Red Hat this week plans to kick off its next-generation Linux distribution and an enhanced channel program.
Heading into the official launch of Red Hat Enterprise Linux 5 on Wednesday, Red Hat is increasing its channel investment for this year, including more marketing development funds (MDFs), free training for partners and incentives to drive more subscription renewals through solution providers, said Mark Enzweiler, vice president of North American channel sales at the Raleigh, N.C.-based Linux distributor.
Still, Enzweiler insists that Red Hat is serious about building up a network of value-added service providers and driving customer subscription renewals through channel partners.
He declined to disclose the dollar amount of Red Hat's planned channel investment. But a company statement said the MDFs to be available to partners for demand generation and the free training for Red Hat Certified Engineers and Red Hat Certified Architects represents a threefold increase.
In addition, Red Hat said it has officially launched its structured process for handing out leads to partners, as well as an easier-to-use Subscription Center that simplifies how partners secure and influence customer subscription renewals, Enzweiler said.
Red Hat has previously outlined its plans to grow its channel. In January, the company announced the Red Hat Certified Service Provider program, which is designed to increase the number of solution providers offering value-added services for Red Hat Linux and the company's JBoss middleware and open-source software stack.
Red Hat currently has more than 230 partners, including resellers and about 25 advanced business partners. It has signed up six advanced business partners for its Certified Service Provider (CSP) program, with InCentric, FusionStorm and Agilysys among the first CSPs.
Though some Red Hat partners are enthusiastic about the program, others said the company has much to prove on the channel front because it pulled the plug on the partner program it operated in its earlier days.
One source close to the company said the new Red Hat open-source store and other online efforts under way may conflict with channel interests.
"Red Hat wants to be the premier online destination for everything open source. If they work to become a destination site ... why is the channel a priority? They have spent an incredible amount of money with Accenture to develop their online strategy," the source said. "Red Hat has trouble working with big strategic partners like IBM, Dell and HP. What will change with VARs?"
This week, however, Red Hat aims to put a little more meat on the bones of the new channel program, including details about lead generation and its "back-office" subscription renewal center.
Going forward, partners will be fully embedded in Red Hat's go-to-market process and will be hand-picked for jobs based on their profile and input from regional Red Hat managers, according to Enzweiler.
"Once the lead is qualified, we drop them to respective partners," he said. "We'll map leads, and if it's not a named account, that lead goes to the channel immediately."
Red Hat will continue to authorize resellers and advanced business partners to renew customer subscriptions. But the company is now offering partners access to "back-office" subscription support as a way to automate the process of customers renewals and take over bookings.
For instance, Red Hat will track subscription expiration dates, alert customers about renewals and even process the paperwork for partners that don't want to handle renewals. Partners that hand over their customer renewal business to Red Hat will be eligible for an agent fee or influencer fee, Enzweiler said.
"What we have been doing since last April in the U.S. is collecting end-user data from our distribution points and partners. Renewals are critical, and it' not something partners have the back office to do. They're eligible to do renewals, but the problem is a lot of them haven't kept track of what they sold," Enzweiler said. "It has been spotty at best, and that includes larger players.
"We will track subscriptions and tell you when the renewals are 90 days or 60 days out, help partners script out what they want to talk about with customers and give partners the opportunities to upsell," he added. "When the customer is 30 days out, we'll do the renewal. We're working on remuneration, what we give partners back, but it's their customer."
Enzweiler said he understands that some partners would be concerned about releasing customer data to any vendor, but he noted that the renewal center is intended to drive more customer renewals through partners -- not directly through Red Hat.
"This is not a problem if you have rules of engagement, and if you violate that trust, it takes a long time to get it back," he said. "
Red Hat should be able to develop a robust channel program if it intends to grow its business on a global scale, according to Frank Basanta, director of technology at Systems Solutions, a New York-based Red Hat partner.
"The channel is very important to vendors because it gives them the extra feet on the street," Basanta said. "Vendors that have cultivated their channel partners correctly over the years have seen vast rewards in revenue and growth."