As Broadcom Deal Looms, VMware Revamps Partner Connect in a Big Way
What’s coming and when? Find out. Hints: New methods of compensation, progression, more focus on services.
![Revamping Revamping](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt3866d1b7092f311c/65241bb71d0f468698ae312f/Revamping.jpg?width=700&auto=webp&quality=80&disable=upscale)
Recall that, earlier this year, then-channel head Sandy Hogan told Channel Futures that VMware already was moving toward the next iteration of Partner Connect. It was doing so by introducing partner-to-partner incentives, for example, and by implementing that much-discussed ecosystem ethos.
“We are moving to much more of a ‘market-in’ definition of partner business models, rather than a ‘VMware-out’ view of how we expect partners to construct their businesses around us,” Hogan said in April. “This allows partners and VMware to innovate together, without the need to conform to a one-size-fits-all approach.”
VMware did this to help partners (and VMware itself) move from acting in a one-dimensional capacity to a delivering in a much more multifaceted way. In other words, partners such as resellers, who might remain too rooted in their traditional business models, would be compensated for teaming with managed service provider peers, for instance, to win and provision a deal. At the same time, VMware was moving its program to pay partners throughout the customer life cycle journey — not just at the point of sale.
VMware continued to make a number of channel program updates under Hogan’s leadership. When Hogan left for the CRO role at SADA, Tracy-Ann Palmer and her team picked up the Partner Connect ball.
Especially with the $61 billion Broadcom acquisition looming, VMware partners will want to understand what’s new and how leaders expect everything to come together under a new owner.
“We have developed a business model programmatic structure, which was not in place before, and those business models are aligned to meeting our partners where they are, ensuring that — for most partners who are more than one business model — they have the ability to reach certain levels of progression via capability and performance.”
That’s the word from Tracy-Ann Palmer, who serves as vice president of partner experience, programs and investments, at VMware.
Let’s break down what Palmer and her colleagues have put in place. First and foremost, the new Partner Connect program measures partner performance beyond bookings. When the initiative fully launches, partners will earn money for pre- and post-sales activity, as well as sum-total life cycle interaction with the customer, by business model type: solution reseller, cloud services provider, solution services provider or solution builder.
“We’re looking to create a program that creates multiple routes to market with partner-led services,” Kaushik Ram, senior director of partner programs at VMware, told Channel Futures. “Partners understand that progression activities also equal benefits and incentives.”
Palmer agreed.
“The more they do with us, the more we are providing in a rebate,” she said.
To facilitate that shift to a life cycle mindset, the enhanced Partner Connect features a points system. The previous version of Partner Connect used tiers that only paid by sales performance. Partners will earn points, going from lower to higher, based on their participation in the following levels: Community, Select, Advanced, Principal and Pinnacle. As Ram noted, “Pinnacle is held to a much higher standard of capability and performance, and is therefore given an incremental rebate structure.”
Pinnacle partners also will receive higher engagement from VMware, including managed account coverage, joint business plan development and access to big bets programs.
VMware will determine points by assessing partner performance at 90% of the total and 10% through capability. Progressing in the new Partner Connect will come from points amounts rather than from participation in VMware’s various IT pathways, the old model.
Editor’s Note: Kudos to Kelly for finding such a punny image.
Next up, expect a streamlined certification process. Until the new version, Partner Connect contained seven domains (the IT pathways), each requiring separate rounds of authorization. It’s an outdated approach.
“That is not how our partners sell or how our customers buy,” Ram said. “So now we are looking at where partners are within lifecycle of customer — how they bring value, how they’re monetizing, aligning them along the progression paths within the structure.”
On a similar note, most partners no longer act in a single capacity. Rather, a system integrator also can serve as a reseller and a cloud service provider, for instance. That spells complexity when trying to stuff a well-rounded partner into a single square hole. Knowing that, VMware enhanced Partner Connect by grouping partners according to the previously mentioned business models: solution reseller, cloud services provider, solution services provider or solution builder. This supports partner flow across the various tiers, allowing participants to earn more points as they deliver more services (e.g., deployment, managed, professional) , and host and maintain VMware platforms.
“We don’t believe our partners are one of these business models,” Palmer said. “Many of them are two to three, so we are recognizing the full value of that partner.”
Also from the business model perspective, the evolved Partner Connect takes channel experts’ solutions focuses into account. Hogan alluded to this earlier this year when she discussed VMware’s new use-based competencies.
“Cloud-smart economics are fundamentally different from the perpetual world of the past,” Hogan said a few months ago. “In the SaaS and cloud world, infrastructure consumption and the managed services opportunity are co-linear with customer value; they cannot be separated. This means that VMware and our partners need be comfortable in a world in which dollars are not created for the ecosystem until customer value is produced. By introducing use-case-based competencies … we will be providing partners with the pathways for capability development and differentiation based on customer outcomes, recognizing that these use cases ultimately become building blocks in a customer’s unique digital transformation journey.
