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VMware Partner Program Plan
 

VMware Partner Program Plan

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  • This chart shows the number of Enterprise and Professional VIP Reseller approved partner applications. This number is slightly more than the number of actual VIP Resellers because an applicant is not an actual VIP Reseller until they submit their signed agreement and program fee. The number of VIP resellers is experiencing steady grow growth, as are the the administrative and infrastructure needs to accommodate this growing number of resellers. There is an upper limit to this growth, depending on the type of reseller and we are currently developing a target number of VIP Enterprise resellers for each geographic area. The growth of Enterprise product resellers will continue to increase in APAC for some time due to the small number today, but their growth in the Americas and EMEA will likely level off this year. Resellers for the Professional products should continue to grow worldwide. The two-tiers in the VIP Reseller program do not currently meet the diverse needs of the increasing number of resellers and we’ll need to create some additional partner level(s). Maintaining and communicating with these large number of partner companies and their associated employees (tens to hundreds) is presenting an increasing number of problems with the current VMware IT systems.
  • The VMware web site lists 165 VIP Enterprise Resellers in North America (an additional 30 have not yet been listed due to having not signed the agreement or paid their fee). Forty of our VIP Enterprise resellers are in the VARBusiness 500 (2003) which includes regional VARs with $18MM in annual revenue to global systems integrators with billions in annual revenue. The median annual revenue of the VARBusiness VMware resellers is $100 MM. The median for all VMware resellers is much less than this. The median annual revenue for VIP Enterprise resellers that our CSMs suggest as candidates for the top-tier in a new program is $80 MM. VMware contributes less than 2% of their total annual revenue. This small % contribution can make it difficult for the reseller to provide the focus and resources necessary to build VMware business. In the VARBusiness 500 survey, the VARs could indicate up to five out of twenty-two primary areas of technology focus. This chart shows the number of resellers that indicated technology areas which had potential synergy with Vmware and the percent of them that are VMware resellers. There was a significant overlap with those having a focus of either Intel and/or Unix servers. We plan to further investigate complimentary technology segments to identify opportunities and coverage gaps.
  • This chart shows the percent of VIP Enterprise Resellers that are in complimentary vendor partner programs in North America. These vendor partners include the following: IBM Premier Business Partners focused on SAN Citrix Platinum Partners HP and IBM partners in the VAR Business 500 focused on Intel and Unix servers Additional complimentary segments will be evaluated for opportunities and coverage gaps in the future. An example are the following IBM Business Partners segments (#’s are for North America): xSeries or pSeries Server – 1,300 Premier partners Above, but with SAN technical certifications – 81 Premier partners Server Consolidation as a business solution - 577 Premier partners There is a high degree of overlap with top-tier IBM partners focused on SAN and Intel/Unix servers. However, there is less of an overlap with HP resellers and this may be an area to target.
  • While there are an increasing number of VIP Enterprise resellers in North America, coverage gaps exist in major business centers. Large cities such as Dallas, Detroit and Philadelphia have the headquarters of only a single Enterprise reseller with the result that there are far too many companies in the area for the reseller to adequately cover. Smaller cities such as Denver, Montreal, and Baltimore-Washington have large numbers of Enterprise reseller headquarters – perhaps too many? We plan to assess the ESX sales volume and business profile for the resellers covering these major business centers to identify coverage gaps for top-performing partners. We also plan to investigate coverage by area of industry focus in the future.
  • In addition to the VIP Reseller program, other VMware partner programs are growing along with their administrative and infrastructure needs. These programs have common processes, systems and tasks that result in duplicate efforts. Automated systems and personnel that would increase effectiveness, efficiency and partner satisfaction likely can be shared by the various programs and this should be considered when making an investment decision.
