Monday, October 20, 2014

The value of partnerships – NonStop VAR program?

As the price of gas at the pump continues to drop in the US, it’s hard to miss the flow-on effect to the community. Could we be getting value for our money at last? When the topic is increasing the sales reach of NonStop value too is important. Could we see the return of VARs?

Have you all seen what’s been happening with the price of gas at the pumps here in America? Is the same thing happening everywhere? In the US we have seen the price of gas drop to $2.89 per US gallon (3.8 liters) as depicted above where I just filled up the Jeep. Remarkable! Considering our family has nothing but vehicles with large displacement engines, this is proving to be a blessing for us and it feels like getting an unexpected tax break. With the US now awash in sea of oil, thanks to the wonders of fracking, and the market laws of supply and demand kicking in, the price at the pump is likely to go down even further – the days of $2.00 per gallon gas may just be coming back. For now, $2.89 for gas? Remarkable!

Whenever I read about discussions on value and on value-add, I can’t help but wonder whatever happened to the Value Added Resellers (VARs) that so many of us depended upon in the past. My fondest memories of the early days of Tandem were about the wonderful Alliance program Tandem had assembled and among the list of Alliance partners, there were many VARs. The specialization VARs brought with them – whether it was a specific market, such as travel, or a regions such as Kenya or Columbia – made the process of selling systems much easier. Perhaps the days of VARs are over given how commoditization has brought with it considerable easing of prices. And yet, this may not be completely true when it comes to NonStop, or so it would appear.

Listening to presentations given these past few weeks at both MATUG and CTUG it’s very clear that with the arrival of a family of NonStop systems utilizing the Intel x86 architecture, the plan will be to pursue new markets with new partners rather than simply flipping the base one more time. It is completely understandable that HP doesn’t want to convert a $1million business into a $100thousand business – the most basic of business schools frown on such approaches. That isn’t to say that there will be some existing customers who will provide fertile ground for these new x86 systems, but that will likely be because the new systems will open new doors for new applications, complementing the present Itanium systems, but I expect that to be the exception. No, HP wants to add to the NonStop business, not just pursue yet another one-for-one migration.

What was also obvious from the presentations to the user groups is that HP wouldn’t be all that keen for the sales teams to add a couple of hundred new salesmen to address these new markets. Solutions sell systems today and that’s very much a given, even for the new HP we face, Hewlett-Packard Enterprise. So why not engage the solutions companies more closely and reopen the doors for VAR sales of their solutions with NonStop systems?  While nothing that could be viewed as a commitment was given by any of the HP personnel involved in the events, nevertheless to anyone who thought through the mechanics of adding a complementary marketing program it seemed a pretty obvious conclusion. VARs selling NonStop? Indeed, every bit as remarkable as $2.89 gas I suspect!

In talking with NonStop partners the reaction was positive overall. According to the CEO of the OmniPayments, Inc., Yash Kapadia, “Yes we can be VARs and we have discussed being a VAR with HP many times.” But Yash was also quick to note that there would need to be a lot more discussion this time around as in those earlier discussions, according to Yash, “At one time they wanted me to take responsibility to generate more sales than all of EMEA !!!!” Why doesn’t this surprise me? The NonStop sales team that we have working globally is a lot different from what we have had in the past and there’s some level heads watching over NonStop today. If a discussion develops around the subject of VARs the way I would like to see if happen then I think it will be a case of introductory baby-steps in the early stages.

In talking to middleware vendor, IR, there was support for VARs as well although not quite as exuberant as solutions vendors and yet, putting the topic under a different light. In an email exchange with America’s Sales Director, Jay Horton, he began, as I expected, with how he, “Wouldn’t see our large users moving away from a direct relationship with us, (certainly not in the near term anyway) but with the presence of VARs, it would open the door for IR to scale and pick up business we are not able to chase currently.” Horton then added that, “We don’t have resources with knowledge of NonStop to chase a lot of these new markets; however, an HP NonStop VAR channel would allow us to scale. It would require us to put a more dedicated NonStop channel support model in place.”

Andre Cuenin, President Americas & Europe at IR Inc. did remind me that a NonStop Distribution / VAR model is in place in geographies apart from the US. For example, in EMEA and AP-J many markets are being served through local NSK distributors / VARs. “In these countries, these partners  typically sell Prognosis. In the US market, most of our NonStop customers are traditionally, direct customers. However, with our Payments partnership with ACI, we do see a shift to more channel revenue in the US as well.

Could a middleware vendor like IR become an HP NonStop VAR? I asked this more out of curiosity than anything else as I anticipate that this would be of interest to solutions vendors and Yash had already expressed that, should a VAR program be launched globally, he would be more than interested. From an IR perspective they do not see themselves as becoming a NonStop reseller, however Cuenin mentioned that, “working with HP and its respective channels to align its go-to-market model is the strategy”. Horton shared that “we have explored bundling a Prognosis Lite version with platform vendors and NonStop on x86 seems a good target for this approach.”

For some time now I have thought that comprehensive monitoring solutions were butting right up against the line that separates middleware from solutions and with just a little more capability, monitoring solutions would be able to stand on their own merits. Should IR pursue this aggressively, and for a reasonable value-add pricing, then I cannot see why they wouldn’t reconsider becoming a VAR for NonStop, and possibly, in conjunction with offerings from other middleware vendors. Had you purchased a laptop from BestBuy you would notice that it comes with a lot of pre-loaded software offered on trial bases – could this become the norm for NonStop sales?

When I put this prospect to a NonStop manager just recently the response was expectedly cautious. “Just last week, we had a customer ask about becoming a VAR, selling both hardware and their application.” However he also acknowledged that for him, he wasn’t sure “if one request is showing a trend, but I think the x86 does open the eyes of existing and new VARs.” And that’s about as far as the discussion went on the topic of a VAR initiative today – but I’m on the edge here and think this could go either way. Complementing classic sales with a thriving VAR program? Again, that would be remarkable.

The key word in VAR is value – a VAR program would have to provide value for the target marketplace. Customers would need to realize savings they otherwise wouldn’t expect to see – or leverage the partnership in a more competitive manner than their rivals. Companies today see value as having many shades and what one customer views as dross another may prize highly and it would be up to the VAR to clearly demonstrate the value proposition. While I have only talked to a very small selection of NonStop vendors, I know there are more that may be toying with the idea, so it will be interesting to watch whether a much broader program that included the US eventuates and whether the participants truly bring with them the value we all would expect.

$2.89 gas! Less expensive NonStop systems? New partners and new markets! A thriving VAR program … there’s still time for something to develop but from where I sit and following the conversations I have had, I am hoping that this time, it will be a positive outcome. Selling more NonStop systems addressing more markets to even more companies is what we all would like to see and while a thriving VAR program is not an automatic answer to some of the most pressing questions about how to get more NonStop systems sold, it has merit and I truly hope for the best this time around.

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