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Veeam Commits $200M To Push Partners Into The Cloud, Take On AWS

Veeam has "neutralized" discrepancies between traditional software license deals and subscription-based cloud deals.

Veeam has launched a massive recruitment program for cloud services partners, backed up by more than $200 million in investments.

At the heart of the program, called "Cloud Connect 2.0," is a $1,000 credit for customers taking the cloud plunge with Veeam, its VARs and its army of 14,000 cloud providers. Along with that, Veeam has "neutralized" discrepancies between traditional software license deals and subscription-based cloud deals, according to Peter McKay, Veeam's president and COO.

"Some VARs are very proactive in the cloud. A lot of them are not," McKay said. "They feel like, 'I built a business on the perpetual license model and I'm going to delay that as long as I can.' What we're trying to do is say, look, you're the partner of record for State Street, for example, and we want you to be able to sell both Veeam perpetual [license] and Veeam as a service through any one of our 14,000 cloud providers. We want you to sell that, and we're pushing you to do that. At some point, if they don't, someone else is going to."

[Related: Veeam President On The Cloud Opportunity, The AWS Threat And The Danger For Partners That Don't Move Fast Enough]

Veeam has about 45,000 channel partners, and while many of them have shown a willingness to move aggressively into the cloud market, many are in danger of being left behind, McKay said.

In response, Veeam has hired about 70 enterprise sales execs since McKay joined the company seven months ago, and is putting $200 million into a program designed to convince customers to make a move to the cloud while guaranteeing financial stability for its salespeople and VARs as they venture into what is for many an entirely new way of doing business.

Michael Vencel, executive vice president at Ramsey, N.J.-based Comport Technology Solutions, said without Veeam's support, Comport and other VARs would continue to struggle to make the transition into the cloud market.

Comport's customers are primarily health care providers.

Last year, Comport's on-premises Veeam business grew 130 percent year-over-year, and now the solution provider is looking forward to similar growth in the cloud.

"Now we can offer an end-to-end solution from on-prem to the cloud that's highly available, fully redundant and HIPAA compliant," Vencel said. "That's a huge investment for us. It's our first foray into a multi-million-dollar investment in equipment and managing our clients' data. The team at Veeam really walked with us in lockstep. They're a true partner, and that's really refreshing. It allows us to continue to do what we do well with our customers, offer a boutique managed service."

"I have multiple routes to market now," Vencel said. "Veeam is morphing into a cloud company, and driving it exclusively through partners and service providers, and the biggest thing with Veeam is they're starting to get upmarket. Two years ago, the majority of clients we took on with Veeam were SMB customers. From a revenue perspective, the bulk of net new customers now is enterprise customers, and when we do a Veeam deal, it drives 2X in infrastructure."

The investment is an extension of Veeam's Cloud Connect program, and according to McKay, the $200 million program helps Veeam "scour through our partners asking which ones want to help us in the cloud."


Veeam VARs "have their reseller margins depending on the tier of the partner. We've just leveraged the existing agreement that the partner had and added that if it's a subscription, it's pretty much the same margin that you would get if you're doing it perpetual. Most partners like to retain account control so they get the recurring revenue. As long as the customer is happy, you keep getting recurring revenue. Your job is to keep the customer happy and sell up," McKay said.

The same goes for Veeam's sales reps, whose compensation doesn't change depending on whether they sell a traditional perpetual license or a subscription.

"What we've done is take what would be a traditional perpetual license deal and we said what do we think that's going to be on a subscription, and we've neutralized it, meaning a sales rep, a Veeam sales rep will make the same amount if they sell a perpetual or a subscription," McKay said. "We're paying them up front for that."

The investments also serve another purpose: They help Veeam compete with cloud titans like Amazon Web Services. McKay said Veeam is in a position to capitalize on AWS's high cost.

"People are seeing the cost," McKay said. "They start, and then it mushrooms up. It's a lot more expensive than they thought and it busts a lot of the budgets that they had. And the channel doesn't really make anything. If you leverage Veeam on Amazon, you're not making much. It's kind of a race to the bottom, and it's kind of a direct model. What we believe is the best scenario for us is that partners pick this up, we enable them with partners like SingleHop an iLand that have built this business, and we join them together."

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