Storage vendor Network Appliance Inc. is counting on growth of at least 25 percent for the current quarter, but the company’s channel chief says sales growth through partners will be significantly higher.
The Sunnyvale, Calif.-based vendor in the past year has launched a series of partner-focused programs to boost its channel sales, and the efforts are paying off, said Leonard Iventosch, the company’s vice president of channels.
In its most recently completed fiscal year, which ended in April, 44 percent of Network Appliance’s $1.6 billion revenue flowed in through the channel, he said. But in the current fiscal year, that figure will grow to at least 48 percent and possibly even higher than 50 percent, Iventosch said.
The increased focus on the channel, he said, has come after the 11-year-old company recognized two years ago that it had to boost business through partners to continue to grow. Adding direct sales representatives to reach all customers in all markets just wouldn’t make sense, he said.
With company management fully behind the efforts, Network Appliance’s channel organization made a series of moves to increase business through existing partners and to recruit more partners.
Such moves include a boost in market-development funds, same-day shipping for orders placed by noon, lead generation, and a lead-registration program that allows partners to register new opportunities and quickly engage the Network Appliance’s sales team for support.
Scott Davenport, enterprise server and storage executive at Pinnacle Business Systems Inc., of Edmond, Okla., said Network Appliance’s lead-generation program is the best he has seen.
“For instance, when they give us a lead, the lead is well qualified and the customer is expecting us to call them,” he said.
Network Appliance qualifies the leads through a third-party organization that does the legwork of contacting the installed based for upgrade opportunities as well as prospective customers for new business, said Debbie Medal, the company’s senior director of worldwide channel communications.
“We’ve taken on the burden of extensive pre-sales qualification,” she said. That way, the partners can put more of their focus on the actual selling.
Another step Network Appliance took to strengthen its channel approach involved compensation for direct sales representatives, who now get paid the same for sales through partners as for direct deals, thereby heading off any potential conflict, Iventosch said.
“That has proven to be very successful,” he said.
The company also has separated the customer segments that partners and direct sales representatives touch. Direct reps handle 200 enterprise accounts, and most of the other business flows through the channel, Iventosch said.
“We’ve put in a hard deck so that under a certain line we don’t want our direct team to go, unless it’s in support of a partner on a deal,” he said. “We’ve really honed in on where we want our direct sales force to spend their time.”
Davenport said he has not run into any channel conflict with Network Appliance.
“They’re easy to work with and they’re very channel-friendly,” he said. “It’s the best channel experience I’ve had recently with a vendor.”
From a technology perspective, he said, Network Appliance’s solutions contain software that addresses “true business needs,” such as protecting data and quickly restoring data in disaster-recovery situations.
Davenport’s company, Pinnacle, is one of about 240 channel companies that sell Network Appliance’s storage solutions. Inventosch said the company plans to add more partners, but the number likely will not exceed 500.
“We believe that we’re still under-distributed. One of the things our partners love is that we are under-distributed,” he said.
It is rare, he added, for multiple partners to compete for the same deal. As with most vendors, Network Appliance would rather keep competition between partners to a minimum because the alternative often leads to profit margin erosion.
Jeff Bawol, senior vice president and general manager at Avnet Partner Solutions, of Tempe, Ariz., one of two Network Appliance distributors, said he expects Avnet sales of Network Appliance solutions to grow. Avnet’s emphasis is on boosting sales through existing partners, such as Pinnacle, as opposed to recruiting more.
Avnet has been doing business with Network Appliance for about two years, Bawol said, and the relationship has proven successful. The vendor, he said, has put a lot of effort and energy into joint marketing and support programs for the channel partners.
Such efforts include a Web-based demo tool and a series of training seminars, he said.
Iventosch is optimistic about his company’s channel business prospects. Fueling his optimism is the demand for Network Appliance’s iSCSI solutions, more than 75 percent of which is sold through the channel.
Demand for iSCSI and storage in general is high because of market forces created by federal regulations that require certain types of companies to protect and store enormous volumes of data, he said Opportunities abound in such industries as financial services, manufacturing and energy, as well as federal and state agencies, he said.
Bawol said demand for storage is high because companies need to store ever-increasing volumes of data and keep it accessible.