Making Veeam VCSP/reseller partnerships work

A VeeamON panel featured a frank discussion with VCSPs and their reseller partners on how resellers can partner effectively to get into the cloud, and overcoming the inevitable hurdles on the way.

L to R: Paul Coffey; William Bell; Sean Arnold; Brian Roets

NEW ORLEANS – Partnering deals between traditional Veeam resellers and Veeam Cloud and Service Providers [VCSPs] have become more common to meet customer demands of a changing market. These relations do, however, have innate difficulties and issues that have to be addressed and resolved. In a panel discussion session on Partner Day at VeeamOn on Tuesday, two VCSPs and two resellers talked about the advantages and potential pitfalls of these relationships, and the steps they have taken to make them work.

“VCSPs trying to go to market on their own today are struggling,” said Sean Arnold, Channel Sales Manager at OffsiteDataSync, a Rochester N.Y-based Veeam Platinum Partner that provides cloud services, including Veeam Cloud Connect. “We are infrastructure companies, technical people. We aren’t by breed great sales and marketing companies. We understand that resellers do understand how to sell Veeam. Managed services are not a core competency for us. Finding a partner in the channel who could build those services was important for us.”

New York state-based VAR SMP works with OffsiteDataSync, and was specifically looking for a cloud partner.

“Our core competency is integration, and we reached out and found OffsiteDataSync,” said Brian Roets, Infrastructure and End User Computing Practice Director at SMP.

Paul Coffey, the Practice Director, Enterprise Solutions Group at SHI – and not the hockey player – said that their relationship with VCSP partner PhoenixNAP evolved over time.

“We started with PhoenixNap for basic colo services, and as they developed more programs we decided to partner with them,” Coffey said. “About four years ago, we began to see the shift in the market [to cloud]. Ironically, our capacity for Veeam Professional Services had been limited because it’s an easy install. When it becomes complex is when you architect it for scale.”

Coffey, who was with SHI in its initial foray into the cloud, when they tried to be a cloud provider themselves and wound up in an unequal contest against the likes of AWS before beating a hasty retreat from the market, found through experience that partnering with a service provider was a much more sensible way to start a cloud practice. He acknowledged, however, that their differences in business models was a main obstacle to the success of the relationship that had to be overcome.

“Their transaction model was different from what we were used to,” he said. “A lot of our account reps still are allergic to the MRR model, because of the way it pays out, and the fear that it will ruin key relationships. Having initial wins helped here though.”

“We found sales and transaction support is hard for VARs, and especially for the larger VARs,” Arnold said. “They tend not to understand a recurring revenue model. Their accounting systems and sales compensation aren’t set up for that. They need to be flexible enough to adapt to our partner program, with the incentive being that aligning with the VCSP provides them with NOC support and sales support to make customers feel good about the service.”

William Bell, VP of Products at PhoenixNap, also a Veeam Platinum Partner, addressed a common issue in these relationships – that the partners do compete in some areas.

“We have services that absolutely collide with what they sell,” he said. “We have to make sure we don’t step on each other’s toes. The engagement processes are clearly defined. Understanding all that helps us go into deals together, and the best partners and best VCSPs that do that well are having tremendous success in the market.”

Bell acknowledged that PhoenixNap had to make significant adjustments in how it works with partners.

“Making sure our resellers weren’t liable if a customer defaults was a big thing for us,” he said. “At the beginning, when we got into this, if a customer defaulted our reaction was to say well, of course, the partner was liable. We learned to find an amenable solution, that is flexible enough to meet the needs of specific cases.

“We probably step on each other’s toes more than a larger company would,” Bell said. “The issue is how you handle it when that happens. If it’s an everyday partner, we will make it right for them – every single day.”

Bell emphasized that PhoenixNap encourages the majority of their partners to start with a referral model.

“With 95 per cent of them, the best thing they do is sell,” he said. “Trying to compete in an area that you aren’t that strong in can break your business. I’ve seen it happen. The shallow end of the pool is sales. Get in that way and then find ways to get more margin later.”

“We ask resellers if something is a core competency for them,” Arnold said. “Can they be best in class? If something isn’t a core competency, you are just muddying the waters for yourself.”

Developing mutual trust is absolutely essential to make the relationship work.

“Resellers had to learn to trust us for first level support, and dealing with customers’ data,” Arnold said. “For some resellers that’s really hard. Moving to the cloud requires some level of letting go. It’s a paradigm shift, and there are resellers who don’t trust that model. We have tried to build a framework where they have some control, using our white labelling tools, so they can be more self-reliant, and making sure that if they have to call someone, they know who to speak with and can control things.”

“It is hard to learn to trust someone,” SMP’s Roets said. “We had starts and stops, and persevered through it, to the point where it’s more of a ‘we’ conversation now.”

Bell also stressed that the reseller has to develop a genuine commitment to selling cloud.

“They have to have an answer when the customer wants cloud – not just ‘aw crap, I’m out,’ he said. “We are working with all our resellers to have another answer if the customer doesn’t want hardware, and improve their ability to position a service that is complementary to the on-prem license.”

Bell and Arnold also discussed the fact that both VCSP business models and the partners they attract can be very different, and how this is best handled.

“Our average partner is much more transactional then Sean’s,” Bell said. “We offer white label for MSPs, and impress on them that the expectation changes heavily the moment the reseller asks to white label – that THEY own the customer and are responsible for first call. White labelling is a very small percentage of our business. It’s generally a reseller selling a PhoenixNap service.”

“White labelling is built into our program and tied to margins on MSRP,” Arnold said. “Our partners do prefer the co-branded mode, however. It seems to be easier for them to adopt enterprise-wide as opposed to white-labelling.”

“We have a managed services arm where we are the face of the client, so white labelling is pretty important to our organization,” Roets said. “We offer a wide variety of services, and to many verticals. It’s everything but federal government. We found it’s easy to take your first cloud client and build your spec to that – but don’t. You don’t want to get locked into one model. Don’t get tunnel vision on one deal.”

SHI’s Coffey’s closing advice to other resellers was to get into cloud, but do so wisely.

“Cloud is a journey,” he said. “You need to start somewhere – in bite sized chunks. Find something you are able to do today – and find strong partners to back you up.”