  • We need to continue to grow our reseller base (especially in certain geographies), but we must profile, segment and develop the top-tier partners to ensure that we don’t create a commodity market for our enterprise products. Channel conflict was the most important criteria to VARs when evaluating a vendor partnership according to the 2004 VARBusiness Annual Report Card. Ease of doing business, revenue/profit potential and sales partnering were the next most important criteria respectively. Increasingly we are receiving complaints from our Enterprise VIP resellers (e.g. Expert Systems Group, MSI, DSS) about losing sales to “fulfillment” resellers (e.g. Compucom, CDW) when opportunities go out to competitive bids from the purchasing department. This problem occurs because both the fulfillment resellers and the value-added resellers receive similar discounts, but their cost structures are quite different. The fulfillment reseller frequently is a large company (e.g. billions in revenue) with sophisticated business transaction systems and economies of scale that allow them to sell products at a price just a couple of points above their cost and still be profitable – in some cases they may sell at or below cost when the VMware product is part of a larger order with hardware and other software products. The value-added reseller frequently is a smaller company (e.g. tens or hundreds of millions in revenue) with as many or more technical employees as salespersons so they can deliver consulting, design, implementation and other services that requires they sell products at a price 10%-15% above cost in order to be profitable. Both types of resellers meet differing customer needs. Some require that software be sourced through approved fulfillment vendors to streamline their financing/payables and license management. Others require that purchases of software and hardware be subject to competitive bids. In those cases the fulfillment reseller has a strong advantage. If the customer knows exactly what they need and doesn’t need services with the software purchase (e.g. provide themselves), the fulfillment reseller is a good fit. If the customer needs assistance with evaluating needs, creating design and implementing solutions, the fulfillment reseller can’t provide a total solution and the value-added reseller is required. Value-added resellers frequently don’t charge for some or all of these services and cover their cost from the margin from the product sale. However, for the reasons previously mentioned, the customer may award the sale to a fulfillment reseller after the value-added reseller has already delivered many of the pre-sales services. In order to motivate value-added resellers of VMware’s enterprise products, to continue to provide the pre-sales services required by customers, we need to establish a multi-tier partner program with different benefits and discounts depending on the investment and services that a reseller delivers. Additionally, we should establish a consulting or influencer partner program that provides compensation to service providers that provide services around the sale of a product, but that don’t ultimately sell the product to the customer. We need to ensure that additional discounts provided to resellers can be tracked and managed effectively, efficiently, and accurately. Most VMware resellers purchase through distributors. However, we cannot dictate the price that a distributor charges a reseller for a product and trying to establish differential discounts through a distributor presents administrative as well as legal complications. Currently, VIP professional resellers pay no fee. VIP enterprise resellers pay an annual $1,000 program fee and must get 1 person technically certified. In return, they they can sell Vmware’s enterprise products, are assigned a channel sales manager that provides sales training at no charge, get a 20% - 30% discount off technical training/certification, receive NFR copies, get 50% off list price for internal use licenses, and receive marketing support and discretionary funds. Although some industry partner programs require no program fees up front (e.g. IBM, CA Cisco), there are substantial charges for services. Michael Haines, Gartner channel analyst, states that normally basic reselling agreements have no fee, while comprehensive reselling agreements have program fees around $1,500. The higher the fee, the more technical support that is bundled in. Haines says it is important that the reseller see that the value of the services received will be 1.5x or more of his investment. For example IBM offers a $2,500 value pack that includes many services that would be much more expensive if purchased ala carte (e.g. training reimbursements can range from $6K to $50K at the Premier level). There are numerous marketing activities (primarily seminars) conducted with our reseller partners, but currently we don’t work with them to develop an annual business plan for developing their VMware business. Marketing planning is informal and should be reviewed on a quarterly basis along with ROI for previous activities.
  • Each quarter goals should be established for channel marketing that support corporate marketing goals. This will drive marketing planning with our resellers. As we invest in building a professional reseller program and develop its members, we need to leverage our investment by marketing the value of the program and its partners as part of our corporate communications. Collateral and tools available to the resellers should be improved as should the timely and easy access to those through the partner connect site. Currently the information on that site is sparse and it is not terribly secure as there is but a single login and password shared by hundreds of individuals. This limits the value of information that can be provided through the site. As mentioned previously, channel marketing with partners is somewhat informal. There are no comprehensive plans, approval of marketing funds seems to be on an ad hoc basis, and its unclear what proof of performance or ROI analysis is done. Communications to the channel are primarily through flash emails which can occur in clusters and result in the partners ignoring them due to the volume and varying degree of importance or applicability. We need a standard bi-weekly or monthly partner communication that will include items of interest to most recipients (i.e. business, marketing, sales and technical). Time critical communications such as product or pricing announcements can occur through flashes as needed, and perhaps be better targeted to appropriate recipients based on the profile information provided. We need to create standardized processes for launching products, handling applications, administering marketing funds, etc. to ensure that these occur in a timely manner and important items are not overlooked.
  • The manual systems or in-house IT systems that support the current partner program are not able to keep pace with the growing number of partners and their increasing demands. We need to invest in improving these. EMC is not able to provide any systems at this time as they were developed in-house and are at their limits. While EMC is investigating implementing more robust systems, they will not be available until the end of the year at best. In the meantime, there are several good quality PRM (Partner Relationship Management) systems available, some as hosted solutions. These could be implemented in a matter of weeks and meet the majority of our current needs without extensive customization. Such a system would allow us to better manage, communicate with and analyze our partners.
