VMware’s Sandy Hogan Talks Building Cloud Business
The company’s channel head discusses, in depth, new incentives, program restructures and other partner changes.
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VMware recently introduced partner-to-partner incentives. These reward a reseller, for instance, who may not have the services capabilities to address the customer’s business problem, and who subsequently bring in a fellow partner to fill that gap. Channel Futures wanted to know how partners are reacting to this “coopetition” approach. P.S. to readers: This is not the first time VMware has promoted engagement among different partner types.
“When you consider the goal is to create ‘customer for life’ value, no single partner can sell or deliver value alone anymore,” said VMware’s Sandy Hogan. “It really requires a collaborative motion. … With the right programs in place, we are seeing less and less concern over coopetition, because the ultimate end game is creating that customer value and driving business outcomes, which ultimately leads to more profits and more opportunities for the entire partner value chain.”
VMware’s overarching mantra, the philosophy driving its partner program in 2022, is “customer for life.” These days, partners across the board must do more than sell and deploy a one-time project. Now, they need to stay in touch with the customer throughout the relationship, consulting, adding technology and services, removing what doesn’t work anymore, and so on. The future of the indirect channel lies in constant client touch and in this “ecosystem” notion. Accordingly, VMware has adjusted how it compensates partners. We wondered how that pay ends up comparing to legacy compensation.
“In the new SaaS and subscription world, customers care deeply about activation and consumption of the services they have purchased to maximize utilization,” said Hogan. “Hence, the role of partners has expanded beyond merely providing assessments and proofs of concept that help customers match their digital transformation/business critical needs. Partners are now instrumental in helping customers embrace and utilize cloud services post-purchase to maximize value. In keeping with these changes, VMware is offsetting partner service costs … through incentives in every step of the customer life cycle. This includes helping partners provide professional services for technical assessments, proofs of concept, activation/deployment of cloud services and driving their on-going consumption.
“Although VMware has increased its incentive spend toward partners, the real value to partners is the increased margins through professional services for migrating customers to cloud, activating and deploying cloud services and helping them optimize consumption. If these services are provided as managed services, the partners stand to earn even more margins. As an example, while resellers earn around 15% in margin, MSPs earn 20%-40% and, including bespoke solutions through Tanzu, can increase margins to 60%-70%.
More vendors are starting to understand that channel partners should no longer be forced into specific buckets. The ecosystem ethos inherently blurs the line among partner types. This calls for providers to adjust; VMware remains among the most active on this front, shifting from a legacy to a next-gen mindset when it comes to redefining requirements for the indirect channel. With that in mind, Channel Futures was curious to learn what new and unique business models Hogan sees partners creating as they maneuver with fewer limitations.
We are moving to much more of a ‘market-in’ definition of partner business models,” said Hogan, “rather than a ‘VMware-out’ view of how we expect partners to construct their businesses around us. This allows partners and VMware to innovate together, without the need to conform to a one-size-fits-all approach. In fact, we have leaned into partner co-innovation and introduced a process that we call Solution Labs to help our partners build the next solution and services capabilities for their own growth, embedded with VMware. We have seen incredible innovation across partner business models, including operators (MSPs and telcos), advisers, integrators and solution builders.
When Hogan first spoke with Channel Futures earlier this year, VMware was planning to introduce new partner funding to accelerate cloud migrations. The money would go toward partners’ technical and business capabilities. We wanted to know more about this particular incentive and how it will help managed services providers, resellers and other partners to achieve.
“The cloud migration program is important for two main reasons,” said Hogan. “First, it puts VMware partners front and center to own the orchestration of the entire cloud migration, from planning to execution to ongoing services and support. Second, it will accelerate the adoption and value realization for the customer. We’re looking to do a targeted pilot in our first half of fiscal year 2023 that will focus on customer-commit contracts for our cloud services; this will enable customer benefits from VMware to offset migration costs and incentivize the customer to engage with their trusted, capable partner faster. This will also help preserve and enhance the partner’s profitability.”
Last year, VMware launched VMware Cloud Universal, a subscription that simplifies how customers buy and consume the company’s multicloud infrastructure and management services. In essence, the program was designed to let users move to the cloud at their own pace. Importantly, it was not immediately available through channel partners. About a year into the program, we asked Hogan for a status update.
“We have built and entire program around the VMware Cloud Universal offering for partners,” said Hogan. ” … In 2021 we enabled channel partners to transact and drive consumption of Cloud Universal offerings. We have since launched a pilot for partners to manage subscription billing and stay close to the customers across the life cycle. In subsequent phases, we will deliver additional partner capabilities to manage the end-to-end process such as commitment contracts, transaction, customer success, consumption and billing.
