After Years Of Channel Neglect, Internap Wholeheartedly Embraces A Channel Strategy
Internap is a highly experienced data center operator, a pioneering OpenStack adopter and an innovative cloud infrastructure provider. But for much of the past decade, the Atlanta-based hosting company hasn't been much of a channel play.
A new CEO and an even newer channel chief have upended Internap's sales strategy with a new attitude toward its channel. Partners tell CRN they're seeing a sea change.
[Related: Internap Debuts OpenStack-Powered AgileCloud]
"Our channel strategy is a really big part of our growth strategy going forward," CEO Michael Ruffolo told CRN. "We've really revamped it in a way where we're now much more channel-friendly in our policies and programs."
Ruffolo concedes that the company had strayed.
"By making that change, we're showing we're long-term committed to the channel partners themselves, and to channel distribution. That's what we're really demonstrating," he told CRN.
When Ruffolo took the top job at Internap in May, the first step toward reversing years of channel neglect was confronting a program structure that sowed discord between direct sales reps and partner agents.
"Quite a bit of [the problem] was related to how we contemplate our partners and work with them along with our direct sales force," Ruffolo told CRN.
The fix, he explained, was simple: Compensate sales staff for all deals closed by partners, eliminating a cause for competition and incentivizing harmony.
Rick Stenberg, president of COLOpeople, a data center agent based in Carlsbad, Calif., explained that for years, competing incentives complicated cooperation between partners and direct sales agents.
"If they're not getting commissioned on our deals, it doesn't behoove them to show up and deal with the customer," Stenberg told CRN.
Dany Bouchedid, CEO of Colotraq, a master agent that has partnered with Internap since 2007, said many reseller agents needed greater cooperation from Internap's direct sales teams to close deals because they simply didn't know the product well enough on their own.
"There is no doubt in my mind that having the sales experts on the early client calls always improves the close ratio," Bouchedid told CRN. "Allowing the agent to pull in that resource when needed strengthens the overall team and increases the probability for a win."
Internap implemented the right change, he said.
"We have seen this approach work successfully in the past and from what we have seen preliminarily, we believe the margins will work for everyone as well," Bouchedid said.
Another source of partner dissatisfaction was the payment structure on customer renewals -- Internap previously offered healthy margins on initial sales, but after the second year, partners, for the most part, lost the account, Ruffolo told CRN.
Internap has now remedied that approach, to the acclaim of its partners.
"It has a lot to do with insuring that when [partners] work with us on a deal, they have the ability to continue to sell to that customer, and continue to get revenues on deals we do jointly," Ruffolo said.
Last month, Internap brought in Patricia Watkins as vice president of global channel sales. Watkins, a channel veteran who previously worked at Avaya and Hewlett-Packard, is now overseeing the provider's transformation and channel expansion.
That includes signing new types of partners, especially those focused on selling cloud, who can introduce Internap into new markets. She's also adding resources to help partners with marketing, a challenge for many solution providers.
The provider currently has just over 100 partners, Ruffolo said, adding, "we want to get not necessarily more, but more productivity out of the ones we have."
Stenberg, of COLOpeople, started working with Internap after bringing in a big deal about six years ago.
"This was the time when Internap had pretty much crushed its channel, and there were a lot of unhappy agents out there."
The company's prior leadership, he said, simply favored a direct sales approach and disbanded its partner network.
But Patty Watkins and Internap's new regional sales director have convinced him times have changed.
"They developed the program again and it just got better and better and better. Right now is the final touch," Stenberg told CRN.
Internap has been actively introducing customers to his subagents and various types of IT consultants to direct business to them in a way "which you pretty much don’t see anywhere in the industry," Stenberg said.
Bouchedid, of Colotraq, told CRN he has seen several iterations of the Internap partner agreements, "some favorable, some not so much." The provider is now on the right track, he said.
In the company's Q2 earnings call, Ruffolo emphasized to investors that revamping its channel was the right approach to growing the business.
"We are retooling and placing greater emphasis on our channel partner programs," he said in that call. "Our primary focus here is extending the reach of our distribution channel. We're expanding the breadth of our partners because there are numerous customer buying decisions that we're not even involved in."
He later told CRN: "We have a pretty unique value proposition, but we didn't have very friendly channel policies. Now they have a financial incentive to work much closer with us."
PUBLISHED SEPT. 11, 2015