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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Dell Technologies Partner Program – Evolution not Revolution – Consistency to Drive Continuous Improvement

Rola Dagher is the new global channel chief at Dell Technologies. Proverbially speaking, changing of the guard brings in its wake anticipation of partner program changes. Because of the success achieved, Dell Technologies does not feel compelled to make significant modifications to its partner program. On the contrary, continuous fine-tuning of the program has helped Dell drive channel partner growth. While the core tenets of Simple, Profitable, Predictable remain, Dell plans to target consistency and constant validation with some refinements. For example, Dell is simplifying the partner preferred program (now to be named Power Up), launching a new platform to track earnings, MDFs, MyRewards with lower latency and cloud-like functionality of partner portal increasing investment earn-outs with potential to cross-sell and upsell. Dell had launched MyRewards in 2017 to capture the mindshare of the channel sales reps. The system awarded $1 value in points for cash to redeem for products and travel. 2017 also saw Dell launch its digital marketing platform (which has grown enormously), introduce Activation Packs for smaller partners with pre-approved MDF dollars, and develop compensation to channel partners on contract value for the cloud (consumption models).

Dell and its partners have been pleased with the channel strategy, and, as a result, Dell does not plan to change course. While every other IT supplier is planning for channel transformation, Dell's channel leadership believes in "evolution, not revolution." The enterprise partner preferred and commercial preferred programs (for targeted account lists) have been successful, yet they were complex to follow and execute. Learning from the experience, Dell has simplified the program to make it even more impactful for Partner of Record (PoR) partners. An identified list of accounts where partners are already working with Dell competitors; Dell sellers commit themselves to joint account planning to shift the customer to Dell. Partner competitiveness, better sales engagement with clarity of seller-partner offering, and robust programs on competitive takeout and customer acquisition have helped Dell and its partners. All part of the evolution strategy.

Until last year, Dell had struggled to simplify deal registration, both due to the task and technology transition's inherent complexity. Dell is therefore launching a better partner experience portal. Regardless of the complexity, due to relentless execution and commitment, Dell's partners made giant strides. There is no question that Dell has a complete product portfolio in the IT industry. This position has significant potential benefits but can lose impact due to the need for partners to navigate an immensely complex set of offerings. Dell deserves plaudits to recognize this challenge and respond with partner programs that mute the various solutions' roar and enable partners to focus on working effectively – and profitably – with their customers.

Channel partners are the custodians of customer needs. Armed with knowledge, training, and experience, partners are and can be in a great position to guide, design, architect, deploy and manage technology solutions for end-customers to work through the crisis and the future. Despite the headwinds, channel partners are quickly adopting both tactical and strategic approaches to solving customer problems to deliver customer success. Partners are the beacons that customers are looking for – partners who listen, share pain points, advise, and are responsive. It may be the best of times to develop a transformative strategy that is customer-in rather than product-out.

To help frame understanding of go-to-market investments, Techaisle asked its panel of channel partners to identify which of a handful of statements they believed to be accurate for their business. Data shows that the channel is in a longer-term transition. There is a need for sales staff to react to increasing customer's technical knowledge by being more innovative is essential and vital for their businesses. There is also broad and growing agreement that line-of-business selling is rising as a proportion of all sales and that "the as-a-Service model has significantly changed what a partner looks for in sales and business development professionals." These findings indicate that channel sales staff can't rely primarily on fulfillment-centric deals. Instead, they need to demonstrate a real understanding of customer business issues and how technology can deliver meaningful business benefits.

Dell is working on its partner training and sellers to transition from product to solution selling, from pricing-led to outcome-driven strategy. It seems to be yielding results. For example, in Q3, over 60% of Dell's new customer activation was through the channel. An increase in incentives to 20% for flex-on-demand offerings (for both referral and resell) lead to US$1.3B in offers in as-a-service. Dell is working to enable partner participation with Project APEX and access to Dell's as-a-service portfolio. The first offering in its portfolio will be Dell Technologies Storage as a Service (STaaS), delivering a pay-per-use model and elastic capacity and deployed on-prem. It will launch in the US for Dell's direct business in the first half of the fiscal year. Dell will share an update later this fiscal on partner availability with Project APEX, including STaaS. The key enabler of Project APEX is the Dell Technologies Cloud Console. This single web interface enables both customers and partners to manage cloud workloads and services. The Cloud Console's initial rollout will allow customers to browse a marketplace of IaaS products, services, and solutions. For partners, Dell is working on a roadmap and timeline for the console to be API eligible, allowing partners to integrate with their marketplaces.

