HashiCorp Looks To ‘Flip Its Channel On Its Side’, Redirect Enterprise Accounts To Partners

New channel chief Michelle Graff told CRN and attendees of the HashiConf Partner Summit that a major revamp of the startup’s channel program shifts focus from volume to specialization as the DevOps pioneer sets a timetable for becoming a channel-led sales organization.


Rapidly growing DevOps powerhouse HashiCorp on Monday told partners it was massively restructuring its channel program as it prepares to shift a wide swath of business to them.

The San Francisco-based startup behind popular open source tools like Terraform, Vagrant and Consul is revamping HashiCorp Partner Network to incentivize specialization rather than volume, Global Channel Chief Michelle Graff told attendees of a Partner Summit the day before the HashiConf annual conference kicks off in Seattle.

"We're flipping our partner program on its side," Graff told CRN of the changes brought on by an evolution of HashiCorp's business and continued focus on scaling the reach of its infrastructure configuration, management and security technologies.

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HashiCorp's 'enterprise sales' organization, which oversees accounts below the Fortune 500, currently realizes 70 percent of revenue internally. In a phased process, HashiCorp plans to flip that ratio and achieve 50 percent channel sales in this current quarter, then 75 percent by the next and 90 percent by Feb. 1

"That’s the gasoline we're pouring on the infrastructure partners that are making massive investments in us," Graff said.

The 'strategic sales' organization, which focuses on the Fortune 500, isn't setting any channel revenue targets because of the unique dynamics of those largest of customers.

The new program abandons a tiering system based on transactional revenue. Silver, Gold and Platinum tiers have been replaced by ones called Enabled, Specialized and Hyper-Specialized, which partners qualify for by investing in certifications.

"We've been doing internal enablement sessions, where we've been aligning and teaching our sales organization to engage not only with partners, but the right partners," Graff said. HashiCorp has implemented a compensation model to encourage that motion.

As it looks to support an active partner base that has swelled 500 percent in just the last three fiscal quarters, the company is also quadrupling its channel leaders from five to twenty while building out a specialized cloud sales team focused on better aligning channel development with the largest cloud providers.

The new channel strategy stems from an evolution of the business over the last few years.

Graff, who built partner programs at Palo Alto Networks and Pure Storage, launched a review of the channel structure after joining HashiCorp in April.

"HashiCorp grew up on open source platforms," she told CRN. "We didn't have investments in a traditional infrastructure channel."

And early on, the startup didn't need VARs to evangelize its products.

"When we launched the enterprise product in 2016, there was a lot of wind in our sales from the open source community seeding our direct sales organization," Graff said.

By 2017, looking for validation from the world's leading cloud providers, HashiCorp started building integrations with new partners Amazon Web Services, Microsoft Azure and Google Cloud Platform, and gearing up to launch co-sell initiatives with them.

"The sales organization realized we couldn't continue to expand if weren't delivering services," Graff said.

The program HashiCorp debuted in 2017 offered a track for systems integrators who could implement its technology (the company doesn't have an internal services arm), and another for resellers, who mostly engaged in low-margin transactions that didn't add value, she said.

Graff determined the company needed a more cohesive channel that could drive transactions and offer added services.

As traditional infrastructure resellers adept at selling security and networking are looking to replace plummeting hardware practices with software-defined infrastructure in the cloud, HashiCorp sees an opportunity to forge those kinds of alliances, she said.

The company has identified 20 to 30 solution providers fitting that bill in the United States it would like to sign to drive expansion of its enterprise base.

At the same time, global systems integrators with security and data center practices that typically don’t work with sub-$1 billion-dollar companies are making investments earlier in hyper-growth and

disruptive technology vendors like HashiCorp, she said.

One channel giant, World Wide Technology, is expanding a partnership with HashiCorp that's propelled by broad customer interest and adoption of the Terraform tool for infrastructure configuration management, said Joe Weber, director for cloud architecture and engineering at the St. Louis-based technology services provider.

WWT has invested in fostering specialized expertise in line with the new partnering model. Several of its engineers and developers are certified to deliver HashiCorp solutions to its customers, Weber said, and the HashiCorp Partner Program has provided the company a forum to collect customer feedback on products and communicate back to further enhance features.

WWT's Advanced Technology Center (ATC) uses HashiCorp products to "help customers test, validate and develop new solutions and architectures," Weber said. With that technology, "we have created extensive sandbox capabilities including public cloud, on-premises and off-premises to assist customers throughout their cloud journey."