VMware spent much of last year automating processes specific to the channel. We asked Hogan for an update on which platforms now require less manual intervention from VMware partners.
“In 2021, our focus was to lay the foundation for automation targeting three areas: partner acceleration, simplifying the partner journey and delivering better partner productivity,” said Hogan. “Over the last few months, some specific examples of improved automation include:
· Bringing together our multiple partner portal/applications into a single partner platform called Partner Connect.
· Launching Partner Value Registration, a co-selling registration motion that will significantly reduce the manual processes, deliver faster lead-to-opportunity conversion rates … and improve co-selling capabilities.
· Automating the process and enabling a self-serve digital capability for partners to share prospects/leads, track progress and gain … visibility.
· New digital capabilities that will help partners manage their development funds and “big bets” plans more efficiently and effectively. The benefits to partners include consolidated planning, auto-generated prior approvals and reduced claim holds.
· Delivering a newly enhanced Distributor Self-Service Portal to empower our distributors to manage their orders, with real-time status updates of all orders with VMware.
· Automating claim validation and approval processes across our sales rewards.
Every cloud provider offers certification; these tend to center around the vendor’s technologies. VMware does the same but this year, it’s expanding the expertise it wants partners to learn. As such, the company is debuting competencies around use cases — think disaster recovery as a service, customer success and managed services, as just some examples. We asked Hogan to talk more about this different take on certifications and why it matters.
“Cloud-smart economics are fundamentally different from the perpetual world of the past,” said Hogan. “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.
“This not only lets VMware, our partners and our customers speak a common language — rooted in value and outcomes, not products — it will also let partners build unique software and services intellectual property that can be segmented and catalogued based on the use case maturity continuum.
“The use cases build on each other, so more advanced partner capabilities align to more complex solutions, which in turn will yield more benefits from VMware. You will see more and more come from VMware that is use-case focused.
There’s been a bit of chatter in the channel recently about the difficulty of doing multicloud well. MSPs have told Channel Futures that specializing in multiple cloud brands is hard, especially considering the talent they have to hire to oversee each specific vendor’s environment. We asked Hogan about this issue, considering that VMware emphasizes its multicloud expertise.
“The VMware multicloud value proposition is incredibly powerful because we know that customer infrastructure and digital transformation journeys are heterogenous,” said Hogan. “In these varied environments, VMware provides the simplest path to cloud by enabling … migration of existing workloads while ensuring consistency of experience across the data center, edge and any cloud. Our goal is to extend tooling, telemetry data and benefits to partners who embrace VMware’s multicloud strategy, to help them unlock the value of true multicloud while reducing the inherent complexity. This is a significant focus for us.”
There’s been a bit of chatter in the channel recently about the difficulty of doing multicloud well. MSPs have told Channel Futures that specializing in multiple cloud brands is hard, especially considering the talent they have to hire to oversee each specific vendor’s environment. We asked Hogan about this issue, considering that VMware emphasizes its multicloud expertise.
“The VMware multicloud value proposition is incredibly powerful because we know that customer infrastructure and digital transformation journeys are heterogenous,” said Hogan. “In these varied environments, VMware provides the simplest path to cloud by enabling … migration of existing workloads while ensuring consistency of experience across the data center, edge and any cloud. Our goal is to extend tooling, telemetry data and benefits to partners who embrace VMware’s multicloud strategy, to help them unlock the value of true multicloud while reducing the inherent complexity. This is a significant focus for us.”
This week, VMware is holding its Partner Leadership Summit in Texas. The event brings together top partners with the company’s executives, all with a focus on building cloud business.
Channel Futures recently caught up with Sandy Hogan, senior vice president of VMware’s worldwide partner and commercial organization, in anticipation of the summit’s April 5 start. We wanted to get a series of updates on the vendor’s plans for the channel in 2022.
Let’s put it this way: VMware has a lot in store. And barely four months into the new year, Hogan’s team already has rolled out a bunch of updates. Building cloud business is no easy feat, especially for partners still rooted in legacy technologies and ways of thinking.
VMware’s Sandy Hogan
VMware has proven one of the more active and aggressive vendors on this front. Over the past several years, the company – itself rooted in the legacy world – has consistently rolled out incentives, program restructures and other changes that help resellers, systems integrators, managed service providers, consultants and other partners shift from a one-dimensional approach to their roles with customers to a much more multifaceted version.
Now, as more partners concentrate on building cloud business, VMware has taken additional steps to foster a next-generation take on the channel — with the channel. In the slideshow above, we go deeper with Hogan about VMware’s momentum and changes.
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