CRN Exclusive: EMC Passes Enterprise Services Baton To Partners

EMC's race to transform itself into one of the top channel-friendly vendors is about to move to a whole new level.

The storage giant is using meetings with more than 3,000 solution providers at this week's EMC World to unveil programs that will push sales and services in all but a handful of its top accounts to the channel while providing partners with new services backed by its global services arm and new non-vendor-specific cloud capabilities.

Even more important, EMC is internally backing up these moves with a strong carrot-and-stick approach to ensure that its direct sales reps are fully committed to working with channel partners.

The new programs will foster business opportunities for EMC's channel partners, said Dan Serpico, president of FusionStorm, a San Francisco-based solution provider and EMC partner.

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"Whatever EMC does to facilitate our business with EMC is good for us," Serpico said. "Of our customer base, 70 percent haven't bought storage from us. This is a big greenfield opportunity. EMC's new programs will make it easier for us to take advantage of that opportunity."

CRN editors sat down with EMC's top executives at the company's Hopkinton, Mass., headquarters in late April to learn more about the upcoming programs and services and get a better sense of the company’s channel-focused moves.

During an interview with EMC Chairman and CEO Joe Tucci, Tucci said EMC's business is growing much faster than the IT industry as a whole, and that more than two-thirds of that growth is being driven by and heavily influenced by the channel.

"What does that tell you? The channel is incredibly important to our future," Tucci said. "We have changed our stripes."

That does not mean that EMC is turning away from direct sales, he added.

"As long as I’m living and breathing, we're gonna have a strong direct sales force," Tucci said. "It's the power of 'and;' not the power of 'or.' It's not, 'Are you a direct sales organization or a channel organization?'’ It's, 'Have you mastered how to do both?' "

However, Tucci said, the move to embrace the channel is not just about increasing EMC sales, but also about making partners successful and profitable so they will drive more EMC business.

"If you're going to call them a channel partner, I want them to be successful," he said. "And I want them to worry about our success. ... And it's a visceral, deep belief. It's not something I'm saying because you're here from CRN, or I want to make you happy so you write a better story. This is a deep belief."

NEXT: EMC's Approach To Direct Sales

Today's EMC is not the same hard-charging direct sales company of years past, said Bill Scannell, EMC's executive vice president, Americas and Europe, Middle East and Africa.

A large part of EMC's enterprise and global revenue, and all of its midmarket and commercial business, goes through partners today, Scannell said.

Pointing to CRN's yearly Annual Report Card study, in which solution providers score their vendors' performance in a range of categories, Scannell said: "If you look at the ARC survey, we used to be at the bottom of that ranking. Now we are at the top. We are the No. 1 company to do business with. Partners like the margins they are making on EMC. They like the EMC strategy. They like working with EMC."

And EMC's sales reps like working with solution providers in part because of the financial incentives that are built into their compensation to engage with the channel and in part because bringing in a channel partner early into a deal frees them up to move forward and develop new business, according to Scannell.

Then there's the big stick EMC wields when needed to keep its direct sales reps in line. How big?

"It is a good-size stick the first time, and it is the ultimate stick the second time," Scannell said.

Meanwhile, chief among the changes to EMC's channel engagement is Enterprise Select, a program under which the company is moving all of its existing and future new accounts to the channel except for a few hundred enterprise accounts that have worked with EMC or that are strategic to EMC, said Gregg Ambulos, senior vice president of global channel sales. Outside those few accounts, a list of which partners can get from their EMC sales reps, all accounts are opened up to the channel.

Enterprise Select builds on the move EMC made about four or five years ago to automatically hand all SMB and midmarket opportunities to solution providers, Ambulos said.

"The partner has the ability to deliver all the services as long as [they are] certified," he said. "It made this a great place for our partners to establish a good foundation for EMC and work tightly with our sales organization."

Under Enterprise Select, if an EMC sales team finds a new opportunity, it will engage the partner quickly so it can move on to develop new customers, Ambulos said.

"The bottom line is, there's an existing run rate that we've had before that we're moving over to the channel," he said. "There's an EMC sales engine that's still there. [Our sales reps will] find an opportunity. They have to work it with a partner. We've established that everything has to go through a partner. You can't take the deal direct. The partners get the services."

EMC direct sales reps also get an uplift to their commissions by taking enterprise accounts through channel partners, and an additional uplift for taking customers through partners as part of the Enterprise Select program.