Techaisle data shows that transformation partners are targeting revenue growth over quarterly, short-term incentives. But incentives seem to work wonders for Dell. Channel partner interest in fees and activity-based incentives are driven primarily by firms with traditional channel business models. SIs and VARs, who form most Dell partners, consider this type of stimulus most important to their businesses. But firms developing IP prefer solution development funds (which has been introduced by VMware). Channel partners focused on commodity products may not capitalize on deal registration, and only large partners would have access to staff/embedded headcounts. Rebates may be popular, but they do not increase margin much and often depress street price instead. Fees and activity-based incentives support solutions that require very long sales cycles, which would not be as beneficial in a rapid-turnaround niche. Solution development funds can be instrumental in building an ecosystem around a platform product but may take a long time to generate tangible results. SPIFs are generally helpful to shaping sales behavior but can be expensive, require effective targeting and management, and only work where there is buy-in from the partner business's owner. Within the overall channel partner ecosystem, 50% prefer fees and activity-based incentives, and 43% want solution development fund. Staffing and embedded headcount are preferred by 37% of partners.

It is evolution and not revolution. Those expecting Dell to make market-shattering transformative changes will likely be disappointed. Dell is working towards simplifying operations, educating partners, and enabling better digital marketing. Yes, there is a lot more Dell needs to do. Recent work by Techaisle shows that the need for updated understandings of channel management imperatives has expanded beyond the tactical questions of sales or management metrics or marketing activities. The pandemic has been an accelerator. Digital transformation provides enormous opportunities for the channel. It offers a means of establishing a customer relationship that secures ongoing/escalating account revenue and influence, improving the business outlook of channel firms who can capitalize on customer need for digital transformation support. For now, Dell's channel partner program has both its feet firmly planted on solid ground. Dell does not want and does need to take flight. Instead, it plans to and should continue its fight to remain valuable and loyal to the channel partner community.

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New partner program from Cisco seizes the channel transformation conversation

Cisco held its annual Partner Summit on October 28-29, 2020, where it announced its new partner program. Since then, I have been sifting through pre-event analyst briefings, at-event announcements, post-event partner discussions. It has been difficult to find flaws with the Cisco partner program's vision, trajectory, commitment, and investments that Cisco is making in an integrated execution model to simplify partner engagement, support profitability, and drive partner differentiation. Cisco is focusing on customer-in rather than product-out.

Key announcements:

  • New partner program organized around four roles (Integrator, Provider, Developer, Advisor) while maintaining three-tier structure (Gold, Premier, Select)
  • Partner Experience Platform (PXP), a digital house to deliver a single source of truth and provide actionable insights, API-enabled for more automation and higher efficiency for partner success; consistent eight-month initiative resulting in a move from 166 siloed partner tools to a unified platform approach
  • Business Critical Services (BCS 3.0), a set of advisory services for customer use cases, for example, a secure remote workforce, trusted workplace, cloud transformation, multi-cloud networking, workload management, and automation
  • Significant increases in incentives for participating in BCS, Success Tracks, and Solution support

Rather than elaborating on each announcement's details, in this Techaisle Take, I am highlighting the three areas that showcase why Cisco is leading the charge in defining channels' future.

Future-ready partner profitability journey

The impact of the cloud on traditional channel business models is wrenching at all levels of business operations. Pay-as-you-go models are compelling to customers; there are higher rewards in business valuations for recurring revenue, and pursuit of as-a-Service calls for different sales approaches. Cisco recognizes that the profit model that was relevant yesterday, based on product lifecycle with margins, rebates, and close to the box services, is not the profit model that a partner will need to succeed. In direct contrast to several IT suppliers' narration about the customer journey, Cisco leads the partner profitability journey's conversation. Before the new announcements, the Cisco partner program was Cisco-out but not customer-in. Cisco put partners in a box, based on how they transacted or interacted with Cisco. The new program emphasizes the roles that partners play for customers. Besides integrators and providers, Cisco has added two new roles– developers and advisors. Developers who assemble solutions by leveraging Cisco components or building on Cisco's platform, and advisors who use their expertise to guide customers to the right solution, often in a pre-sales motion, or kickstart on the lifecycle journey.

