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.