Veeam President On Taking Partners From Veritas And Commvault, The Subscription-Based Market Opportunity And More

The Veeam Partner Push

Peter McKay (pictured) became president and COO of Switzerland-based disaster recovery and backup firm Veeam in June, and the VMware and IBM veteran is already making his mark.

On Tuesday, the company introduced what it calls the Veeam Availability Platform for Hybrid Cloud, a combination of all the company's products. The platform allows customers to use one solution for backup and recovery across on-premise, cloud and SaaS applications, and McKay said it's part of the company's aggressive push into the enterprise.

It's a lot of work, and McKay told CRN that one of Veeam's main tasks is getting channel partners on board with selling the company's software on a subscription basis. So far, it seems to be working. McKay said Veeam has successfully taken partners from key competitors, including Veritas and Commvault.

Here, McKay discusses the opportunities for Veeam and its partners in a rapidly changing market for backup and recovery, as well as the market forces driving the industry and its customers into the cloud era.

What follows is an edited excerpt of a conversation he had with CRN.

Solution providers and customers have a number of options for data protection. Why should they choose Veeam?

One of the things the company has done a really good job of over the years is building solutions customers were asking for and making those solutions work. Veeam just works. People purchase Veeam because it works. It does the job. The loyalty of the [Veeam] customer is more so than I've ever seen in my career. That's the reputation we've built over the years. Now we've expanded, and I think we do the best job in the industry. I've been watching Veeam for five years. Veeam and VMware are very strong partners, so when I was in an account and I saw Veeam, I was amazed at how loyal the customer base was. As much as we tried to get that budget from them over to us, they weren't budging. I have an incredible appreciation for the incredible technology they've built over the years.

How can you capitalize on that reputation now?

We spend a lot of time talking to customers about what you need, what's missing, where are you going, what's next? Microsoft Office 365 is an example of something customers are asking about and we're building it in. It's the concept of innovate and iterate on a constant basis, I think that really differentiates us in the market. Compared to a lot of companies that have been in the industry for so long – slow-moving, methodical businesses – we just move fast.

HPE, EMC and Dell all have integrated data protection solutions. How do you convince a customer to go with a stand-alone solution?

VMware's strategy is all about hardware [being] a commodity [and focusing on] software. They try to do everything in the software to continue to commoditize the hardware, and I think that's the way it is today. The merger of Dell and EMC is really a consolidation of their portfolios to optimize cash. For us, it's more about a software play. Not only is it continuing to commoditize hardware because it doesn't matter, it's all about software. But it's the same thing about the cloud. If you want to move to Amazon or Azure, moving workloads on and off, the commoditization of clouds will be the next iteration. Our availability platform is about doing that. There's a lot of disruption on the hardware side. Dell and EMC, or you talk about HP and the potential spinoff of their software. Dell sold off its software. Veritas [was spun] out of Symantec.

What kinds of opportunities does that create for Veeam?

There's a tremendous amount of white-space opportunities that we see in the market that we're going after. There's a big market of legacy solutions that are now at a point where companies are looking and saying, 'Why am I spending all this money on all this? There's got to be a better way.' Once we're in the door and we give a proof-of-concept, we have a 90 percent conversion rate. We just have to get in the door and show what we can do. A lot of the features are now getting us better suited for broader, more complex enterprise customers, which is not where we were two years ago, but it's the fastest growing part of our business. That's what we see as our opportunity. In the enterprise space, big companies around the globe are our focus.

Where are Veeam partners getting the most traction and seeing the best margins?

We're 100 percent channel. We're not like Commvault, where 50 percent of the business is services. All our service is done by our partners. They bring in the hardware, they bring in the software, they bring it all together as a solution, and that's been the lifeblood of the company for eight-and-a-half years. It's getting more and more complex, and it's driving the need for partner involvement, but different partner involvement, more focused on enterprise customers. It's more complex. The ecosystem you have to integrate with, the complexity of the workloads is significant, so it's a journey we go on with our partners together. It's not like VMware, which takes the top end and says "I'm going direct here," and then gives all the rest to the partners. That's not our approach. We have to move in unison with our partners. Our shift from a single product to a multi-product portfolio, our shift to push up into the enterprise aggressively, to go global much more aggressively, those are all opportunities for our partners to go along with us.

How well is your partner community growing, and which vendors are you winning partners away from?

There's the big guys who grow and continue to have phenomenal years, but there's a steady influx of partners coming in every quarter. People want to get into this. Veritas partners, Commvault partners are starting to shift over. The software works, and they can make money selling it. I think we've done a really good job at making it a win-win for our customers, our partners and Veeam.