Channel partners have looked to vendors for information on technology directions. They will continue to align new offerings with customer needs and internal resources with emerging requirements. This dependence grows more acute in times of structural industry change, as channel partners look to vendors for product insight and guidance on how to position their firms to ride with and not get swamped by the waves of change. However, the cloud has broken many of the links which connected channel and IT supplier business strategies. The buyer needs have become much more acute in the cloud era – meaning that the channel partner has an essential role to play in supporting mainstream businesses in IT acquisition. But the services/functions that have justified vendor payments to the channel have less direct value, which has strained the vendor/channel relationship. The channel's most significant opportunity is in meeting buyer needs – and that requires that the channel partner plot a path for the buyers rather than vendors. Cisco's new partner program helps partners be future-ready and build these capabilities to drive profitability by delivering full customer value across the lifecycle.

It is critical for partners to invest in new capabilities and differentiate their practices because the differentiated practices can jump-start their profitability journey. Front-end discounts and deal protection matter too for the partners. Cisco is inching towards a vendor-partner zero-friction future by introducing guided deal registration, which means faster approval time through a simplified process, apply the right promotions to offer the best discounts. Partners that are customer experience specialized will see incremental discounts and protection.
To align with the primary revenue model, cloud channel partners often view sales commissions as tied to a book of business, which is a challenging proposition to present to seasoned reps who have substantial quotas and variable compensation expectations. It is one reason why established channel partners have difficulty migrating from product sales to hybrid/cloud sales. To assist the partners, Cisco provides a bonus for maintaining monthly recurring revenue and a cumulative book of business. Lifecycle incentives vary from US$7500 (lifecycle starters) to US$100,000 (for defining a use case and then successfully delivering upon it) with the potential to earn up to 6% for additional software licenses sold.

APIs are essential to empower the consumption of Cisco technologies and enable partners to build tools and services on top. The shift to APIs isn't a matter of moving to where the market is going – it represents a requirement to accommodate a current need that will continue to increase in importance. Software-led business assessment is a tool that Cisco is introducing to help partners identify where they are in their journey. The tool identifies areas that partners may want to invest in or begin the process of becoming software-led and moving into the world of transformation. Associated with the assessment tool is a profitability simulator. Once the partner has determined the transformation path it wants to take, the tool simulates a profitability profile to ensure that partners get a return on their strategic investments.

Pivot to customer value creation through as-a-service

The notion that channel businesses need to add value - logistics, installation of software, upgrade, or implementation of a system, provision of services - to remain viable is old. Each value-add has an essential factor in common – it looks at what the channel does to enhance its revenue stream or differentiation. However, future-ready channel partners need to look at the issue from the other direction: how do the products and services delivered create value for the customer? What is my client able to do differently or faster, or more efficiently in a way that enhances their revenue stream or differentiation? In today's post-pandemic reality, customers are not especially interested in optimizing their hardware and software widgets' performance – they are focused on improving their businesses' performance. And this is where Cisco is focusing, empowering partners through agility, relevancy, and profitability to create customer value successfully.

We know that "as-a-service" is growing and is on its way to becoming the dominant technology acquisition model, as both a consequence of customer demand and a result of IT suppliers changing their business approaches to emphasize the as-a-service delivery model. Like HPE and Dell Technologies, Cisco is on a mission to empower buyers' preferences for rapidly deployable solutions through as-a-service, the need to work with managed service providers, realize value from technology investment, and assure the desired business outcome.

Cisco is estimating its as-a-service opportunity to be US$140 billion, two-thirds of which is potentially from the small market segment with pre-integrated solutions based on consumption models. Cisco is approaching the new technology acquisition business model holistically through three lenses: 1/ delivering exceptional outcomes, 2/ enabling and facilitating agility for Cisco customers by removing their operational burden when adopting Cisco solutions, 3/ regardless of the IT and cloud maturity as well as the size of the business, allowing them to adopt Cisco solutions in the most flexible manner.