EMC recognizes that getting its solution providers into services builds incentives for them to do more business with EMC, Ambulos said. "Services might be 10 [percent] to 15 percent of the revenue opportunity, but 30 [percent] to 40 percent of the margin," he said. "And at the end of the day, it's a way for partners to really establish themselves as the trusted adviser because they'’re doing the design and implementation."

NEXT: VAR Weighs In On Enterprise Select

Bob Olwig, vice president of business strategy at World Wide Technology, a Maryland Heights, Mo.-based solution provider and EMC partner, called Enterprise Select a very significant change to EMC's channel program.

"Enterprise Select is all about incentivizing EMC's direct reps to leverage the reseller channel and to support the channel in larger accounts," he said. "World Wide and EMC have already been collaborating on accounts that EMC did direct in the past. EMC is not going away. But the client now gets to work with us."

Getting the partner into big enterprise accounts is important for EMC, Olwig said.

"In today's multiproduct world, EMC realizes the importance of the other part of the IT infrastructure besides storage," he said. "With World Wide's close relationship to Cisco, VMware and other vendors, EMC recognizes our importance to their customers."

Another major channel priority for EMC's direct sales reps is to adhere to newly published rules of engagement.

Those rules, which are available to partners globally, provide guiding principles for how EMC's sales teams work with partners, and are a major improvement over the rules last posted about five years ago, Ambulos said.

"One rule is to bring a partner into a deal no later than the second sales call," he said. "Or if a partner has a registered deal, EMC [sales reps] cannot take it direct. If they do, then there are ramifications for the sales team. All these rules have been tied into the EMC sales comp plan."

Other rules give partners the lead on services opportunities in channel-only markets or registered deal, prevent EMC from talking about prices with partners' customers, and stop EMC reps from directly engaging with partners' customers unless authorized by the partner to do so.

Breaking a rule means significant penalties, Ambulos said.

"If you break one of these material rules, then the sales team could lose their credit for the transaction and any compensation," he said. "They could lose the whole deal. The sales leadership at EMC has made it really easy for me. They understand that we need to get a lot more reach within the marketplace, and that our partners are there to help drive our overall productivity and are an extension to the EMC sales team, and we need to work in a collaborative manner. So the bottom line is, there's wood behind the arrow."

EMC's new rules of engagement were approved by EMC's partner advisory board, of which World Wide Technology’s Olwig is a member. Olwig said that since the rules were approved he has not heard of any particular conflicts.

"EMC has always had some rules," he said. "The finalization of the rules of engagement shows that EMC is focused on its channel relationships."

NEXT: New EMC Partner Capabilities Grid

EMC also has implemented a new partner capabilities grid to make it easier for its sales reps to introduce the right partner to a deal. The partner capabilities grid is a search engine the sales reps use to check customer needs against multiple partners' skill sets and certifications to find the right solution provider early in the sales cycle, Ambulos said.

"They type in their opportunity in hand, and out comes a list of partners that have [the right] capabilities," he said. "They click on the partner, and the resources are there. They can go through and see all the certifications. It's a way to bring the right partner in early in the cycle so we can get the maximum amount of leverage."

Once the partner is involved, it is time for the EMC rep to move on, Ambulos said.

"At this point, we go off and try to find another opportunity," he said. "We know this partner is trained, has the ability to drive and conduct sales campaigns."

Should the partner capabilities grid identify more than one partner as suitable, the sales rep may work with the territory's partner development manager to make a decision based on factors such as who may be tied up with other jobs. Or it could be turned into an opportunity for the sales rep to visit partners with whom they are less familiar to understand their capabilities, Ambulos said.

"Our whole goal is about keeping our partners and their technical resources busy," he said. "It's not just about certifications. We have measurements in there about their ability to position our EMC solutions. Not just design work, but how to position it, how to close the deal."

The partner capabilities grid is clear evidence of how well EMC's new rules of engagement work, said Keith Norbie, vice president of Nexus Information Systems, a Minnetonka, Minn., solution provider and EMC partner.

"We're pretty much caught up on our certifications as part of getting our competencies in consolidation and BRS [backup and recovery services]," Norbie said. "In my experience, the grid is a way of doing account alignment. We and EMC talk about XYZ account, they say we're in there doing this, and you're in there doing that, so let's talk about how to work together."

NEXT: EMC Cooperative Services For The Channel

EMC also rolled out EMC Cooperative Services, its first series of services designed specifically for channel partners.

These are based on services developed by EMC Global Services including health checks and performance assessments, and will give new capabilities to partners who cannot deliver those services now, said Jason Mundy, EMC's director of global services marketing.

