The growing importance of the reselling partner channel to just about all the major applications providers is already mirroring the rise of the old Value Added Resellers. But what was then a major sector of the IT industry is arguably set to become the dominant contact point for all business enterprises, be they small corner store operations or the largest of global enterprises.
With Splunk CEO Doug Merritt taking the need to build the supply of such partners seriously enough to decide to use the company’s new Venture Fund to inject some investment into the sector, it was apposite that the opportunity arose at the recent Splunk.Conf event to spend some time with Aziz Benmalek, Splunk’s VP for Worldwide Partners, to get his assessment of the situation.
As a start point I posited an overview of why the role of the channel partners might be important. For example, the time is coming when a prime role for CIOs will be to orchestrate complex business services using a wide range of cloud-delivered applications, tools and small services rather than manage teams of code cutters. These applications and services will come from a wide range of different cloud service providers including a company’s own internal cloud and on-premise resources. This will be a true multi-cloud environment.
Networking resources will increasingly come from 5G service providers, and the whole enterprise (regardless of size) will be virtualised to allow tasks to be performed at the most appropriate physical and logical location, and using the most appropriate resources. Basically, this means there will be an increasing level of complexity; but the corollary is that it will give users a greatly-increased level of operational flexibility and agility in the way they tackle business problems.
This all sounds very good, but the downside is that it becomes completely impossible for any individual vendor or cloud service provider to service the incredibly diverse and rapidly growing needs of a huge mass of customers on their own. What it needs is for the old channel reseller business model to be reinvented. For the CIO and other C-Level execs, there is now a great need to ‘decerebralise’ the technology – makes its use a no brainer – so they no longer have to think about how it works, but just about how they can exploit it, both by itself and in combination with other services. Benmalek said:
I think it's a really great discussion, because you are taking an angle around what is core to me personally and to us. In this digital era and digital transformation that is happening, technology is at the core of it to serve real business needs, which are around reinventing business, or serving customers in a different way, or optimising the way we do business. As well, there is the competition from lots of companies coming from all angles. Data is the key enabling piece, and the core is how you leverage it and enable the value of it.
Baby, its complex out there
Benmalek certainly sees technology complexity as a serious issue, one that is generating the need for data platforms that can enable and simplify what users work with. And that he sees as the core of the company’s strategy and what it is calling its `data-to-everything’ platform. But this is still only an element of something broader and richer, an ecosystem that enables the generation of new business value across hybrid clouds, multi-clouds, hyperscale public cloud providers, and a range of other innovative services. That ecosystem is coming to the company from multiple players, including strategic partnerships with service providers around the world, but also working with a growing number of partners on adding value through the joint development of solutions that are built in the ecosystem with partners.
I also asked about getting the `technology trickle down’ kicked off. This is where most of the major technology vendors are already working with the major enterprise consultancies, such as Accenture and Deloitte, but the big need coming is with the vast numbers of small enterprises that have far fewer resources than their large cousins and a greater need for support.
The biggest problem here is that while the tech trickle down itself is quite easy, the traditional business model that most of the old VARs have operated under – taking around 10% of the total sale price as their commission – means that they have balance sheets that do not impress venture capitalists or other finance sources. So few of them are encouraged to even look at these new opportunities. Benmalek argued:
Let me let me break it in a couple of areas on how I believe I see it. Number one is as we move more into cloud and hybrid, the need for serving customers in this digital era is morphing and transforming. The added value is changing and the spectrum is moving more into solution delivery, as well as managed services. I think that's why that's why really we are heavily looking and investing in jointly with our, the right partner ecosystem in a strategic way on how to help build the platform, as well how to enable and provide managed services and IP solutions in the hybrid cloud world.
Partners of all sizes add the value
Benmalek now sees businesses of all sizes with a need for nimbleness across the board, which means the ecosystem of players does require small, nimble managed services providers. Some of them, such as Signal Fx and Omnition, end up as Splunk acquisitions. Each started out as born in the cloud service providers, each providing a managed service that users valued.
He definitely believes in added value across the spectrum, from reselling to service provision, to adding value with managed services and IP solutions and on across all aspects of the platform. And this ranges from the biggest of the big partners, such as AWS, through to very niche, specialist partners who have lots of expertise around security, operations, DevOps, or providing managed services in the public cloud and solutions:
“That's how we see the ecosystem forming. And we do need the whole diversity of the ecosystem to thrive as we move forward.”
The same basic approach is being used in the development of joint IP. Splunk is already doing this with the larger consultancies, and he is already well aware of the problems this carries with it:
Applications get merged, and deliver an entirely different result for anything that's been delivered before. How do you divide that out? That is the sort of problem then that both sides need teams of lawyers specialise in that sort of thing. And I think it's the thing that is really frightening, especially for the smaller businesses. They can come up with some IP that serves a niche market or suits the particular needs of a regional marketplace, and they have really no idea of how to charge for that and support it in the different environment of both the annuity business model, the subscription approach, and the fact that they're not just sending somebody out to their customer if it breaks. In fact they’re probably running it for them in the cloud.
As well as the possibility of financial support via the Splunk Venture Fund outlined by Merritt, Benmalek stressed the support channel partners might expect from the company:
We are about enablement, and training is one of our critical areas of investment that we will continue to drive. which is how we enable the partner ecosystem to build not only solutions and IP on top of our platform, but services and practices as well.
Here is an object lesson for most of the big vendors. There is a growing, if grudging `yes, we probably need them’ acceptance of a future for a new range channel partners based on the VARs of old, but very few yet see the need to be of too much assistance in their development or transition. Splunk is one of the first to get stuck in to that task, even to the point of putting its corporate hand in the corporate piggy bank. And if 50% of them stay loyal – add other suppliers and vendors certainly but keep using Splunk for what it is good at – then I suspect they will all do very well by the trade