Palmer’s team has implemented such competencies. Take Customer Success as one example. It contains three options. Partners may build their own offering through the Specialization, for instance. Or they may collaborate with VMware on customer success activities. Or they may resell VMware Success 360. VMware bills the choices as enabling partners to guide customers through all stages of the multicloud journey, using VMware. Meanwhile, the competency will give partners a consistent method of working with customers to realize value and achieve outcomes faster, VMware said.
The Customer Success module is available now, while the MSP competency is coming in the fourth quarter. Practice Orchestration and focuses on verticals — healthcare, financial services, retail and manufacturing — are forthcoming, too.
While VMware channel partners have a little more than six months before they can dive into all the Partner Connect enhancements, here’s what they can explore and act on now:
• Go-To-Market Play System (GPS): This effort helps partners deliver customer outcomes while ensuring their own profitability. GPS centers on strategy plays (think transformational business challenges) and velocity plays (discrete IT solutions). Here, GPS provides defined roadmaps and couples them with enablement and incentives. GPS also takes fragmented go-to-market approaches and unifies them with customer success as the goal, VMware said.
• VMware Ignite: This program aligns with GPS and partner-led services initiatives. VMware describes Ignite as a partner practice activation and development program. It features a methodology with paths for building capabilities across technical, sales, services and marketing functions. It also comes with access to training and VMware sales and practice development experts.
• VMware Ecosystem Solutions Partner Studio: This endeavor includes Solutions Lab and Solutions Hub. In essence, VMware designed it so partners can create and co-innovate on use-case-focused solutions. Solutions Lab helps partners take repeatable, tailored ideas to market with help from VMware experts. Its counterpart, Solutions Hub, is a digital self-service platform. It provides tools for activating and publishing solutions to VMware Marketplace. In the future, Solutions Hub will let partners publish on other companies’ cloud marketplaces. VMware said Solutions Hub also measures pipeline and adoption, and gets partner solutions to market faster because of its automation. VMware has opened these capabilities to all partners. “We’re not gating it for large or small,” Ram said. “It’s accessible to everyone in the Select level onward.” (Select is the second level after Community.) Note that VMware did not have details to share about how it plans to help partners protect their intellectual property when using Solutions Lab and Solutions Hub.
VMware came up with its range of enhancements after surveying its partners. (Recall, it has almost 30,000 around the world.) The major theme that emerged from that effort, Palmer said, was that most channel partners are delivering advanced and complex services, and lifecycle support.
Until the new Partner Connect, partners have earned “significantly different margins” regardless of their expertise. Changing Partner Connect to reward partners across the life cycle “becomes really important to partners and to us,” Palmer said.
And, she added, “the MSP becomes very important to us” as a result, more so than before because now these experts will earn money not just from selling VMware platforms but from the management and administration they deliver.
Palmer and Ram did not directly answer Channel Futures’ question as to whether VMware stood to lose partners if it did not make the Partner Connect enhancements that will go live in February. Instead, Palmer put the matter this way: “We recognize that we are still in transition. … We have a pretty aggressive roadmap to shift as much to SaaS and subscriptions over the next 12 months as possible. … The goal is to bring partners along the journey with us and open up to partners that haven’t been able to do as much with us, and MSPs are a perfect example.”
To be sure, VMware sees a lot of promise in services-heavy partners. The company said that when comparing its most profitable partners to global averages, more than 80% of revenue from their VMware practice stems from cloud, managed and professional services. Their services profit is one-and-a-half times higher, and professional services revenue is more than two times higher, VMware said.
In addition to better accommodating maturing partner business models, VMware’s Partner Connect changes coincide with soaring cloud demand and, yes, the Broadcom acquisition. Go to the next slide for more insight.
Organizations’ appetite for public cloud, in particular, has followed a somewhat meteoric trajectory over the last decade. While some outlets think a slowdown lies on the horizon, others disagree.
To that point, Gartner predicts almost $500 billion in global spending this year alone, with the number reaching almost $600 billion in 2023. VMware, as it continues to grow past its legacy roots, wants its piece of the pie. Rejiggering its partner program to accommodate more sophisticated partners should help it do that.
But VMware leaders have more on their minds as the pending Broadcom deal nears.
Now, too, executives have to consider overall company performance in light of the upcoming Broadcom acquisition. VMware needs to keep proving to its likely new parent that the deal will more than pay off. However, Palmer would not say whether channel leaders feel any worry about the new Partner Connect changes falling to the wayside once the $61 billion Broadcom purchase closes (likely to happen at the end of October).
