Dell, HP, Rackspace Execs: Partners Still Have Cloud Sales Fears

Lorna GareyCLOUD 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?

left to right: Channel Partners contributor Howard Cohen, Rackspace's Iain Urquhart, Dell's Darrin Swan and HP's Efrain Rovira.“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.

Other advice?

  • Lean in to the customer, says Swan, by taking a consultative approach. Imagine if a retail or medical customer didn’t have to worry about CPUs or storage anymore. That’s the promise of IT as a utility. “You’re not a trusted adviser if you’re just talking purchasing,” he said. “Know what customer competitors are doing and [offer a] range of options to help them outpace.”
  • Urquhart says know the end-ustomer experience or outcome that your client wants to accomplish. “The other thing is, the cloud is complex,” he said. “It does not make things easier.” That’s where partners come in, because simplification creates margin. Invest in both sales and tech staff because, make no mistake, there are still decisions being made between private and public cloud. “SI is not dead,” he said. “Think of app buyers and platform decision makers. Both are channel ops.”
  • Rovira says partners should spend more time at the department level. Does the customer’s data center team feel it’s losing control? Work with them to find a new central role, and help them become an internal service provider. Ask about the biggest source of helpdesk tickets, for example, then teach them how to fix the problem at its source, and thus earn cred with the business.

“The world changed overnight with the Internet,” Swan said. “That’s happening again. What’s possible?”

Follow editor in chief @LornaGarey on Twitter.

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