Igneous Guarantees Partner Margins With Launch Of New Channel Program

Igneous Thursday is launching its first channel program to formalize its relationships with VARs, DMRs and MSPs as it tackles the market for unstructured data management.

The Seattle-based data-management-as-a-service company, which was founded in 2013 and has raised over $40 million in funding, aims to provide growth, margins and simplicity for partners who join the new program, said Shaun Walsh, vice president of channels and alliances.

With the launch of the program, the 100 percent channel company is offering guaranteed margins, deal registration, joint business planning and other benefits, Walsh said.

Walsh spoke with CRN Executive Editor Jennifer Follett ahead of the program launch to discuss the market opportunity for partners and his plans for the new program. Edited excerpts of the conversation follow.

What's the main problem Igneous is trying to solve?

One is how much data do you have and where is it? That's an ongoing theme. The second part is, OK, once you've got it, what do you do with it? Do you archive it, do you back it up, do you tier it to the cloud, what's the right price point for your storage based on the piece that you have and then how do you solve the physics of movement? When you look at having petabytes and petabytes of data on-site [with] the cloud guys, it's a great story but you've got to get the data there. So how do you get it there in a cost-effective way? And what we found is that while people have a strong desire to leverage the cloud where it makes sense, there's also a strong desire to keep certain things on-premises. And the balance of those two, between regulatory security and then just the physics of data movement require that you have both types of services. And those were kind of the big problems that we were looking at. And when you talk about data protection, like every technology we go through waves. … We saw with some of the more traditional legacy vendors such as Commvault or Veritas that when you start to get over a billion files, their systems, their indexes just weren't designed to handle those sorts of things. And like all new companies, we had the opportunity to look at this from a different perspective. And that's really where our founders came in. So if you look at our three founders, [CEO] Kiran [Bhageshpur] was the head of engineering at Isilon that was part of Dell EMC now. [CTO] Jeff Hughes also came from Isilon and [Architect] Byron [Rakitzis] came from NetApp. The three of them understand unstructured data, file data and the scale that people are dealing with today. And that was really what drove them to look at some different solutions. And like everyone who's a serial entrepreneur, they go, 'We did it this way a decade ago, now we have another shot, let's see how we can do it.'

How is Igneous differentiating its approach from legacy players?

So a couple of different things that we wanted to do was, and this is a common trend as you see with new generation products, focus on APIs first. So make it easy to integrate into anything that's out there. So whether we're talking to NetApp or Isilon EMC or [Apache] Accumulo or Pure Storage, they all have APIs that we can link into. Next is catalog all this data, scan it, bring it in, allow you to apply your policies and then create extremely high-performance latency-aware data movement. And the reason we did that is very simple. If you have an application that's running, you don't want it slowed down by having a backup cycle interfere with it. So we can look at the behavior of the data and know whether to throttle down or throttle up based on what performance we're seeing and what we're seeing on CPU impact and that sort of thing. … And the last part is that when we looked at it, the other key piece of feedback from customers was, look, we want these things to look as much like a web service as possible. We want it on-demand and sold as a service.

What's the impact of that on-demand mentality for customers?

When we go to market, even though there may be on-premises hardware, we still sell it as a service on a Terabyte-per-year cost basis. So they can throttle that up and down and, ultimately, whether they're working with all cloud or a combination of the two, they're able to control their cost model and scale it as they need it. And we do all the maintenance for anything that happens to be on site as well. So [you can] take all the different file systems, different indexing systems, put them into one, consolidate it, and then allow you to set your priorities for tiering to cloud. And this is a classic multi-generational problem that we're now solving in a cloud world versus a heterogenous or SAN world. So pretty straightforward.

Is it just enterprises that are adding data management to their storage solutions or are SMBs doing that as well?

No, a lot of them are SMBs. So I'll give you an example, one of the companies we work with is Paige.AI. They're a spin-out of Memorial Sloan Kettering and they're a startup within that organization and they're getting large volumes of data for cancer research scans, and then they're bringing those in and developing AI-ML [artificial intelligence/machine learning] models for doing diagnostics and that sort of thing. And they have the same challenge, which is we don't want to buy tons and tons of infrastructure in order to do this, we don't want to re-create what the overall chain is, so we're doing that as well. We have studios in the [media and entertainment] space that are as small as 50 people and as large as many thousands, depending upon what they're looking at. … And this is one of the examples of the workflow that we do. So you take the large volumes of data, so in the case of like a Paige.AI, we bring that data in, we catalog it and then we allow them to search. Not only do we protect it, we allow them to search for it and say, ‘Here's the parameters of the type of research material we need in terms of the nature of the cell, the nature of the condition, some of the demographic data.’

Igneous has been working through channel partners from the beginning, but now you're launching a formal program?

We've tried to take a very pragmatic approach to this. As we've talked to channel partners and even the deals we've done so far, even though we haven't launched a program [they] have all been through partners. … We talked to these partners and said, ‘Alright, we're a new company, you've seen thousands of new companies trying to enter this market, what makes sense?’ And they said, ‘Look, this boils down to a couple of very simple things. We both need to grow new logos. You need the help of the channel to get introductions to these companies, and we want to make sure that when we introduce you to these companies that you're being good stewards of the trust that those customers have placed on us.’ So we've followed that approach and that's really where the growth part is. We've focused on strong incentives around putting new deals in place and then making sure that once we're there, we have an ongoing customer success team that makes sure that we can expand and there aren't troubles. And we do 24/7 monitoring of the system in order to do that.

