Q&A: Channel Executives Take On the 80/20 Rule

IVENTOSCH: I don't think it's realistic to go from 80/20 to 50/50 or 60/40. I would love to get to 70/30 or 65/35. In some sense, we create the problem ourselves, because we run lead programs and give the best leads to our best partners because we know they'll take care of those leads and drive the opportunities of closure. And so the whole concept of feeding the strong perpetuates the 80/20 rule. One of the things that we're trying to do is identify for our partners that we want to move up into that space where they become go-to players.

The other thing is that we look toward distribution partners to play a big role in helping us change that 80/20 equation. Together, we can identify some partners that we believe have very high potential. And we start treating them almost like they're big partners and giving them some of the tools, maybe even some of the incentive programs, that help jump-start them so they have an opportunity to become big partners.

ROBINSON: It's natural that smaller solution providers are dependent on distribution, because not everybody can afford to just go out with a field crew. Ingram tries to work with vendors in hitting that next level down. And I don't think it's the lifestyle VARs that you're talking about. We're not trying to convince them that they can go from $1 million to $50 million. I think it's working with the VARs that have well-established businesses and looking at them and seeing where they play and what their capabilities are--how strong their companies are. And then we need to look at the programs we're running and help them grow.

COOK: We retooled our certification program based on VAR feedback, recognizing the complexity of the environment and some of the additional solutions that we've acquired. It's not based on volume for these partners; it's based on their level of expertise and industry-specific capability, and where we need them to play in strategic markets both in the emerging growth areas and in the emerging countries.

VARBUSINESS: Does this mean we're looking at smaller but more efficient channel programs eventually? Or does this mean that we're still going to have those marginal and lifestyle VARs as part of a large community where only the best performers get most of the attention?

VITAGLIANO: It's going to be a little of both. I totally agree with the point that we'll never get to 50/50 or 60/40. You're always going to have the majority of the revenue driven by a smaller number of larger players. The key, though, is that you can have well-certified, well-trained, well-qualified partners that are doing smaller amounts of revenue in the marketplace that they operate in. That's partly because the marketplace is capped based on where they are. The trick is not to differentiate based on that, and not to drive programs that are just geared to large players. Offer programs that every partner can take advantage of.

What I would like is for partners to drive business and not have to have one of our sales teams in the middle of every transaction. To do that, we've got to ensure that they're adequately trained--particularly in those tertiary markets. I'm not going to have the capability to have face-to-face direct-sales coverage for everybody; therefore, I need the partners to drive it.

VARBUSINESS: A lot of solution providers are leading with your brand. In the future, do you see them taking advantage of some of the performance-based incentives you may develop? And do you see a need for them to act independent of your brand as well?

IVENTOSCH: Absolutely. We used to have sort of a policy at NetApp that if a partner sells a competitor's product, we're not going to sign them up. And we've seen loyalty programs from our competitors that put [partners] in a very difficult spot. We've moved quite a bit away from that. Some of our most successful partners are those that present themselves as independent storage consultants or solution providers. Our job is to provide them with the enablement, tools, technology and margin opportunity so that, even while being an independent consultant, they're going to recommend NetApp eight times out of 10.

VARBUSINESS: Where is that balance between the vendor brand and the VAR brand going forward?

"Our focus is on selecting the right partner for the right market or the right industry," says Oracle's Doug Kennedy.

KENNEDY: We're not demanding exclusivity from our partners. Higher up in the marketplace, as we deal with some of the largest service providers out there, their brand carries an awful lot of weight with the customers that they're selling to. Obviously, in the smaller markets and the industry markets, we would like those resellers to showcase our solutions and our brands first. But what they need to win with is their capability--their ability either to sell that product in the marketplace or to sell the services that they deliver along with those products in the marketplace.

COOK: When we look at our emerging businesses, we tell our partner team that partners have the first right of refusal when it comes to service implementations. It's a powerful statement to tell them that when they go into our fast-growing businesses, services belong to the solution providers.

IVENTOSCH: We're doing the same at NetApp. Giving partners the first right of refusal to provide services is critical. We're actually looking at building programs that train our partners how to provide services themselves so they'll be in a position to go out and deliver that on their own paper.

ROBINSON: We've invested a lot in our field resources. And it goes beyond just sales. We've also put marketing resources out there. We're trying to start with, 'Here's how you can improve the profitability of your company through these different means. Here's the training, so you can defend [your territory] whether on the Web or in person.' And then, on top of that, that's when we're getting into the solutions. And we're really trying to focus on how they can be profitable in deploying those solutions.