  • Partner programs must meet diverse needs of different types of partners, but must be simple to understand and administer. Therefore, we suggest a 3-tier reseller program at this time as the best balance of needs, and is a model used by many top-rated partner programs in the industry. This differs from the 4 tier program suggested by Bertrand and Bryan, but we believe that this is too complex to handle given the current systems. The top tier will have perhaps 30 partners by the end of 2004, an average of 6 partners per CSM. The second tier may have up to 150 partners by the end of the year, but its growth will be determined by the automation systems (e.g. PRM) that are available for handling the large number. The bottom tier may have several hundred partners by the end of the year and again its growth will be determined the availability of automation systems. The requirements and benefits also differ somewhat from the recommendations of Bertrand and Bryan. We recommend these features because they can be administered successfully and are similar to features in other top-rated partner programs in the industry. The quarterly revenue target should not be published and my vary depending on the reseller’s business environment.
  • With the creation of a formal channel marketing department at VMware, these are some of the key channel specific deliverables and tasks that will be implemented.

VMware Partner Program Plan VMware Partner Program Plan Presentation Transcript

  • VMware Revised VIP Reseller Program Proposal
  • Agenda
    • Current Situation
    • VMware Needs / Goals
    • Partner Needs
    • Industry Benchmarks
    • Proposed Program Structure
    • Channel Marketing Activities
    • Project Timeline
  • Growing Numbers of Resellers
  • Reseller Coverage By Technology Focus
  • Overlap with Other Vendor Resellers
  • NA Enterprise Reseller Coverage by Geography
  • Multiple Partner Programs
    • Separate Partner Programs
      • VIP for Resellers (potential 1,000+)
      • VAC for Consultants (potential 100+)
      • V-SIP for Global/Large System Integrators (potential 12-20)
      • ISV Partner Program (potential 500+)
    • Contracts
    • Communications and Marketing
    • Databases
    • Administration
  • Sales / Business Needs
    • Growth of Reseller Channel to Meet Sales Goals
    • Partner Profile / Segmentation / Development
    • Channel Pricing Conflicts
    • Incentive Compensation Models and Administration
    • Cost of Program Elements vs. Value
      • Program Fees
      • Technical Support
      • Training/Certification
      • Marketing Funds
    • Business/Marketing Planning
  • Channel Marketing Needs
    • Alignment of Channel Marketing and Corporate Goals
    • Value of Value-Added Resellers
    • Marketing Collateral/ Sales Tools
    • Control of Marketing Funds to Partners
      • Allocation / Approval
      • Proof of Performance
      • ROI Analysis
    • Partner Communications
    • Standardized Processes (e.g. launch)
  • Infrastructure Needs
    • Partner Relationship Management System
      • Application processing
      • Secure access
      • Unique partner profiles for partner locator and communications
      • Confidential sales tools and collateral
      • Lead Distribution, Management, Forecasting
      • MDF management
      • Forums
      • Partner Success Stories
      • Online Training
      • Partner Report Card
  • VIP Requirements
  • VIP Benefits
  • VIP Benefits
  • Channel Marketing Activities
    • Partner Recruitment
      • Gap Analysis
      • Program Collateral and Presentations
      • Application Processing
    • Partner Development
      • Product Sales Training Presentations for Channel Sales Managers
      • Periodic Training Webinars
      • Online Sales Training Courses
      • Partner Conference
      • Reseller Council (planned)
    • Partner Communications
      • Welcome Kits / Guides
      • Newsletters
      • Flashes
      • Webinar Briefings
      • Success Stories
  • Channel Marketing Activities
    • Partner Portal
      • Partner profiles, locator, news, collateral, access to resources as they become available
    • Partner Marketing
      • Seminars and Webinars
      • Ads / Direct Mail / Email / Web Banner Templates
      • Telemarketing Scripts
      • Banners / Posters
      • Logo Merchandise
    • Sales Support
      • Sales Tools (sell sheets, PPTs, demos, solution stacks)
      • Price Lists
      • How-To Guides
  • Project Timeline – Phase 1 Gather input from VMware s ales/marketing, VMware resellers, other partner programs, analysts Finalize revised partner program Document/publish processes, RDs, agreements, revised web site Communications, press release & training Completed Pending Milestone Phase II Go live 7/1 Apr May Jun Jul Implement systems