What else did solution providers say they needed from your program?

Keep it simple. Don't ask me to have four trained SEs and this many trained salespeople and that's one thing going. Because it may not apply to all my salespeople and all my SEs. Let's focus on a deal-by-deal basis and let's identify those very specific customers that make sense. … And then the last part was they said, ‘Look, we need to make good margins, so unlike most programs that are some discount off a fabricated list price, we've taken the approach of saying we're going to do a guaranteed gross margin model.’ So we've got some pricing barriers that we have to stay within and that's true for every customer, but we've taken the approach of we're going to do end-to-end deal engagement with the partners because it's new to them. So it's going to be show one, teach one, have them run on their own. And again, this is just trying to be pragmatic in it.

How many customers does Igneous have?

It's under 100. I don't want to oversell it, but we're in that range.

Is the plan to be 100 percent channel?

It is now and will be in the future. Today it's a fairly classic enterprise-type model. As we roll forward with a couple of new products coming next year, we'll add DMRs like CDW and Insight and then also expand into some of the MSP-type players. But it'll be all channel. … We should have about 20 partners when we launch the program.

And can you tell me more about the margin, the guaranteed gross margin you were talking about, how that's going to work?

It's very simple, we're going to work with the customers on setting the price with the end user and they get a [competitive guaranteed margin]. We have set some parameters around what we've got to do in terms of pricing, but we feel that based on what we've seen for our average sale prices so far, we should be able to consistently provide that to customers. And over time, as pricing changes we'll adjust our approach ... ‘approach’ is the wrong term. If prices do come down, we will adjust that as we go forward.

But the critical point to this is that channel partners are placing a significant trust in an emerging vendor. And we want to show that commitment back and we want to make sure that we help them close the deals that they've invested their time in.

So then is there opportunity for them to add their own other services to this?

Absolutely, so they can add their own other services and then obviously as we move to a reference architecture approach, they'll have the opportunity to sell incremental hardware, make gross margin and services on that. And there are some future products coming that will also create professional services opportunities for them.

What's the ideal type of partner for this?

I think right now most of the partners you'll see will be regional-driven. They'll be vertical-focus-driven. These are the four areas where we've seen the strongest take so far. So again, life sciences and this includes medical research, this includes genomics and a number of subcategories in there. The electronic design area, so silicon 3-D design, anything where you've got renderings of things like airplanes and automobiles. On the media side, not a big surprise, post-production, game design, that sort of thing. And then the AI-ML, it's really run the gamut from research to autonomic driving and what we found is that there's a very clear line. There are some AI-ML things that are born and created in the cloud where the datasets are all up there and they tend to do that in the cloud. But where the datasets come or are required on-site, and that again, when you talk about these areas, you've got artists creating scenes and adding special effects and all the other stuff. That's where we tend to see the strongest play.

There's been a lot of commentary back and forth among some of the big-name executives in the industry about the differences between the cost of private cloud and hybrid cloud. What role do you see Igneous playing in helping contain costs of cloud rollouts?

So there's two things that we do that I think are important. One is with our scan we give you the ability to understand where your data is and what the cost of the storage a platform that it's on. So we help you understand and manage that. The second is that when we do place things in the cloud because we write it as an object, we help mitigate some of the cloud costs. Because today the cloud services vendors, there's no charge beyond the telco costs to upload. And their storage costs are very cost-effective. But if you want to export items from the cloud, then that can become more pricey. And the way that our product works is we break up very large files and very small files to help manage the cost model for the cloud. … Obviously we're big proponents of the cloud, it's a great tool but like everything in life, not one tool does every job.

Do you have a sense among the customer base for what percentage are all public cloud and what percentage are hybrid?

Within our customer base I would say because of the nature of the customers we've been focused on, there have got to be 90-plus percent hybrid.

What do you feel is going to be the biggest challenge for solution providers as they try to get going with you guys?

I think probably the biggest challenge is going to be working with different arms of the [customer] organization, the business owners versus the data owners. Because the data owners have a certain set of priorities and requirements, the business owners have a different set, and making sure that those two groups both get satisfied in the sales process.

How does that struggle manifest itself for partners in the field?

We've had some accounts where researchers want to do everything on their own in the cloud and don't want to use IT and vice versa. But they've had experiences of data loss. And how do you bridge the gap between IT showing that they can provide services at or near the cost of the cloud providers, with the flexibility of the cloud providers? And that I think will be the biggest challenge. The technology itself I don't think will be a challenge for people at all.

Can you talk about what the economic impact would be to a partner of adding this type of solution to their hybrid cloud or their public cloud portfolios?

From a financial impact perspective, what it will allow people to do is reallocate spend from maintenance-level investment in IT to innovation-level in IT.

How significant is the opportunity with Igneous for partners to add margin to their cloud solutions?

I think the opportunity is fairly significant, and there are two dimensions that help with that. One is that this will be a higher-margin product than I think legacy solutions they've been selling, that have been ground down over the years. And because this will enable them to work with the customer for more services, that will help them grow their margins.