However, Mundy said, partners had better be prepared to invest in services-related skills before expecting EMC to back them up.

"It doesn't make sense to just give [partners] the recipe of how to do this unless they make the investment in the tools and the expertise," he said.

Under the program, a solution provider engages with the customer to do analysis and gather information related to services, and then works with EMC to develop and implement the appropriate services, Mundy said.

"In doing that, [partners] can maintain the face in the relationship to the customer," he said. "They own the contract. They own the delivery. They own the entire engagement and the relationship. ... In the end, they can scale their services bench without having to make a heavy investment."

Solution providers can either brand the services as their own or they can use the EMC brand. The solution provider sets its own prices for the services.

To offer EMC Cooperative Services, solution providers must be at the Premier or Signature level in the vendor's Velocity channel program, and must show EMC they have competency in the service, including the ability to sell and position the service and collect the appropriate data.

EMC initially plans to have between 12 and 15 services ready to go for partners, including unified storage health checks and backup services around Avamar and NetWorker, and will add more advanced capability over time, including virtualization and the cloud.

EMC Cooperative Services is a program for which Sigma Solutions has been looking, said Rick Eddings, vice president of professional services at The Colony, Texas-based solution provider.

Customers understand the value of storage solutions from EMC but struggle with issues such as how to tune storage for their environments, Eddings said.

"We can provide them peace of mind," he said. "With services help from EMC, customers know they won't run into problems later."

Eddings said that he has found EMC to be his most strategic vendor in the year since he joined Sigma Solutions, and that includes the importance EMC places on bringing his company into services opportunities.

"This is especially true when customers are looking for services in multivendor situations," he said. "EMC will proactively bring us in to the customer."

NEXT: EMC Helps Partners Build Private Or Public Clouds

Also new from EMC is the Velocity Cloud Practice, a group of capabilities tied to its Velocity channel program aimed at helping solution providers build private or public clouds.

The first of these, Cloud Builder, gives solution providers that invest in cloud-related services the skills needed to build private clouds, said Dan Burton, EMC's head of global channel marketing.

The other is Cloud Provider, which is focused on helping partners that are service providers and are looking to provide public clouds to customers, Burton said.

Cloud Builder requires solution providers to invest heavily in cloud capabilities, EMC's Mundy said. "You have to teach them the end-to-end opportunity in the cloud, how to find the business justification, how to build the business case, how to design or architect for the cloud," he said.

Solution providers entering the Cloud Builder program must invest in a number of required training programs including an EMC storage specialty, EMC backup and recovery specialty, third-party certifications in servers and networking, and EMC cloud infrastructure and services, data center virtualization, and IT-as-a-Service training. However, the training is different from most EMC training in that it is not focused exclusively on EMC technology, Mundy said.

"We built it keeping in mind all the heterogeneous technologies that can go into a data center," he said. "This is very significant training we will ask our partners to take."

Cloud Builder is not focused on partners building VSPEX reference architectures, as those architectures already include a cloud component, Mundy said. Instead, it targets solution providers looking to build private clouds on existing or new IT infrastructures for which there is no standard cloud architecture, he said.

The Cloud Builder program is available now, while details about EMC's Cloud Provider public cloud program are expected to be released later this year.

Cloud Builder will be successful if EMC does some heavy marketing around the program, World Wide Technology's Olwig said.

"We have been educating our own sales team on the importance and the differentiation of bringing in EMC and Cloud Builder," he said. "’Now EMC needs to help customers understand the importance."

FusionStorm's Serpico said that his company is already partnering with EMC on the storage side of its own hosted cloud services and is engaged with the vendor with customers looking for on-premise and hosted cloud solutions.

"It's a nice start," he said. "But we want to do more with EMC and the cloud."

NEXT: EMC Taking Aim At NetApp, NetApp's Response

Another top priority for EMC is to leverage the channel to take market share, especially from archrival NetApp.

A big part of this strategy was EMC's April introduction of its VSPEX reference architecture, which are blueprints on how to build data center infrastructures including EMC storage, Brocade or Cisco networking, VMware or Microsoft virtualization, and industry-standard servers from any vendor.

VSPEX is a channel-only offering that will help partners more easily grab SMB deals that previously were out of reach, EMC's Ambulos said. It also gives partners their first-ever opportunity to add their own brand alongside that of EMC for registered deals.

"It's an opportunity for [partners] to get some recognition and visibility from selling the VSPEX, and we think it's going to be a win-win for the partner and for EMC and our technology alliances," Ambulos said.

