VMware: We're Back On Track With Renewals, Services

For example, VMware's renewals process used to be like a trip to the dentist for solution providers: full of long waits and lots of pain. But over the past year VMware has spent $5 million on building a renewals portal, improving the accuracy of its data and streamlining the overall process, Carl Eschenbach, VMware's president of customer operations, said last week at VMware Partner Exchange 2011 in Orlando, Fla.

VMware's SLA on renewals used to be three days, but the company is now delivering in less than two. VMware has now achieved a 90 percent accuracy rate for quotes on a renewal perspective and is shooting for 95 percent by end of year, according to Eschenbach.

"We're taking it seriously and not making excuses, and it is improving," Eschenbach said.

Another important channel program adjustment that had partners buzzing was VMware's decision to add renewals to partners' performance rebates, which previously only took licensing into account.

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VMware is also paying its partner business managers on renewals, to eliminate conflict and ensure their interests are aligned with those of partners, Eschenbach said. Basically, VMware wants to look at partners more holistically than it has done in the past. "Today we don’t service you as a true business partner, instead we're serving you as a business in silos. That's wrong," Eschenbach told attendees.

Services have been another touchy subject in the VMware channel, as there have been past incidences of competition between VMware and its partners. To deal with this issue, VMware is now drawing a clearer line between where it plays and where partners play in services by moving 5000 enterprise accounts, which were previously handled by VMware, down into partner owned accounts.

Brandon Sweeney, VMware's vice president of Americas channel sales, said the move reflects VMware's growing dependence on the channel its desire to expand its coverage model. "Five thousand accounts are going down below the line, which is really important because we don’t pay our folks on services below that line," Sweeney said.

As VMware moves to a more services-led sales process, it's relying on partners to gather feedback from customers and relay it back, Eschenbach said. "It's critical to engage with customers to generate a closed loop feedback conduit to R&D to ensure that the products are meeting their needs," he said.

VMware currently derives 7 percent of its revenue from its services business, and nearly half of that comes from consulting. VMware is working to build intellectual property around services in order to drive deployments and help partners raise their own services game, Eschenbach said.

"We're not in this to compete with you, we're in this to get IP to give to you," Eschenbach said. "You want us in this business."

VMware's virtualization business grew so quickly that it wasn't able to maintain the effectiveness of its channel program. Now, fully aware that its cloud computing strategy could be negatively impacted by program glitches, VMware is letting partners know that it's back on the right track.