CLOUD PARTNERS — Last week’s Cloud Partners was all about the shift from selling products to using technology to solve customers’ problems.
In a keynote discussion, Efrain Rovira, VP of HP cloud channel worldwide; Darrin Swan, director, worldwide sales and business development for Dell Software; and Iain Urquhart, Rackspace’s VP of technical and partner sales, sat down with Channel Partners contributor Howard Cohen to discuss how their companies are working to help channel partners become strategic allies for both CIOs and line-of-business leaders.
All the panelists acknowledged that partners’ sales teams are accustomed to chasing big one-shot deals, and that they’re afraid of cannibalizing product purchases with shifts to cloud and IT as a service — with reason. Rovira and Swan say they see this within HP and Dell, even as both companies have made it crystal clear that this transition is happening, and sales teams need to get on board. What’s the trick to incentivizing?
“Compensation will always drive behavior,” said Rovira, so HP is working to transform its partner program. “At HP, we’ve made that shift” to reward selling cloud solutions, he said. Of course, HP realizes it still has significant business in selling gear, and Rovira says that’s a benefit as his company equips partners to solve customer problems. “It’s not binary,” he says.
Rackspace’s Urquhart sees technical talent as an area of differentiation among successful partners — those who really understand applications have an edge. Still, even though Rackspace has been in the MRR (monthly recurring revenue) business for years, cloud sales models are complicated.
“Rackspace hasn’t fully figured out how to compensate based on spike models that we see with public cloud,” he said. “We’re having to change and evolve as well.” For partners, his advice is simple: “You get margin where you add value.” For example, in areas like cloud storage or file sync services, where prices are being driven down by a flood of new entrants, customers need help deciding whose stuff to buy.
“For MSPs, what is the ‘S’ — what is your value add?” he said. Once you answer that, the compensation plan tends to work itself out. Rackspace, for example, pays a percent of the first month as commission. (That theme of adding value with managed services was continued by CompTIA’s Carolyn April.)
For software, Swan cited Microsoft and Office 365 as a model of how IT …
… will be consumed in the future.
“It’s our job to package offerings,” he added. “We’re basically an arms dealer.” He says that across the board, tech vendors are working hard to reposition all their offerings as services.
“We’re in a world of utility,” said Swan, and companies want to pay for value as …
it’s consumed rather than writing a big check upfront. He points out that this model is just as good for partners. “Piling on additional revenue raises the value of your business,” he says.
It’s also a way to stand out from the crowd of cloud sellers pursuing your clients.
“I can’t imagine being a customer right now. They’re being barraged,” he said. “It’s obnoxious. We’ve lost sight of the practical reality of where IT is going.”
That future, says Swan: “Stop trying to hawk some magic elixir. Sell business value.”
Rovira agreed and says he encourages HP’s partners to make it a business outcome discussion. Stop talking speeds and price features.
“The world changed overnight with the Internet,” Swan said. “That’s happening again. What’s possible?”
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