“The bottom line is, we are today an independent company,” she said. “The acquisition has not happened. … We are laser-focused on continuing on exactly all the transformation that’s in place . … Right now we are moving forward exactly as projected … and we are actually really excited about it. … When you look at what we’re doing, Broadcom does have a channel, we have a channel. … We’re forging ahead.”
Overall, Palmer promised a “more flexible and efficient” Partner Connect that allows all 28,000 partners to benefit.
“We’re optimizing incentives and programs to help partners take their SaaS and subscription businesses to another level and capitalize on cloud-centric business models and economics,” she said.
Here’s what four VMware partners have to say about the upcoming Partner Connect changes:
“We love that this new points-based system for progression will recognize and reward partners like Insight for the results-based strategic growth we achieve with our shared customers. The recognition of our total achievements and capabilities as part of the VMware Partner Connect Program is a key driver for the continued investment in growing our VMware solutions business.” —Joyce Mullen, president and CEO, Insight Enterprises
“VMware’s newly transformed Partner Connect program will provide ITQ with opportunities to drive our SaaS and subscription sales and allow for more services-led growth opportunities. Partner Connect’s … points-based framework will recognize ITQ for all the ways we create value for our customers, including influence-driven engagement, and rewards us for the totality of our achievements and capabilities with simplified tier progression.” —Dennis Hoegen Dijkhof, managing director, ITQ Consultancy
“The refreshed VMware Partner Connect program will increase our operational efficiency while recognizing and rewarding our capabilities across all our regions. The flexibility of Partner Connect’s program gives us increased opportunity not just as a global OEM, but also as a services partner driving TruScale and VMware SaaS/subscription solutions through our channels. From a management perspective, the new structure enables us to manage our performance more easily through a comprehensive, global view that enables unified engagement to unlock benefits for our multiple entities.” —Brian Connors, vice president and general manager, software and business development, Lenovo
“The enhanced Partner Connect Program will give us more access to financial benefits and go-to-market resources to drive our SaaS and subscription sales. As our business grows and evolves, the program flexibility will provide enhanced profitability through aligned incentives. This type of value from VMware will provide Rackspace Technology with the foundation we need to help our customers become ‘cloud smart’.” —Adrianna Bustamante, vice president, global alliances and partnerships, Rackspace Technology
Here’s what four VMware partners have to say about the upcoming Partner Connect changes:
“We love that this new points-based system for progression will recognize and reward partners like Insight for the results-based strategic growth we achieve with our shared customers. The recognition of our total achievements and capabilities as part of the VMware Partner Connect Program is a key driver for the continued investment in growing our VMware solutions business.” —Joyce Mullen, president and CEO, Insight Enterprises
“VMware’s newly transformed Partner Connect program will provide ITQ with opportunities to drive our SaaS and subscription sales and allow for more services-led growth opportunities. Partner Connect’s … points-based framework will recognize ITQ for all the ways we create value for our customers, including influence-driven engagement, and rewards us for the totality of our achievements and capabilities with simplified tier progression.” —Dennis Hoegen Dijkhof, managing director, ITQ Consultancy
“The refreshed VMware Partner Connect program will increase our operational efficiency while recognizing and rewarding our capabilities across all our regions. The flexibility of Partner Connect’s program gives us increased opportunity not just as a global OEM, but also as a services partner driving TruScale and VMware SaaS/subscription solutions through our channels. From a management perspective, the new structure enables us to manage our performance more easily through a comprehensive, global view that enables unified engagement to unlock benefits for our multiple entities.” —Brian Connors, vice president and general manager, software and business development, Lenovo
“The enhanced Partner Connect Program will give us more access to financial benefits and go-to-market resources to drive our SaaS and subscription sales. As our business grows and evolves, the program flexibility will provide enhanced profitability through aligned incentives. This type of value from VMware will provide Rackspace Technology with the foundation we need to help our customers become ‘cloud smart’.” —Adrianna Bustamante, vice president, global alliances and partnerships, Rackspace Technology
After two years of phased changes, VMware has put the final touches on the new iteration of Partner Connect. On Thursday, the company gave the revamped global channel program its official kickoff — all with cloud and SaaS in mind, and even as the pending Broadcom deal looms.
Partners and industry observers have anticipated the new, cloud-first framework for some time now. Over the past several years, VMware — rooted, like many of its partners, in the legacy world and contemporaneously modernizing its own thinking and portfolio – has rolled out several fresh incentives and program restructures.
Those efforts now culminate in the most updated version of Partner Connect. The overall aim? To enable resellers, systems integrators, managed service providers, consultants and other partners to build their VMware cloud business while championing customer outcomes.
All aspects of the updated Partner Connect go into effect in VMware’s first-quarter, fiscal year 2024. That will occur on Feb. 4, 2023. However, some pieces of the new program are available.
You’ll want to know how the forthcoming (and current) Partner Connect changes impact you. Get the whole scoop in the slideshow above.
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