Checkup Time: Channel Chiefs Examine The Financial Health Of Partners


Duncan: The CEOs and the senior officers within our partners get it. Where they're struggling is with their [sales] reps. So their reps are very coin-operated. Sometimes they don't have the same tie-in. They are still looking for that transactional base. So that's something we see trying to help our partners through heavily over the next 18 months. We're working on our own internal compensation plans through the partners and their recurring revenue [with IBM SoftLayer]. We now have 100 software products and Software-as-a-Service [SaaS]. So there's multiple things that we're doing there that the partners can resell them and get the fee all at once. We're trying to move the clients to that Software-as-a-Service. We're working through all of that. We're not in the end game yet. This is going to be a complete changer for how we compensate our channel and how our channel recognizes revenue. So we're trying to do it in a step-based approach and help the partners through that as we work through it internally as well. 

Bates: We do incent our salespeople internally on annuity business, whether that's our traditional enterprise agreements or enterprise licensing or cloud now. And in certain circumstances, actually, our incentives are for our partners around annuity as well -- paying them more for driving the annuity conversation versus a transactional sale.

Vitagliano: The reoccurring revenue piece to me is an indication of the health of that partner. And when you talk to this "born in the cloud" group … they're not struggling as much with the questions about, 'How do I pay my sales team on a three-year reoccurring model versus a [transactional sale]?' because they started it that way, so they don't have a bunch of salespeople running around worried about getting paid on the box. I have to be honest with you, I've seen a lot of that over the years, depending on the models that the partners are in. So I think it will evolve, but I also would tell you that there are a number of them today that aren't having the issues. They're moving with this new model. So what we can do as vendors, not so much from an incentive standpoint, is more of a training [approach], more about helping them understand that new model, and providing them with some support and guidance relative to changing the business model. It's all about changing the business model. That's really what it's all about.