VMware Adopts New Partner Strategy to Help Drive Profitability in New Multi-Cloud World

Originally posted on CRN, written by Mark Haranas

VMware’s worldwide channel chief, Sandy Hogan, has several plans in store for the new fiscal year aimed at increasing partner profitability in an ever-changing IT channel landscape.

“This whole profitability journey for partners is evolving,” said Hogan, senior vice president of Worldwide Partner and Commercial Organization at VMware, in an interview with CRN.

VMware’s new fiscal year 2023 began this week with the Palo Alto, Calif.-based virtualization and software superstar implementing some new strategies into its partner programs to help drive profitability in the multi-cloud world.

CRN told Hogan that some partners believe VMware is a relatively expensive investment to undertake as a solution provider due to its diverse and broad software portfolio along with the certifications needed to achieve a Master Services Competency. Hogan addressed this by explaining five initiatives VMware is doing in fiscal year 2023 aimed at helping increase channel partners profitability.

‘Heavy Investment’ In Automation

Hogan said the first part of VMware’s strategy to evolve channel partner profitability in fiscal year 2023 is via more automation capabilities.

“The first part that’s really going to impact that profitability is the process in automation. Because there are a number of pieces in how partners implement and engage with VMware that impacts their margin—whether it’s operational business management, real time access to data and having visibility— [automation enables] less manual work to move through the sales cycle. This is where we have made heavy investment for 2022.”

VMware is striving to enable partners this year to “spend less” resources on the manual work during a typical sales cycle, she said, “which will drive up their profitability.”

New Visibility Tools

A VMware channel partner’s ability to see and understand how profitable they can be will be revamped this year via new partner profitability tools, according to VMware’s channel chief.

“We’re actually going to be implementing this year: tools, estimators, profitability models that help them evaluate at the deal level and also at the practice level, so that they can determine investment scenarios and make very good, educated decisions on what will it take to invest and the ROI for that investment,” said Hogan.

The new visibility tools this year will better help guide partners to make the correct decisions in terms of ROI, she said.

“That’s a big piece in wrapping up how we want to help guide partners to make the right decisions so that they have full transparency to see where they can be and should be profitable,” Hogan said.

Pushing Partners To Create More ‘Advanced Services’ And Business-Outcome Differentiation

Hogan said VMware’s top partners are becoming two- to three-times more profitable compared to traditional partners for two fundamental reasons.

"One, they’re heavily investing in all the advanced services … and they are also investing in the Customer Success capabilities. So not the traditional technical aptitude, but true business outcome and value differentiation,” said Hogan. “So that’s where we’re going to continue to invest to enable partners to continue to differentiate themselves.”

Some real-world examples of advanced services that partners are providing today include managed services offerings around financial operations with CloudHealth by VMware, as well as building service offerings around a fully managed VMware VDI [virtual desktop infrastructure] deployment.

In terms of customer success, Hogan said, “We view customer success—whether it’s SaaS subscription, licensing, the whole experience—it’s about having expertise. It’s about having customer telemetry to know what technology they’re using, what problem they’re trying to solve, and working with the customer to make sure they’re always providing that level of expertise to help the customer utilize and optimize the technology, solve for the business outcomes, etc. That’s a whole new skill set that partners are building.”

Boosting Practice Development

Another goal for VMware to help partners increase profitability this year is investments toward helping channel partners build-up a new VMware practice while also helping partners achieve VMware Master Services Competencies (MSCs) quicker.

“Our whole onboarding and enablement process that we launched, where we’re now providing the IP of our practice development methodology, actually helps partners accelerate time to achieve those MSCs,” said Hogan. “They can do it at their pace. They can access the information that is most relevant to them that they want to leverage. So it’s less of a dictated environment.”

In the new and complex world of multi-cloud, expanded practice development will help partners differentiate themselves.

“Practice development, traditionally and historically, has been pretty significant, which also connects to just how complex the portfolio is and is growing,” VMware’s channel chief said. “And the multi-cloud world is more complex in order for partners to truly deliver value.”

New VMware Master Services Competencies For Use Cases

Hogan wants channel partners to know that VMware’s Master Services Competencies will continue to evolve which will gives solution providers more flexibility and choice.

“We will give partners the option to have MSCs for the traditional technology level that we’ve been providing, we will also be doing it by use cases. So partners will be able to develop use cases. For example, disaster recovery as-a-Service,” said Hogan. “The reason I bring that up around impacting profitability is those use cases create more of the need for unique services for partners to create. That’s where they can generate a lot of the profitability.”

She said if partners review the different levels of choice and scale for MSCs, it will help the channel’s profitability.

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