Considering all the change in the market, what do you need from your partners that you may not be getting now?

I would say continuing to grow their technical expertise as we go into the enterprise. ’It’s harder, and it requires a [different] skill set.’ ... I think that's an evolution, moving up. If they're [in enterprise accounts] convert and enable on Veeam, if they're going to be like, 'Well, here's Commvault, here's Veritas,' we're now into that game, and we want to get that opportunity, so allow us to come in and help. Also, as workloads are shifting to the cloud, the partners should want to get aggressive about moving to the cloud. Some people see it as cannibalizing; they want to slow that migration to the cloud. .. We can't. If it's going to go, you want to get a piece of that. You want to be part of that journey as opposed to them going around you. They need to be prepared for that journey.

Is your incentive structure formulated to get partners to fall in line with that?

We survey our channel partners, and they always want more margin, but they make more money on Veeam than with most companies that are out there. We're also not in conflict with them. It's not like they're going to do all the work and we're going to take it direct. We've all seen that game. There's an opportunity for them to do really well with bigger opportunities, more complex, more specialized transactions that they can make a lot more money on, as well as the services around it, and the renewals and everything else that go with it. We look at it as a phenomenal opportunity for us, ripe for disruption. It'll be tougher competition, but that's where we need the partners. We also need partners to help us open the door. Partners have great relationships, and we only go through the partners. We need them to get us in the door.

At this point, do you think the partner community is on board with doing business on a subscription basis?

It's a struggle for a lot of companies. I saw this at VMware. I saw it at IBM. Let's face it; The best model in the world in the software industry is perpetual license. That shift to subscription, usually the comp plans for a lot of guys is such that they don't make as much on subscription. We're getting more aggressive in making sure internally that they're not dis-incentivized. You've got to make more of an incentive to make it the same amount ... That's the mentality we have, but it is a shift. It's a shift for us, and it's a shift for our partners. I would say you're in the second or third inning in a nine-inning game. That's still a big transition. VMware, IBM, Oracle, everybody's going through it, and if they're going through it, the partners are going through it as well. You have to let the customer drive it. I think too often it's the sales rep that's driving it.

You announced the new Platform today. Does your partner program change as a result?

No, but there are going to be more solutions out there that are priced differently, and they have to understand that they are priced differently. Instead of sockets, it's workloads. There's a little bit more they have to know, but it's almost making it simpler. We've already done a lot of work to adjust on subscription already, so a lot of these changes are going to be part of that. As we get closer to 2017, we'll be looking more closely at that. We'll be meeting with a lot of our channel partners and getting some feedback to see if there's more work we have to do.

With the new Platform, it seems like partners can say to customers, 'You don't need disparate backup and recovery solutions for on-prem, SaaS and cloud anymore.'

Exactly, and 'As your VAR, I can help you with that. I can help you manage that. Take the back end out of the equation and let me run that for you.' I think it's a phenomenal opportunity for our VARs, our corporate resellers, and also we're starting to see service providers and systems integrators getting more into that cloud game as well.

Is this a good play for a partner that runs its own cloud? Is that a smart move?

Well, whether that's a smart move or not, I don't know, but I will say yes to two things: One, if you're building a cloud, it's a phenomenal service to offer to your customers. DR as a service, backup as a service are phenomenal opportunities to offer to your customers on your cloud. If you don't want to do that, it's a phenomenal opportunity to broker that. You can resell someone else's cloud. If they want to be the bank and finance all the hardware and stuff that goes into that, then resell theirs. Leverage their money, their investment.

What about the IT-as-a-Service market? Are you seeing growth there?

I think that's a huge opportunity for the platform. More and more companies are becoming the cloud for their business and offering it as a service. A lot of these IT people don't want these workloads to go to Amazon. It's kind of like the Wild West with client/server, when everybody was moving up to servers. It's the same thing that's happening with Amazon, and they know there's going to come a time when they're going to have to manage this crap. They're worried that that's going to happen and it's all going to fall back on them, so what they're doing is build their own cloud internally. All the things you can think of as a service provider, companies need that, and they're doing a charge-back and they're doing their own cloud to compete the shift to all these cloud providers. They see Amazon as a competitor to their own IT.

That seems like it would be happening at big companies like GE, or Fidelity.

It is. All those guys. State Street, Prudential. But we are seeing it move down into the commercial space where they're offering it as a service. It's a 1,000-bed hospital, or a company with seven offices, and they're trying to offer it as a service to all seven, and they want to do DR. They want to be the one that does it. They're the ones with the expertise, and so they're going to offer it as a service to the others and make money doing it. It's becoming more common. And a partner can say, 'Let me manage it for you.'