VSPEX is also a direct shot at NetApp, which is EMC's "enemy No. 1," said Jeremy Burton, EMC'’s executive vice president and chief marketing officer.

NetApp has been building a strong customer base for its own reference architecture, FlexPod, which includes components from EMC partners Cisco and VMware. "VSPEX is another shot directly at NetApp," Burton said.

While NetApp has been reaching down to the SMB space with new versions of its FlexPod, Burton said that move is more about competing with EMC than with expanding NetApp's market.

"NetApp is trying to protect the relationship with Cisco. They clearly see VSPEX as a threat and are responding to it," he said.

NetApp is not intimidated by VSPEX, said James Sangster, senior director of solutions marketing at NetApp, Sunnyvale, Calif.

Sangster called VSPEX "business as usual" in that it is similar to the reference architectures offered by many vendors, including NetApp's Validated Architecture, which goes beyond the company's Cisco relationship from FlexPod to make it easy to pull together any combination of IT equipment through NetApp's Solution Builder back-end configuration tool.

"I don't really see anything unique with VSPEX," he said. "FlexPod has support wrapped around it. With VSPEX, support is just like normal. Normal is OK. But it's not the same as wrapping support around FlexPod."

NEXT: Velocity Channel Program Changes

Solution providers will find several other enhancements to EMC's Velocity channel program.

One of those is a new partner relationship management system to bring better leads to partners and to better track those leads through to closing the deal, EMC's Ambulos said. Partners that closed deals in the past will automatically get first crack at new opportunities stemming from future technology refreshes, he said.

"Right now, we're tracking the close rate," he said. "We're tracking who gets the leads. I go to a partner sometimes and they say, 'Hey, I never get any leads.' I can say, 'Wait a minute, I see you got 25 leads in the last three quarters.' Sometimes, it may not be communicated up that they're getting leads. Sometimes we'll have a focus group with a partner and say, 'Hey, you just got five leads, now let's go do something with this.'"

Ambulos said EMC is also rolling the separate channels that EMC inherited with multiple acquisitions over the years into a single channel. For instance, there will be no more separate channels for EMC’s backup and recovery systems and for its Isilon line. However, EMC will keep separate business development specialists for certain products, all of whom will report to the partner development managers in individual territories.

Within each territory are EMC technical consultants focused on helping partners develop their skill sets, managers who help partners build out their implementation and professional skill sets, and field marketing managers who help with demand generation. EMC also created new business unit specialists around its Isilon and backup and recovery services offerings to help partners build out their capabilities in these areas, Ambulos said.

Ambulos said EMC currently has about 11,000 solution provider partners worldwide, of which about 50 percent are active partners in any given quarter. The company picked up about 5,000 new partners, one-third of which are in the U.S., in 2011 after its huge January 2011 product launch, Ambulos said.

Two years ago, EMC got rid of revenue-based tiering in its channel program and focused instead on competency-based tiering in order to make it easier for partners, particularly those with a regional focus, who invested in the EMC program to compete with larger national solution providers, Ambulos said.

"So we said, 'Hey, if you're making the investments in the territory, we want to make sure you're able to capture any kind of benefits and compete on an equal footing if you built out your competencies,'" he said.

The result has been an increase of 40 percent in year-over-year technical certifications for solution providers that took advantage of face-to-face and online training. Partner individuals spend an average of 16 days a year on getting those specialties, he said.

NEXT: Partners Have Their Say

Meanwhile, EMC'’s focus on the channel has not gone unnoticed.

"Over the years, we've seen EMC emerging as a go-to partner with the channel," FusionStorm’s Serpico said. "EMC sees the value in its partners and is now creating programs to make it easier for us to work with them, and to make it easier for their sales to identify go-to partners."

However, one longtime EMC solution provider who requested anonymity said that while EMC has shown amazing improvements in the channel over the years, there remains under the surface the lingering effects of its old direct sales culture.

"The culture is the culture," the solution provider said. "’EMC has great guys who are true channel champs in the organization. But in the enterprise space, they will sometimes do whatever they want. There are still times when they put on direct activities without the VAR, or treat us like a supply chain instead of as partners."

World Wide Technology's Olwig said he would never say that there isn't some behavior coming out of EMC that harkens back to the old direct days.

"But the collaboration we have at the field leadership level shows EMC recognizes the importance of World Wide" he said.

In the end, Serpico said, actions speak louder than words and EMC is demonstrating the right actions.

"EMC is showing clearly where it wants to go with the channel," he said.