NetApp’s focus over the last two years has been to encourage partners to adapt their business models to add more services, cloud, and breadth within NetApp’s growing portfolio. Global Channel Chief Chris Lamborn provides an update.
When Chris Lamborn was promoted to NetApp’s Head of Worldwide Partner Go-to-Market and Programs in February 2018, NetApp’s partner community was at an inflection point, with the company’s shift in emphasis from a narrow portfolio to a broad one, and in its increased focus on the cloud. It was a different task than the one that faced Bill Lipsin, his predecessor, who had to rebuild partner relationships from the Dark Days of NetApp before the company’s turnaround under CEO George Kurian. But it had major challenges of its own.
“I had a different task than Bill,” Lamborn told ChannelBuzz. “When I took over, NetApp had started to drive its recovery, and part of that was the explosion of the portfolio. We had begun to transform to the cloud, a strategy that some people didn’t understand, as well as moving to a software-based outcome environment. Many partners two years ago weren’t that confident in driving those.”
Building that confidence and expertise became the NetApp channel team’s top priority.
“The key to improving that was simplification,” Lamborn stressed. “That meant simplifying the programs and processes that we had, so that partners could differentiate not just by their number of certifications, but by their business capabilities and their scale globally.”
Partners had to make this transition because their customers were compelling them to, not just with their new requirements and requests, but with the changing way in which they were making purchasing decisions compared to the past.
“It was essential to change, because this whole transition to the cloud and purchasing decisions required partners being able to show the value of NetApp, even if it was not focused specifically on traditional NetApp solutions,” he said. “They can drive the hybrid cloud opportunity with the NetApp Data Fabric.
“What matters is their ability to transform into that new world, where you don’t make money by reselling the public cloud, but by in what you wrap around it,” Lamborn added. “Many partners weren’t clear what they would do.”
Lamborn said that NetApp’s being able to clarify choices and behavior for partners required that the company rethink the whole process of how they incented partner behaviour, which had dated from the days when the business was focused on filers.
“We had programs which were aligned to products, and where the partner was paid for selling a product,” he noted. “That works great when you have two or three products. With a much broader portfolio, it confused people. So we now reward for bringing in net-new customers regardless of what they buy in the portfolio, and for selling NetApp deeper. The partner doesn’t have to worry about where the workload ends up, just about getting deeper with the customer. Even if the customer goes to the public cloud, if the partner sells them NetApp for that, we pay them the same rate as for selling traditional hardware. We are unique in doing that. It takes away the traditional fear of not making as much money with the cloud compared to on-prem.”
Lamborn said that program structure had also been rearchitected to make things simpler and easier.
“We took away an old rule that partners had to claim everything for rebates, which could mean filling out 14 forms to justify something,” he stated. “We made it predictable and more profitable. Predictability and profitability are what’s important.”
Lamborn referred to the results of NetApp’s most recent Partner Profitability Survey.
“Services are the most profitable part of a partner’s opportunity,” he said. “That’s really where we are seeing high growth.”
Implementation and integration make up more than 50 per cent of the revenue stack.
“Our most profitable partners now attach $7.41 of incremental revenue in hardware, software and services for every dollar they sell of NetApp,” Lamborn noted. That’s a rate which has gone up generally across the industry over the last several years, from the $5 or so most vendors would cite as an impressive attach rate.
Among NetApp’s most profitable partners, 73 per cent of their NetApp practice revenue comes from services, both NetApp branded services which partners can resell, and partner-branded services, which NetApp encourages. More than half this services revenue is partner-branded.
“Our NetPromoter score in the last 6 months has gone up by 10 points – and 20 points specifically in ease of doing business,” Lamborn added, noting that their score still isn’t great.
“We still have a lot of work to do there, and we are nowhere near where we need to be,” he said.
NetApp also doubled down on the program which had been in place previously, the Fueled by NetApp program. That program is for service providers, and provides them with consultancy services to help them with their customers on the path to digital transformation.
“Fueled by NetApp delivers consultancy services to service provider partners,” Lamborn said. “However, until the last few minutes when we meet with them, we don’t talk about NetApp at all. Instead, it’s about how to remodel themselves, to structure their business in the best way to present these new services, and how NetApp can help them accelerate.”
Lamborn described how NetApp uses technical experts to help partners build out those consultancy services.
“Most partners were used to doing business around boxes in a room,” he said. “They were not used to directing customers to a choice of outcomes. One of our North American partners just closed a big deal where the customer, a global transportation company, knew they were on a journey. That partner had spent a lot of time with our team going through the cloud consultancy workshop, learning about getting out of selling boxes to building services, and the solutions to go there, and how to leverage the NetApp data fabric, which future-proofs the customer’s evolving cloud strategy.”
Lamborn also referred to NetApp’s June rollout of a consumption-based pricing model for both public and private clouds, together with enabling new cloud data services like Kubernetes on their hyper-converged infrastructure [HCI].
“The cloud consumption model will continue to expand,” he said. “It’s an important thing for those partners who aren’t building out their own consumptive services. It’s an important part of our growth strategy.”
Lamborn stressed they will encourage partners to build out their own services here, along with services generally.
“We offer strong financial incents to get partners to build out their own,” he said. “Anything we build out ourselves, we open blueprints to services, and the partner program here will continue to be simplified.”
In addition, Lamborn emphasized that the focus on products would continue to place greater stress on their business capabilities and competencies.
“In June we announced the entry level AFF C190, which provides a new price point for our all-flash, and it has been doing very well,” he said. “Its cloud connectivity and new price point will enable partners to go into new customer segments.
“The focus will continue to be to enhance cloud experience in a multi-cloud world, and we will continue to drive that forward,” Lamborn concluded.