Seeing the 'new normal' through the eyes of the customer

As per Cisco, its most profitable partners have been winning larger deals by accessing new buying centers outside of IT, by co-selling with ecosystem partners. Over the past six months, the need for partners that can support strategy, implementation, integration, and optimization has become much more acute. Business patterns changed by COVID-19 require businesses to accelerate digital transformation within their operations. In many customer organizations, purchasing authority has shifted from IT to business management. The shift requires partners to position their offerings and services in terms that emphasize business metrics, such as time to market and measurable revenue and cost impact, rather than technical specifications and targets. This business focus ripples through partner marketing and technical operations: marketing needs to emphasize time-to-benefit, the ability of individual solutions to contribute to overall business agility, and the direct application of IT features to pressing business needs; on the technology side, partners need to focus as much as possible on services centered around pre-built vertical solutions that can be deployed and integrated rapidly, with replicable processes and predictable outcomes, so that delivery matches the vision set by marketing and the requirements of the customer executives.

For decades, a turnkey solution approach worked well for customers, the channel, and vendors but it is out of sync with a hybrid world focused on a continuous path towards ever-greater levels of digital business capabilities. Business users are not committing to static systems that manage defined tasks/processes; instead, they are building approaches that allow for incremental deployment of new capabilities that increase reach and efficiency. And this is where Cisco is heading with a book of business aimed at the business buyer through a co-selling approach with Cisco sellers and ecosystem partners. To be successful, channel partners need to develop an ability to be flexible in their approach to customer needs. Cisco is committing to support this flexibility by enabling an ecosystem that can extend the ways solutions are deployable by adopting APIs that facilitate integration across complementary offerings. It also requires Cisco to establish alliances that help position these integrations as part of a strategy aligned with a digitally-transforming market.

Final Techaisle Take

In short, Cisco's partner program is ready for the future. It is a program that can help channel partners become the navigators in plotting customer digital transformation strategies.

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IBM empowering partner ecosystem to co-create the future

Enablement, execution, empowerment and experiences are the unwritten principles driving the entire IBM partner team in transforming the rules of partner engagement. At the recently concluded IBM PartnerWorld at Think conference in San Francisco, the term partner ecosystem was emblazoned across the entire IBM partner leadership team. Techaisle data shows that channel partners are faced with balancing investment in depth vs breadth and increasingly turning to a larger ecosystem for partner-to-partner collaboration. Between 2014-2018 there has been a 69% increase in opportunistic partner collaboration for sales. By using the power of artificial intelligence (AI) to empower its partners, IBM is formalizing partner-to-partner collaboration and ecosystem, named IBM Business Partner Connect, built on Watson.

With an instant match capability, IBM Business Partner Connect has been designed to accelerate solutions for end-customers by matching partners looking for assistance with partners offering expertise. Business Partner Connect also allows partners to join the business partner Slack community to share best practices and find new partnership opportunities. In its pilot stage, approximately 800 partners participated, which unveiled 300 matches.

Enablement to Empowerment

In the current channel world – where core business conditions, market opportunities and requirements are all in flux – an opportunity to provide relevant guidance, targeted business advice from IBM, plus peer-level input, is an enormously important and valuable capability. Partners need guidance to transition through current market and business changes and a community is an appropriate context for this guidance, and leading the community will be IBM at the center of this dialogue/activity. Over time, Business Partner Connect and the community platform will give IBM the ability to involve a large number of partners, increase IBM’s centricity, and provide a revenue line into the channel operation.

It is quite evident that a key factor in IBM’s partner program’s momentum and transformation has been John Telstch’s leadership and his own ecosystem of senior leaders (Carola Cazenave, Jacqueline Woods, Catherine Solazzo, Chris Oliver, Jamie Mendez, Ken Gregory and Rose Nunez). He has been listening, responding and committing to having the channel partner’s back. Techaisle’s latest study of channel partners shows that 52% of partners want their vendor partner channel chiefs to be setting a clear overall strategy and 44% value trustworthiness and accountability. John gets a check mark on both these value traits.

Vendor organizations usually focus on simplifying drivers of channel enablement, but IBM is consciously extending enablement to empowerment to deliver customer success. Enablement (usually incentives) is a short-term lever to change immediate partner behavior for achieving sales quotas and revenue targets. Regardless of addressing short-term objectives, it is necessary. In Techaisle’s study, 50% of partners mentioned that incentive programs are important for marketing and sales. Empowerment helps partners transform themselves from a vendor’s sales agents to sales advocates especially when increasingly partners are focusing on business outcomes with hybrid/as-a-Service delivery solutions and shared-risk partnerships. IBM has spent the last one year in understanding the present and is working consciously and furiously in shaping the future.

