VMware Canada transitioning to “channel-first mindset”

VMware Canada country manager Sean Forkan

Canada country manager

LAS VEGAS — With a new leadership team including country manager Sean Forkan and channel chief well-established as they attend their first as VMware employees, the company is switching “into execution mode.”

And what it’s executing on is a series of go-to-market changes that he said will make the Canadian subsidiary a much more channel-friendly organization.

“The big thing we’re working on right now is how do we transition to a channel-first value mindset,” Forkan said in a briefing with ChannelBuzz.ca at the show here. “The key word there is mindset — so many organizations talk about channel-led, but haven’t had clarity on what that means. We’ve put pen to paper on what being a good partner looks like, and now we’re layering in operational processes to support that.”

A big part of that push is coming from the North American-level leadership, which is experimenting with eliminating the “channel tax” the company has long imposed. Since the company’s founding, that “tax” has made selling through partners more expensive than selling direct. But the organization has decided to ditch that tax at the North American level starting February 1, and has put in place a spiff to partners to neutralize the difference in the meantime.

Another big change to come will be a push to bring partners in much earlier in the sales process, and work more closely with those partners.

“If a field team has a new opportunity, before we even get into the customer opportunity, the first conversation is what does the relationship with the partner look like,” Forkan said. “We want really understand how the deal will work from a partner perspective, particularly the margin requirements.”

Fine said the company will whittle down the number of Canadian customer with which it will allow itself to have direct relationships to between 20 and 30 large customers, who will operate on a “customer choice” basis. Before, there was no official guidance or demarkation between what could be taken direct, and what would be channel territory.

VMware Canada channel chief Tara Fine

VMware Canada channel chief Tara Fine

“We’ve heard from partners that we weren’t predictable, and we were too late bringing them in,” Fine said. “As a result, they were finding they can’t help us explore more innovative ways of solving problems, or of tackling broader issues for the customer than we’d discovered.”

She said the company will measure itself on a day-to-day basis by taking a look at its pipeline, and ensuring that “anything above stage two has a partner identified, a partner on-record to go close that deal” for any customer outside the aforementioned “customer choice list.” That part of the plan, she said, will be in place by October.

But Forkan stressed the transition in mindset “starts today.”

“We want them to be creative in solving problems, and we can’t them to be creative in solving problems, and we can’t get to our growth targets or our aspirations without our partners,” Forkan said. “We need them hip to hip in that process.”

Forkan cited partners’ abilities to understand opportunities to craft multi-vendor solutions that better solve customer problems, as well as their ability to sell any necessary hardware — a capacity that VMware does not have — as key reasons the vendor has to move its business closer to the channel.

Like many vendors, part of that push will be convincing partners to get outside of their comfort zone, and adding the company’s “emerging products” — which is to say most everything in its lineup outside the core of — to their linecard. For VMware, there’s growing lineup outside the traditional compute technology, including its network and storage offerings, NSX and VSAN respectively, its end-user computing lineup, including and Horizon, and its recently-redefined cloud offerings.

Cross-selling is, of course, a major goal for any channel-selling multi-product vendor, and in a recent meeting with ChannelBuzz.ca, VMware CEO described NSX in particular as the area where he needs the most support from channel partners.

The company is putting incentives in place to get partners even more engaged in those solutions, Fine said, having just announced in Canada an increase on discounts on registrations for emerging product sets, which  will double partner profitability when those emerging products are included in Enterprise License Agreements.

Fine said the company is also investing in more technical resources to help support partners in skilling up around and then selling those emerging products.

Forkan reported that the emerging products are currently hotter in Canada than Stateside, although he acknowledges that some of that is a function of Canadian businesses being a bit behind the adoption rate seen in the U.S., and just now beginning to catch up. But that momentum, he said, has partners interested in the offerings.

“We’re now wining the lighthouse accounts, and that’s going to show our partners the opportunity, and that will drive growth going forward,” he said.

Beyond that, the company is focusing on “educating our partners both on solutions and on profitability” for some of these emerging solutions — for example, pointing out that when it comes to its offerings, there’s typically a $5 drag of hardware, software and services for a partner on each $1 of VMware software sold.

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