As Sales Approach $1B, Splunk Makes Its Pitch To The Channel

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Jim Kinney, president and CEO of Indianapolis-based solution provider Kinney Group, makes a bold observation about Splunk, the big data software developer that his company has partnered with for four years.

Splunk and its technology "sure has the feel of being on the front of something gargantuan," Kinney says. "This has the feel of VMware back in '05 or '06."

Splunk, founded in 2003, is hardly a startup. But the developer of operational intelligence software for instantly searching, monitoring and analyzing machine-generated data is getting more attention these days beyond its core IT operations and IT security customer base. Splunk's platform is finding its way into an increasingly broad range of business analytics and big data applications, and the company is positioned to be a key technology player in the nascent Internet of Things arena.

[Related: Splunk Expands Machine-Learning Capabilities Of Its Operational Intelligence Software]

It's also attracting more attention from solution providers as the company, after relying primarily on direct sales for the first decade-plus of its existence, has been ramping up its channel efforts in the last two years.

The channel should take notice. Splunk (whose name comes from the cave exploration term "spelunking") is closing in on $1 billion in annual revenue, having recorded 43 percent sales growth in the first half of fiscal 2017 to $398.7 million. Analysts have put the vendor's total potential market at $46 billion to $58 billion, and observers say the company's sales could hit $5 billion as soon as 2020.

The San Francisco-based company's customer base grew from approximately 10,000 as of July 31, 2015, to more than 12,000 on July 31 of this year, according to a recent filing with the U.S. Securities and Exchange Commission.

CEO Doug Merritt, speaking at Splunk's .conf2016 customer and partner event in Orlando late last month, said he thinks "at least half" of the company's sales should ultimately go through the channel.

"When I walked in we were [following] a more direct-centric model," said Merritt, who joined Splunk in May 2014 as senior vice president of field operations and was named the president and CEO in November 2015. "I came in the door jumping up and down about the channel, about partners in general. It felt like an opportunity for growth for us."

Merritt, both at .conf2016 and in an exclusive interview with CRN, acknowledged that Splunk was slow to leverage the channel. "Splunk has been difficult for people to understand," he said, and recruiting resellers is a challenge "when you're an early pioneer, and you're evangelizing a new [technology] category.

Splunk does not disclose what percentage of its sales go through the channel today or how many channel partners it works with. The recent SEC filing, for the company's second fiscal quarter ended July 31, said the company "expect[s] that sales through channel partners in all regions will continue to grow as a portion of our revenues for the foreseeable future."

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