By Matt Brown
128 Technology’s Vice President of Solution Providers Brian Norris has his sights set on rapidly growing the four-year-old networking software company’s partner base, and not just a little.
Norris, who came to 128 Technology about a year-and-a-half ago, says the company can grow its stable of about 25 partners by at least 50 percent, and perhaps even double it, over the next year. The growth comes as more solution providers realize the value in 128 Technology’s network software platform, especially as it drives aggressively into the red-hot market for software-defined WAN technology.
128 Technology’s solutions can save customers up to 80 percent compared to traditional, hardware-centric networking solutions, the company argues, and partners are in a position to realize a margin bonanza as they dive further into the subscription-based, recurring revenue model. (Learn more about the savings here).
Growth is also likely to mean change for the way 128 Technology relates to its partners. While its program is informal today, Norris said it will likely adapt a more familiar, tiered structure as time goes on.
“There will be more structure a year from now,” Norris said. “How can there not be when you go from 25 partners to 50, or 100 partners?”
What follows is an edited excerpt of Norris’s conversation with CRN.
128 Technology doesn’t have the familiar, industry standard channel program. How do you interact with partners, and what makes 128 Technology attractive to the channel?
We work with partners in all regions – across North America, EMEA and APAC. We’re looking for folks that share our vision of next-generation networking. How can we deliver that most effectively to end-user customers and how can we work with folks who can also benefit, i.e. partners. We work with partners to deliver value to end-user customers. We’re building what we think will ultimately be a very valuable enterprise software company. The vast amount of our investments have been on the technology side, R&D. What we have not done is build out an army of sales executives or services and implementation folks. We are absolutely going to build the company by working with partners to deliver that to our end users.
What kinds of partners are a good fit for 128?
We’re looking for partners that can help us do a couple of different things. No. 1, sell our product to end-user customers; install our product and support our product at end-user customers. We’re looking for folks who want to deliver a product or service based on our technology. They take our technology, wrap services around it and deliver a managed service to the end-user customers. We’re also working with folks on the OEM side where people are literally embedding our technology into another product. We’re also working with supply chain partners.
What does the program look like structurally?
We don’t have the typically Gold, Silver, Bronze program. We’re working with partners who want to partner with us in the few ways I just described. We don’t have exclusive geography relationships. We don’t have exclusive vertical market relationships. The way we’re structured is we will recruit, onboard and enable a partner and then that partner will be assigned to a sales executive who will be the day-to-day contact for that partner wherever they are. We do everything for these partners. We bring them onboard, we provide them with sales support, services support. We bring them into our partner hub, our password-protected platform that provides all kinds of enablement materials. We get in the field and work with them on customer-facing opportunities. We will do everything to make that partner successful.
How do you expect that to change as the company grows?
A year from now, it’ll be a bit different. A year from now, we will likely have a stratified program. We don’t want to over-engineer it, but we do want to bring some additional organization to it. I’m sure there will be tiers of partners. The high end will be people who want to make specific commitments to the company and to the partnership, revenue commitments and whatnot. Maybe they are folks who have a more global reach rather than a vertical-specific or geographical reach. There will be more structure a year from now. How can there not be when you go from 25 partners to 50, or 100 partners?
Considering that pace of growth, how much of 128’s business do you expect to go through the channel?
There’s a lot of greatness working with partners. Not only for 128 and our customers, but for the partners themselves. Our partners can drive significant revenue for their own businesses. They can drive shareholder value for their businesses by working with us. Our customers are going to get the technology. It’s a matter of do partners share the vision and want to work with us, and do they want to do that for the benefit of their shareholders? Two-dozen companies have said that, and we think many, many will do that over time. If I had to guess, I’d say two years from now, 90 percent of our revenue is going to come with and through partners.
From your perspective, where is the channel along the journey toward a managed service model becoming the dominant go-to-market strategy?
There are a lot of legacy models in partner-land that just are under assault. The traditional VAR model maybe doesn’t work real well in subscription-land. As more and more enterprises want to move to cloud offerings, that doesn’t really mesh well with the traditional VAR model. There are some partners that see that transition occurring and are right there in front of it. They want to be part of it. Others are going to take a little bit longer. We don’t want partnerships just to say we have partnerships, and we don’t want partners to work with us just because they hear that 128 is a cool company. We want to work with folks that share our vision, but also can benefit from the changing partner landscape. It’s changing, and it’s changing for good. The traditional VAR model is likely going away. Some partners are further out on the leading edge of recognizing that market disruption. Those are the folks that seem to gravitate to us, and we to them. It’s reciprocal.
How does a partner make money working with 128?
Our partners can make money in each of the ways I just described. They can earn fees for selling our product. We help them do that, and it’s very compelling because we offer a subscription service and it’s a high-value, high-margin recurring revenue stream that the partner gets. As a services partner, someone who wants to install or support our product, they earn services dollars that are completely devoid of 128. We don’t own a piece of that revenue stream. They’re generating a revenue stream they wouldn’t otherwise have, and they’re having customer intimacy. We’re not disintermediating that relationship. As a managed service, their benefit is they’re acquiring a recurring revenue stream they wouldn’t otherwise have, and it’s a high gross margin revenue stream, as well. There are multiple ways partners can monetize their relationship with 128, all of which lead to high-margin recurring revenue, and they get to work with a very innovative provider of next-generation solutions.