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VARs Push Back On Fee, NetApp Surrenders

Solution providers told NetApp exactly what they thought about an annual fee to be an authorized service provider, and NetApp blinked.

NetApp has agreed to eliminate the $10,000 annual fee for participants in its new authorized service provider program, said Leonard Iventosch, vice president of worldwide channels for the Sunnyvale, Calif.-based storage vendor.

The move came as a direct result of solution provider complaints that the fee was too large, Iventosch said.

"We got partner feedback," he said. "They said they want to provide us support for professional services. But they didn't want to pay $10,000 on top of the expense of taking people out of the field and away from billable hours."

Iventosch said the fee was originally his idea, and was aimed at offsetting the cost of NetApp's professional services support center. "I did the ROI (return on investment) on the tool, and found that it justifies the cost of the program. But partners said, 'Great, but we still have to pay the $10,000 up front.'"

No more, Iventosch said. Since the program is new, no partners had paid the fee yet, and will not going forward. "We're gonna eat the cost," he said.

Iventosch said it was Ed Deenihan, executive vice president for NetApp's global services, who took partner feedback to heart and pushed back internally on the fee. "I thank an enlightened person like Ed for making the right decision on this," he said.

Going forward, partners can still use MDFs (market development funds) to pay for the costs of the courses needed to get authorized services provider certified, plus a separate charge of $100 to take the tests.

NetApp is glad to do what it takes to get partners involved with professional services, Iventosch said. "We never intended to build a professional services organization that would grow large in revenue or margin," he said. "Professional services is our lowest-margin offering, but it's our partners' highest-margin offering. Ed, by increasing the pace at which partners can enter the program, will slow or halt the hiring of NetApp professional services people."

Good, said Keith Norbie, director of the storage division of Nexus Information Systems, a Plymouth, Minn.-based solution provider and NetApp partner.

"It's massively significant," Norbie said. "You talk to any VAR, and they'll tell you they want services and higher margins. But they don't want to pay an annual fee to do it."

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