SGI Launches Channel Program with Best of Rackable and Old SGI

Nine months after Rackable Systems announced plans to acquire technology icon Silicon Graphics (SGI) for $25 million, the combined company, under the name SGI is rolling out a new channel partner program built out of the best practices of both companies.

The acquisition was completed in May 2009 for $42.5 million.

The new SGI channel program includes a one-stop-shop portal, built from scratch, and launches with about 200 partners. Alison Ryan, vice president of channel sales at the new SGI, says the companies took the opportunity to winnow down their partner ranks with the merger, keeping those partners who were productive while letting go those who weren’t.

Prior to the acquisition, Rackable’s nascent partner program had just 20 partners while SGI’s was quite a bit larger.

Ryan says the partner ranks at the new company will remain at about 200 for the near future as SGI recruits selectively based on geographies and vertical focus.

To keep those partners happy, Ryan says the new program has been designed with profitability of partners at top of mind.

“We have limited the number of specialized partners,” she says. “That ensures that when they get into sales situations they are not one of eight partners representing the same solution.”

Specialized markets for the new SGI include digital media; oil and gas; and Internet, Web and financial services. SGI also worked with many partners who were strong in government accounts.

SGI’s new partner program includes an opportunity registration program that offers 15 points on most products and five points on some products. In addition, to keep the direct sales and indirect sales out of conflict, Ryan says SGI will compensate all internal sales people for channel business done, and compensation will be positive to do business with channel partners.

“We really looked at what would have the most positive effect in our relationship with partners,” she says.

The new program offers two tiers based on both quantity of revenues and quality. To qualify to be a Platinum partner, the reseller must do $3 million in business with SGI or else $1 million and reach an expert level of certification as well as employ dedicated engineering and sales personnel. The second tier is called Authorized Partner.

The MDF program consists of co-investments with partners in trade shows, seminars and any joint marketing efforts and is value based.

“We took eight months to look at our strategy, and we built a portal and program from the ground up intended to make a difference,” Ryan says.

The old SGI’s business derived 28 percent of revenues from resellers and 54 percent from both resellers and system integrators.

The old Rackable business was predominantly direct, with just 10 to 12 percent of revenues coming from indirect sales.

“Now we are 26 percent indirect,” says Ryan. “Our intention is to grow that significantly."

The new SGI offers customers hardware and software technology within large-scale x86 cluster computing, high-performance computing (HPC), Internet, cloud computing, large-scale data storage environments and virtualization platforms across many verticals and geographies.