Over the last four years, Red Hat has quietly moved its channel business from just over 50 per cent of its overall revenues, to around 65 per cent. But it’s got a much bigger number in mind.
Kicking off the company’s 2013 Americas Partner Conference at the Hotel del Coronado in San Diego, Red Hat sales and services chief Arun Oberoi shared the company’s new goal with partners.
“The only way to go forward is for 100 per cent of that business to be touched in some value-added way by some sort of partner,” Oberoi told attendees, putting a stake firmly in the ground.
That’s not to say that all Red Hat sales will go through a traditional reseller. Oberoi, and Red Hat CEO Jim Whitehurst, speak of broad networks, even constellations, of partners with which Red Hat works and will work in the future, with roles ranging from VAR to SI to ISV and beyond.
“As we move from a one-product company to company that’s expanding rather quickly, the broader infrastructure stack for computing as an open utility by default requires a network of partners to come together,” Oberoi said. “Some of that is market reach, but a lot of that is integration, and adding in other software.”
Especially when dealing with larger customers, Oberoi said that all deals will likely have multiple partners of multiple roles involved.
Oberoi and Whitehurst speak of Red Hat’s role as a “catalyst” in the open-source and open computing world, and in many ways, it seems to view its role in its expanding partner network the same way – a catalyst amongst numerous partners. The goal in most cases, Oberoi said, is to create a specific solution for a vertical or type of customer across a number of partners.
“This is teaming as a very deliberate exercise,” he said. “When we do it well, it becomes repeatable every time.”
Oberoi walked partners through changes in the company’s portfolio – its expansion of its middleware lineup, and the addition of storage and virtualization offerings to the mix. All in all, it means a much bigger pie for the company’s channel partners to share – Oberoi shared figures of potential markets of $19 billion for Enterprise Linux by 2016, $20 billion for middleware, $5 billion for virtualization, $12 billion for storage, and $15 billion for cloud offerings. The message that Red Hat is now about much more than just Linux was well received by partners like Eric Ng, vice president of sales for Toronto-based Scalar Decisions.
“They way they’ve expanded their portfolio really hit the market well,” Ng said.
Dean Bedwell, direct of new business development for software solutions at OnX, said the company is getting better at being more consistent in letting partners know about the various new offerings in it arsenal.
“They don’t come and talk to me about Linux, about Red Hat Enterprise Linux,” he said. “It’s about a suite of products that’s interconnected and how we’re going to the market together. They’re getting better at it. I don’t know if the market knows about it yet, but they’re getting better at it.”
Services are your friends
Another key element to Oberoi’s message comes from the services side. Surveying top partners ahead of the event in San Diego, Oberoi seemed surprised to find that many had concerns about Red Hat’s growing services capabilities. Oberoi stressed that Red Hat is still a product company, and that services capabilities only exist to “enable the adoption of our products” and to support both partners and customers in rolling out their products. Services revenues around solutions that involve Red Hat software can be between seven and 15 times the software or infrastructure sale, Oberoi said – sometimes as high as 20 times.
Rather than viewing the company’s services professionals as competitors, Oberoi urged partners to use the company’s services resources, which he said a “tied very closely to our products teams,” as a way to enhance their own services reach.
“You should think about our services team as deep experts in the product architecture, but also the deployment model for these product architectures,” he said.
He committed to making the company’s service resources available to channel partners, to help them architect and optimize solutions for customers, and urged partners to think of a co-engagement and co-deployment model.
“Don’t view them as competition, view them as value-add,” he said.
That’s exactly how Scalar’s Ng is viewing them. “Every VAR and SI is looking to capitalize on their own talent, but there are going to be requirements that pop up where we need to augment our bench, and Red Hat and other manufacturers are definitely a key part of that,” he said. “I think [Red Hat’s] is a great message, and that’s exactly how we look at it as well.”