Veritas, StorageTek Seek More Channel Revenue With Fewer Partners

The first question concerning such a strategy is, why? Consider that both executives spoke to hundreds of VARs at GE Access' New Frontiers event in Keystone, Colo., this week, and both companies are riding the red-hot storage wave to new heights. Why then do Veritas and StorageTek want to reduce the number of partners they support?

While it may seem counterproductive, Bloom explained to an audience of solution providers Tuesday that his company is actively reducing the number of its certified partners in order to reduce in-house competition and channel conflict between Veritas solution providers. The storage software company currently has approximately 350 enterprise partners that generate 55 percent of the company's revenue. Therefore, a few hundred solution providers should generate hundreds of millions of dollars for the company, and Veritas would prefer to have a smaller number of high performing partners than a high number of average- or mediocre-performing VARs. In fact, Veritas reduced its partner ranks from 900 to 350 last year, and the company still continued to turn in an excellent performance and generate more channel revenue.

"Ninety percent of those 550 partners didn't applaud the decision, but they understood," says Michael Sotnick, vice president of partner sales at Veritas. "We saw a degradation in the implementation quality and the margin levels for our channel partners."

The strategy doesn't preclude adding new solution providers, Sotnick says. "We have a value business and a volume business," he says. Veritas essentially is keeping its value business, based on complex enterprise products, like Veritas NetBackup, around a small group of top storage integrators in the United States that will be served by "value" distributors like GE Access. The volume business, which includes midrange products like Veritas Backup Exec, will go through "volume" distributors such as Tech Data and Ingram Micro.

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"We touched more than 5,000 VARs through distributors in the last quarter," Sotnick says. "We're lowering the number of partners to improve quality, but that doesn't shut the door to adding new ones."

StorageTek found itself in a similar predicament, perhaps because the company is also in the emerging storage market and trying to hone skills in a relatively new channel. The company aims to boost its channel revenue from 50 percent currently to 65 percent within two years; the challenge will be to get more sales from fewer partners. George Karabatsos, vice president of reseller channel sales at StorageTek, says the company lowered its partner base from 205 U.S. solution providers last year to 175 this year. He says the company is aiming for 150 certified partners by next year, but, like Veritas, StorageTek plans to use distribution to reach new VARs in the midrange space that are beginning to break into the storage space.

"We're moving more to a two-step model for the channel by leveraging the distributors," Karabatsos says. "We want to make our brand more valuable, and if every VAR can bring StorageTek products to market, it becomes a little less valuable."

StorageTek, however, will continue to promote its storage tape and ATA disk hardware as well as its branded professional services to top storage integrators in the market. In fact, GE Access announced that it will now offer StorageTek professional services to its customers. The company is also hoping to improve support and training for a smaller number of top performing VARs.

"One of the biggest complaints last year from partners was the lack of training and certification resources available for them," Karabatsos says. "We're trying to move B-level partners up to A-level."

The next question for Veritas and StorageTek is, can they pull it off? The storage market continues to be a growth area for IT despite the recession, and the two vendors created a buzz at New Frontiers and were well-received by prospective VARs. Phillip McWhorter, president of NetWork Enterprise Solutions in St. Petersburg, Fla., was impressed with Veritas' showing at the GE Access event and says he's in the initial stages of working with the software company. Time will tell if he makes the cut.