VMware Adds Management Software Incentive For Partners

VMware is putting its money where its mouth is to get partners to sell the company's new Operations Manager proactive virtualization monitoring and management software.

The virtualization kingpin kicked off its Partner Exchange Conference 2013 by announcing an additional 5-percent up-front margin accelerator for partners that sell the Operation Management virtualization monitoring and management software with VSphere.

The additional margin stacked on top of other VMware incentives brings the margin for VSphere with Operations Manager to a whopping 51 percent if partners take advantage of all VMware's incentives including deal registration, according to VMware.

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The Operations Manager offensive may well be the biggest near-term opportunity for thousands of partners that have up until now sold VMware mainstay VSphere virtualization software without a proactive monitoring and management solution. Partners also have a significant opportunity to go back to the hundreds of thousands of customers that have bought VSphere and provide a 30 percent reduction in IT capital expenses with the benefits of the management software, according to VMware.

Dan Smoot, senior vice president operations, customer operations at VMware, urged the hundreds of VMware partners to move up the stack and get away from selling "naked VSphere" with products like Operations Management and even the full VCloud Suite.

"This is the foundation of the software-defined data center moving forward, but it is a journey to get there and to solve these problems for our customers and to make sure you are getting paid along the way," said Smoot.

The VCloud Suite offering provides partners a total stackable margin incentive of 41 percent with 25 to 27 percent bigger deal sizes and a whopping $15 dollar of services for every dollar of software sold, according to VMware.

NEXT: Solution Providers Praise VMware's Partner Profitability March

Kent MacDonald, vice president of converged infrastructure and network services for Long View Systems, a top VMware enterprise partner headquartered in Calgary, Alberta, praised the new VMware margin incentives.

"Anything that accelerates or compliments profitability is positive," said MacDonald. "VMware is certainly listening to the channel. It is great to see their statement that they are 100-percent committed to the channel. We look forward to their execution."

Long View's VMware sales were up 20-30 percent in the last year, said MacDonald. "VMware is key to us," he said. "They are foundational in everything we do from converged infrastructure to data center to end-user computing. We can't move without VMware being involved."

Keith Norbie, vice president of Stratos Management Systems, a Minnetonka, Minn., VMware enterprise partner, said VMware's margin incentives should significantly boost overall partner profitability. "Anytime you can dramatically increase the bottom-line EBITDA in a company. especially a solution provider. it is a big deal," he said. "Now, it is matter of solution providers looking at all the extensible ways to make that margin and ultimately make a difference for their clients."

Colleen Kapase, senior director of partner readiness for VMware, called the VSphere operations manager play the No. 1 initiative partners could undertake to significantly increase their profitability. She expects thousands of partners to be selling VSphere with Operations Manager by the end of the year.

Raghu Raghuram, executive vice president of cloud infrastructure and management for VMware, said the Operations Manager proactive monitoring yields dramatic IT operating expense improvements for customers with as few as 50 virtual machines. "This is a very unique product," he said. "It is integrated very tightly with VSphere." The ability for the Operations Management software to "figure out problems" before they happen and bring customers "faster mean time to recovery" is "very, very unique," he said.