Eaton Steps Up Rack PDU, IPM Software Sales Offensive; Partner Recurring Revenue On The Rise

Eaton is stepping up its rack PDU sales charge, which is paying off in a significant increase in recurring revenue software sales for its partners.

Eaton – a $23 billion power management behemoth – in the last several months has refreshed its entire ePDU (enclosure power distribution unit) G3 lineup resulting in an astronomical increase in deal size for partners and recurring revenue with Intelligent Power Manager (IPM) software and PredictPulse remote monitoring and management service.

[Related: Rise of Rack PDUs: Market Opportunity Is Promising for Eaton and Partners]

The company has also expanded its product lineup with the addition last summer of its RS Enclosure, the first rack in the data center cabinet market made available through channel partners.

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The new product lineup, combined with Eaton software, is driving dramatic sales gains for partners, said Eaton Vice President Herve Tardy in an interview with CRN.

"Every $1 of rack PDUs sold by the channel translates into a sales pull-through of another $3 to $4 in rack PDUs and another $3 to $4 in UPSes, plus the recurring revenue of 15 percent of the total sale," Tardy said. "It's huge. The fact that we didn't have a competitive rack enclosure line previously put us at a disadvantage. Now we have the best rack enclosure in the industry at the right price."

The PDU offensive continues the recurring revenue charge that Eaton began last year with its Intelligent Power Manager (IPM) and PredictPulse offerings.
Eaton's IPM software sales grew a whopping 400 percent over the last year, driving robust recurring revenue sales through the 300 partners actively selling IPM and the PredictPulse service, said Tardy.

Eaton is introducing new Rack PDU SKUs every month, said Tardy. "This product line is an unbelievable margin opportunity for our partners," Tardy said. "To select the right PDU configuration you have to go through an 8-step process. For UPS it is a 3-step process. It is a fairly technical, complex sale. Partners add real value in this market."

The intelligent rack PDU market – which grew at a six percent clip in 2016 - is expected to be 50 percent of the power market in the U.S. by 2020, according to IHS, a London market research firm. The IT rack enclosure market, meanwhile, grew at five percent in 2016, according to IHS.

"The rack PDU market is on fire," said Tardy. "It's a big opportunity for our partners. We are moving fast in this market. The rack PDU is becoming the intelligent hub of the entire power chain."

Before the Eaton PDU and rack enclosure sales offensive- which began in earnest late last year - Eaton simply did not have competitive offerings in those markets to go head to head against power management kingpin APC By Schneider Electric, West Kingston, R.I. That put Eaton at a competitive disadvantage versus APC, a perennial power in the rack PDU market.

The new "tool-less" RS Enclosure provides partners with an enclosure that is much easier to set up and configure than competitor's offerings, said Curtiz Gangi, sales vice president for U.S. channel and midmarket in Eaton's data center business. Together, the rack enclosure and Eaton's G3 PDUs pack a formidable punch, he said. "Our sales team's No. 1 job from a strategic initiative perspective is around these new technologies," said Gangi.

At the heart of the Eaton partner PDU sales march is the company's new Visual Power Manager (VPM) enterprise software, which is aimed at simplifying day-to-day management of PDUs. Visual Power Manager has just been released and is being tested by leading Eaton customers.

"That's a huge revenue opportunity for partners too," said Tardy, noting the sales pipeline is already building for the VPM software. "When you have 1,000 PDUs – each with their own IP address- you need partners to install and set it up. That is hours and hours of services to sell as a channel partner."

The rack PDU phenomenon is being spurred in large part by a demand from both partners and customers for robust software in the hyper-converged and network closet era aimed at proactively preventing power failures. That's just what IPM and PredictPulse- combined with new Eaton Rack PDUs - are providing customers, according to Eaton partners.

A-TRAC, a Waltham, Mass.-based solution provider which has built a recurring revenue services model around Eaton's software, is one of Eaton's top channel partners benefitting from the PDU and IPM software sales offensive.

A-TRAC's Eaton business is up about 30 percent over the last year and its recurring revenue around the Eaton power management portfolio has doubled over that period, said Kevin Mullin, vice president of business development for A-TRAC.

A-TRAC's average Eaton sale, meanwhile, has gone up 20 percent over the last year with margins increasing from single to double digits in the midst of the power management software sales offensive.

The biggest differentiator for the new Eaton PDUs is driven by the intelligent software that the company has brought to partners, said Mullin. "Eaton understands that software is eating the world," he said. "They are bringing solutions to market that leverage both hardware and software, and as a result we as channel partners are able to differentiate ourselves from our competitors."

The new PDUs along with IPM are driving a growing number of consulting and design sales opportunities for A-TRAC, said Mullin. "With Eaton, now we can pull together a one-stop solution for customers with rack-level PDUs, the rack sale, the UPS sale and then it all ties back into the IPM software. This has allowed us to grow the footprint of each and every sale. It has allowed us to get sales where we just couldn’t have gotten them before. We are going wider and deeper into accounts with Eaton."

The PDU network closet phenomenon is a "huge" opportunity, said Mullin. "What Eaton has allowed us to do is grow our sales footprint out of the data center into the edge network closet," he said. "We are finding tons of opportunities there. We are designing the network closets. It's not just about the gear. We are seeing a lot of consulting opportunities."

A-TRAC is also moving aggressively into the hyper-converged opportunity leveraging tight Eaton IPM software integration with hyper-converged superstars like Nutanix and SimpliVity, said Mullin.

"Eaton is opening the door for us to get into those opportunities as well," he said. "We are now seeing attach rates with hyper-converged servers and the network switch. Ultimately Eaton is helping us become more of a trusted advisor to our customers. We are selling the full stack from power to the top-of-the-rack network switch."
Eaton's PredictPulse provides partners with a significant competitive advantage versus competitors, said Mullin. "That is allowing us to leverage data to know proactively when there is going to be a failure," he said. "It helps us limit issues before they happen."

Eaton has backed up the software initiative with strong engineering teams to assist partners in designing and building solutions, said Mullin. "That has allowed us to focus more on finding and growing opportunities," he said.

Eaton anticipated the shift in the market from facilities-based power management to IT-based power management well before its competitors, said Mullin.

"Eaton embraced the shift much better than the competition," he said. "The paradigm has shifted from facilities [making power decisions] to IT making power decisions. That has changed how companies think about power and adopt power within their infrastructure. With power, customers are demanding the same kind of intelligence they get out of their network, server systems and IT gear. Eaton has bridged the gap from facilities to IT."