Simplifying partner experiences

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Pick of the Week: IBM’s Clear Vision of Mid-Market Cloud Opportunity

On Wednesday this week, we attended a Channel Expert Hour webinar (sponsored by IBM) and produced by Nine Lives Media, Inc. It made our Pick of the Week for three reasons:

  1. Very clear statement of IBM’s Addressed Market
  2. Very clear statement of IBM’s Three Tier Mid-Market Cloud Offers
  3. Very clear statement of IBM’S SMB Channel Partner’s Opportunity

The format of the webinar was informal, with ongoing Q&A by channel partners and users. We started off with an overview of the SMB move to the cloud by VP Joel Raper of Azaleos, Inc., a 300+ employee, Seattle-based Service Provider focused on Microsoft UC&C Stack Managed Services (Cloud, Design, Deployment and Lifecycle Management) to the Mid-Market.


This was followed by an overview of the IBM Mid-Market Cloud Partner Program, by Ed Bottini, a Cloud Ecosystem Program Director at IBM Global Services. As mentioned, within three or four slides, it was clear where IBM saw the opportunity, what offers were available to address it and what partners could do to take advantage of IBM’s resources to sell into the market.

IBM’s Addressed Market


In typical IBM fashion, this graph represents the big picture very well: They believe half the Opportunity is SaaS growing at a compounded 25% rate, three-quarters is XaaS, compounding at ~25% - IaaS is growing at 35%. The remaining is ~25% Private Cloud and Non XaaS, growing at 20%.

This is not an acknowledgement of the IBM estimates, the point is that they see huge opportunity growing very rapidly in their base and it comes through when they talk about it. This answers WHERE REVENUE opportunity is for SMB Channel Partners.

IBM’s Three Tier Mid-Market Cloud Offers

IBM’s Cloud Solution Stack includes the Foundation layer of Servers, Networking, Storage and Secure Data, using a virtualized environment of IBM hardware, software and networking including PureFlex and Bladecenter Foundations for Cloud, along with IBM Cast Iron to integrate different clouds and applications.

On top of the Foundation is the Infrastructure as a Service layer, SmartCloud Services, which includes Pay-as-you-go Managed Backup Services, Tivoli System Management and Cloud Automation “middleware”,  Managed Security Services, and IBM SmartCloud Enterprise, which according to IBM delivers "enterprise-class public cloud infrastructure-as-a-service (IaaS)—delivers secure and scalable hosted IT infrastructure with on-demand access to virtual server and storage resources."

The top layer is the Applications Tier, Software as a service (SaaS), SmartCloud Solutions,  "a software model with applications centrally hosted in a cloud computing environment and accessed by users over the Internet."  As described in the first section, IBM has identified SaaS as half the opportunity growing at 25% CAGR; this is where the rubber hits the road. IBM has never been known as an Application Software vendor, preferring to invest in Systems Software, Database Technology, Tools, Middleware, etc. – which they have done very successfully. In addition, acquisitions over time have steadily been used to both plug holes and repurpose for gaps in applications - Cognos, CoreMetrics, SPSS and Unica being examples in Analytics, along with Sterling for e-Commerce, Merchandising and Supply Chain Management. The bold decision  (at the time) to fully embrace the Open Source movement in the '90s and leverage it with their tools like Websphere to participate in the rapid growth in web-based computing has also had a positive impact (i.e., SugarCRM). This answers WHAT SOLUTIONS offer the opportunity for SMB Channel Partners.

IBM’s Five Mid-Market Cloud Options for Channel Partners

The approaches SMB Channel Partners can choose to work with IBM is next, and  is  evident in this chart. Ranging from Tools, to Infrastructure, to Cloud Building, to SaaS Application Providers, Partners have a variety of options from which to select. This chart is pretty self-explanatory, so we won’t go into redundant detail here. This third leg of the stool is a clear view of HOW the Opportunity can be addressed by Partners.

This is not meant to be an endorsement for IBM - they are not the only Systems Vendor that 1) has a strategy, 2) has an integrated solution stack and 3) has a Cloud Partner Program. As a firm that helps companies sell more effectively into the SMB space, what appealed to us was the simplicity of the message and the ease with which the story was communicated and re-enforced using  credible, robust and tested Enterprise-level offers. In our opinion, IBM sounded a lot more like a young SaaS start-up than a hundred-year-old East Coast manufacturing company.

Postscript: When thinking through how the industry has consolidated around a few major system vendors, we wonder whether Cloud Computing strategy and execution have impacted confidence in the company?

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