‘Lead With the Cloud’ seminal message to NetApp partners going forward

NetApp’s cloud business is still fairly small, but their offerings will roll out in force this year, and NetApp wants customers to lead with them – a strategic decision that would have seemed bizarre not long ago, but is now central to the new NetApp.

Anthony Lye, SVP and GM of the NetApp Cloud Data Services Business Unit

SCOTTSDALE – NetApp partners need to lead with the cloud, and if they do that, the synergies between NetApp’s cloud business and their hybrid and on-prem solutions will drag significant sales along. That was the core sales strategy message relayed by NetApp to channel partners at the NetApp Channel Connect Conference [C3] here this week.

“I had my doubts a year ago, like some of you, and now I get to go first – Cloud First,” joked Anthony Lye, SVP and GM of the NetApp Cloud Data Services Business Unit. Lye was the first of the NetApp sales leaders to detail specifics of the component strategies within NetApp’s FY19 go-to-market strategy at the C3 event, following CEO George Kurian’s high-level delineation of strategy and Global Sales Leader Henri Richard’s detailing of how the go-to-market strategy as a whole will work.

“It’s just a wonderful time to lead into this cloud business,” Lye told the partners. “You are a critical part of my business, and we hope it’s very lucrative for you, as it is for us. We can now sell to companies that have no intention of ever purchasing on-prem infrastructure. Clouds have become the platform for innovation and our services are in those clouds. We have the deepest relationships with the cloud infrastructure companies of any company in our space. What Microsoft has done with us, they have never done with any business. What Google Cloud does is fundamentally based on us”

“This should give you the confidence to lead with cloud!” Lye proclaimed to the partners. “If you don’t, you will be marginalized into the more traditional legacy opportunities.”

The entire idea of NetApp centring its business strategy around cloud would have seemed like a comedy routine before Kurian took the reins as CEO.

“When I joined NetApp a year and a half ago, they hadn’t formally created a cloud business unit, but they hired me to cement this second business unit – with the rest of the company being the other business unit,” Lye said. “We pursued this because George saw that the market itself was continuing to evolve. George saw that IT was devolving, and buyers were evolving. Before, we had only been aligned to one type of customer – the CIO. But as companies broadened their strategy beyond making sure on-prem was cost effective, they put freed-up money into digital transformation, and mainly in public clouds. Anything that they couldn’t do in on prem or public cloud, they would build a private cloud for. It was to talk to that different level of buyer in these new areas that we created the cloud business unit.”

That confidence that NetApp could succeed through this focus on the cloud, and its leading to business unit status, was critical, Lye emphasized.

“If NetApp had buried it in the regular business, it would never have seen the light of day,” he said. “We made the decision then to be investing based on where we thought companies would be, rather than where they were. My business is a lot smaller than Joel Reich’s, but like him, I report directly to George. I focus on working my business closely with Joel’s because we are better together.”

The evolution of the cloud strategy today, as NetApp heads into its new fiscal year, is that it has moved from a hunch to a linchpin.

“The difference in our cloud strategy now is that it has really gone from an opportunistic level to a more systematic one,” Lye said. “I think that when we started, even George had a ‘let’s do this and see what happens’ attitude. Now we have a full P&L responsibility behind it. We have already made an acquisition [Greenqloud] and now I think we will make multiple acquisitions in the space.”

Lye told partners not to think of cloud as a product or SKU, or even as being about cost savings or even expenses.

“What it is is a process for making decisions, to limit traditional thinking, and an acknowledgement of digital transformation,” he said. “NetApp’s cloud strategy enables customers to deliver outcomes for all workloads on cloud, multicloud and hybrid environments. We have built a wonderful software stack, with data monitoring and optimization, orchestration, data services and management and storage.”

They have also forged key strategic relationships with the big cloud hyperscalers, something that Lye said is a massive differentiation for NetApp.

“All the biggest clouds chose Netapp – Google, Azure and AWS,” he stressed. “Unlike any other vendor in our space, we can now lead with cloud. We can tell customers with a cloud-first mandate a story that these other guys can’t, and make sales to customers who have never bought from us before. Google got a large integrator to use us in their cloud instead of EMC because they know it will work. We are excited to have the hyperscalers promoting, selling and supporting our products.”

Lye described these hyperscaler relationships as being on a continuum.

“At one end, with Amazon we are a strategic partner with joint development, but the products are sold as NetApp branded ones in the Amazon market place,” he said. “At the other end of the spectrum is Azure. We are a strategic partner, but our services are sold by Microsoft and licensed as OEMs like they were their branded products. Google is in the middle, like a reseller. When we negotiated these deals, they all told us there was no one else they were looking at the same way, because we have a software-based system that can run these protocols and services at scale.”

Lye went over the details of NetApp’s cloud portfolio with the partners. While these are just beginning to make it to market, they will roll out in force during this fiscal year.

“Our cloud strategy involves winning in the cloud with Cloud Volumes first,” he said. “We announced Cloud Volumes at NetApp Insight last fall. It is two offerings: ONTAP for a storage admin who knows on-prem and wants to replicate it in the cloud, and Cloud Volume Services, with NetApp as the admin. Cloud Volumes is now live in AWS in US West and East. Azure will be live July 15, Google on July 27. By the end of this fiscal year, we will have our first entry into Gov Cloud. We will be rolling out aggressively in Europe by the end of the year, and Asia Pacific. We will be in China by the end of this fiscal year.”

Cloud Insights was announced in a preview in May, with GA scheduled to be announced at NetApp Insight in the fall.

“The Cloud Insight service, which is available today under preview, is a configured cloud service, which can consume all cloud data services,” Lye said. “It’s performance analytics. We’ve been doing OCI [OnCommand Insight] on prem for years. It’s enterprise software. It’s a sister product, although they are not the same. OCI is for very complex infrastructures. In the cloud, we don’t want people building all those customizations, so the focus is on simpler configurations, which are more for a department or division of a big company.”

The base version of Cloud Insights is free, but there is a single click upgrade to the paid subscription versions.

Jean English, NetApp SVP and CMO, stressed that the primary focus on cloud is a key part of the new NetApp.

“This is about moving from being timid to being bold and strategic, in our messaging and story around data and the cloud,” she said. “Lead with the cloud, and you will sell the portfolio 74 times out of 100. You will still sell flash and HCI.”

Lye also noted that NetApp will be strongly incenting partners to sell cloud, with a 10 per cent Cloud First rebate for up to a million dollars of Annual Recurring Revenue [ARR] on everything a partner sells, and 15 per cent on ARR above a million dollars.

The partner is required to reach certain qualifications to be eligible. This includes achieving NetApp’s Public Cloud Integrator Business Capability, as well as Premier level status with AWS or Google, and CSP status with Microsoft. Partners also must drive $500,000 in ARR for CDS, and have a public cloud service practice.”

“We will pay you every single time we get paid,” Lye said. “It will make you more than double your top-line revenues in the first year, and we keep paying you after the first year as long as the customer is happy.”