide Channel Sales, he found that he had a big job in front of him.

“Partners said that they loved working with NetApp, but that NetApp has lost their mojo,” Lipsin said. “When I came in, the channel pipeline and bookings had dropped, and I spent a year trying to understand what the issues were.”

Lipsin said he found there were multiple key areas that has to be addressed.

“Partners told me that they didn’t see as many NetApp people working with them as they had in the past,” he said. “They also said they thought that our investment in the channel seemed to have diminished. They indicated as well they were seeing inconsistent field behavior from us on sales and services.”

Several issues had also arisen regarding the evolution of NetApp’s product portfolio.

“Partners indicated that our broadening out from a single product line to a more diverse portfolio increased their costs and cut their profits,” Lipsin stated. “We also weren’t there yet in flash, and that was getting a lot of attention. There was confusion about our mid-sized business market strategy.”

Finally, Lipsin noted, charitably. that their cDOT migration – the transition from 7 Mode to clustered DATA ONTAP – had been “harder than expected.”

Lipsin said that he reacted by putting in place a number of multi-year initiatives to improve partner predictability and profitability.

“Predictability was actually more important than profitability,” Lipsin stated. “Partners need to know where to put their focus.”

Accordingly, last year NetApp introduced a three-year channel strategy that mirrored the technology road maps. Increased resources were a key part of the strategy.


Scott Strubel, NetApp’s Vice President, Americas Channel Sales

“For us to regain the experiential advantage of our partners, we decided we had to make a bigger monetary investment and a bigger people investment,” said Scott Strubel, NetApp’s Vice President, Americas Channel Sales.

“We increased our investments across the board, but especially in the cDOT migration from the 7 Mode install based,” Lipsin said. “We had to bring in specialists because we can’t expect the channel to make markets for us. We brought in more specialists, around cloud, and around Solidfire. Last week, we started a new cloud business unit.” Flash was the exception, as far as new people was concerned, as Lipsin said they consider it simply another type of storage, not a specialty area. Major investments were however, put into flash to enable partners and help demand generation.

“We also introduced rules of engagement with teeth,” Lipsin added. “If our sales people break rules of channel engagement, there are consequences. These range from a slap on the wrist, to not being paid at all on a deal, to being terminated.”

Strubel said the investments in migration to cDOT – now ONTAP 9 – have done much to remedy the issues there.

“The problems are much less now compared to some past drama, as we gave a lot of technical assistance to help with moving workloads” he said. “The last four quarters have seen a dramatic growth to ONTAP 9, as the percentage of the install base that has moved over has gone extremely well.”

Dealing with partner objections to the expansion of the product line was more problematic, although the issue was addressed indirectly by encouraging focus.

“We sold FAS filers for many years, and some people don’t like change,” Strubel said. “We made it clear that we were a public company that is expected to grow, and to do that, we will do some new things. On the other hand, we did focus more on technical enablement and indicated that we didn’t want all of our over 1000 partners in North America selling all parts of our portfolio. We looked for expertise and built programs which bring extra benefits for those who have additional accreditations.”

Steps were also taken to eliminate the confusion over the mid-market business strategy.

“There was confusion – more in the US than in Canada – because we had taken the midmarket away from the enterprise sales force and given it to a separate organization,” Strubel said. “We had created a new set of barriers when we did this. So on May 1, we moved all midmarket accounts back into the general population of the sales force. This has really paid off in more local demand generation from local events, because now customers and prospects of all sizes can show up.”

Lipsin also noted that NetApp also introduced Express Packs primarily for this market.

“Two months ago, we took flash and lower end spinning disk products, made it all very simple to configure, and put these configurations together with simple pricing,” he said. “These are now in pilot. The principal target is mid-sized business, but this doesn’t preclude them being sold to large accounts.”

Special emphasis has also been given to make sure partners are able to sell partner-branded services.

“We had already been friendly on partner-branded professional services and first level support, compared to some other vendors, but we thought we could do better there,” Strubel said. “So we made a conscious decision to swing more branded services from NetApp to partner-branded services, as well as an effort to get more partners to sign on for first level support.”

Lipsin said this is key to partner profitability. NetApp’s annual partner profitability study, which is now in its fifth year, found that the most profitable partners drag $7.21 in services for every dollar of NetApp sold.

“Learning what made up that profitable set of services helped set our services strategy so we reward accordingly for NetApp services, and made sure we didn’t needlessly compete with partners,” he said. “With storage prices dropping, and partners having to find not only more deals but also more profitable deals, allowing them to wrap branded services around them makes the difference between the partners who are most profitable and those who are lagging. Partners who have invested in us and who have built out their services capabilities are the most profitable. That’s why the services element is such a competitive element for us.”

NetApp is in the process of finalizing another key programmatic item – a Hard Deck defining NetApp’s top 1000 customers in North America, and below which everything will be partner-led.

The term Hard Deck won’t be remembered fondly by old HP partners. However, Strubel, who spent many years at HP, and is well aware of the problems of their old policy, said that NetApp’s Hard Deck doesn’t have that much in common with the HP one.

“My definition of a Hard Deck is quite different,” Strubel said. “While we never had a formal Hard Deck policy before, approximately 3000 named accounts were considered ones that the direct sales force would sell into. That number is now being reduced to about 1000, and we want the direct force to penetrate those more effectively. In addition, before over 70 per cent of the business in the 3000 named accounts went through partners anyway. Nothing will change for partners selling into those named accounts. The difference is that below those 1000 accounts, we are now declaring publicly that the market is entirely partner led.”

In that sub-1000 segment, NetApp will be providing additional resources and marketing campaign assistance to go after those deals. Teaming up with inside sales is part of this initiative, as is the new Express Pack bundles.

“We got great guidance from partners about these bundles, and tuned configurations and some pricing,” Strubel said. “You can’t get velocity in the mid-market if you have to put a lot of SE work into every quote that you are doing, and the Express Packs address this.”

Strubel said that he talked to over 75 partners before going ahead with this Hard Deck, and the response was overwhelmingly positive.

“There is absolute embracement of THIS VERSION of a hard deck from partners, as well as support from our own sales force,” he said. “I see nothing negative for the channel, unless you consider as a negative the fact that I’m going to ask more of the channel to invest in the midmarket with us.”

The Hard Deck program is still being put together.

“We are still working through the details, including the specific benefits,” Lipsin said. “We don’t have the whole model fully defined.”

The whole package of changes, should, Lipsin said, generate a more efficient and highly motivated channel.

“The Idea is to provide predictability and profitability so partners will want to work with you as opposed to others,” he said. “We want to be that preferred vendor.”