Storage solution provider NetApp found that global system integrators (GSIs) viewed its products as merely a transactional IT component, rather than a part of wider business transformation activities such as server virtualization or data center modernization. NetApp decided it needed to work more closely with the GSIs to "get a seat at the table" and become a part of these more-strategic initiatives, which are key for enterprises in today's competitive environment.

• IT transformation projects require significant business process change, which means vendors need to work with "classic" integrators such as Accenture and HPES.
• Executing an effective channel strategy with GSIs requires resources to match the GSI structure — global, regional and local — on the sales and technical side.
• Proactive creation of specific solutions and/or ensuring that your products are tested/approved within existing architectures is critical.
• It can take a couple of years before the full potential of the relationship and a positive return on investment (ROI) are realized in an enhanced channel strategy.
• Gaining alignment with GSI practice directors is critical for influencing prospects' leaders, and the market in general.

• Understand GSI selling methodologies and embed your solutions in their architectures especially those that focus on business outcomes, and then explain how the solution works. This approach can create broader appeal and lead to increased client interest.
• Invest with long-term returns in mind (one to three years). Establishing an enduring partner relationship with a GSI requires a long-term approach to investment and value realization.
• Compensate GSI account managers using management by objectives (MBO) or milestones in the building of the relationship, especially early in a partner's life cycle.
• Start with a centralized approach to alleviate local investment pressure at the tactical level. Local investments can assume responsibility once the program gains momentum.

Storage and data management solution provider NetApp saw that its products were not playing a leading role within the sales conversations within GSIs (see Note 1) and needed to leverage the right partners to get into sales cycles earlier, and at the right level. It also became apparent that NetApp was not effectively engaging GSIs to win "mind share" at either its partner or targeted enterprise customers.

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Although NetApp had relationships with many GSIs, these were around specific transactions and deals rather than long-term strategic value to the GSI. The answer lay in working more closely with key GSIs to make NetApp a part of the GSI's proposed (and repeatable) solution before entering into prospect discussions. NetApp needed to develop new sales programs beyond its standard reseller program (the NetApp Alliance Partner Program), which was unsuitable for use with GSIs because they tend to influence rather than resell products.

This study focuses on the Global System Integrator Program, which has seven members — Accenture, Avanade, CSC, HPES, Fujitsu, Infosys and Tata Consultancy Services — and is by invitation only. We look specifically at how NetApp established its three-tier global model, with effective support mechanism, to embed itself in these relationships and create an enduring model for channel growth.

NetApp is a provider of storage and data management solutions. It reported revenue of $1.01 billion for the third quarter of fiscal 2010, ending 31 January 2010. Two years ago, NetApp realized that it didn't have the right level of relationships within the partner network and infrastructure to support its key GSIs. The GSIs were delivering a small percentage of NetApp's overall enterprise business. This was inconsistent with the role that GSIs typically play for a vendor such as NetApp.

NetApp began to shift its GSI strategy when it recognized a change in large-enterprise buying behaviors. Increasingly, large data center projects and even business transformation projects were driving individual pieces of infrastructure, creating a much more dynamic environment. This meant that customers were increasingly looking for large "aggregators of demand" to assist them with technology acquisition and integration. The role of GSIs was becoming increasingly important in the data center, but although NetApp had a long history of sales through solution providers, it did not have the right model to fully leverage GSIs.

This study examines how NetApp reorganized its sales efforts, put a three-tier support model in place and developed a global consistency support infrastructure focused on GSIs. The aim was to improve customer coverage, solution and architecture validation and bolster revenue.

NetApp realized that storage products alone don't lead to sales opportunities in very large enterprises. Instead, professionals responsible for an enterprise IT infrastructure view storage products and solutions as part of something more strategic, such as virtualization or infrastructure modernization projects.

NetApp's ability to get into the conversations with GSIs about strategic projects early enough and at the right levels was somewhat limited and inconsistent. Despite having many long-term relationships with GSIs, NetApp was not seeing strong results and wanted more ROI. There was a need to participate in deals at a higher level in the partner organization to establish meaningful and long-term growth opportunities. Also, a need existed to develop longer-term account mapping and territory planning.

At the same time NetApp wanted to re-engage the GSIs; the recession was leading IT professionals at the enterprise level to re-evaluate their infrastructure spending, optimize current investments and rationalize future expenditure. They were evaluating options such as server virtualization, data center modernization, outsourcing and cloud computing. And they were engaging GSIs to help them lower the cost of delivering mission-critical IT infrastructure. NetApp wanted to be a part of those discussions to have the opportunity to help influence the direction of client conversations.

Despite the market opportunity, NetApp still had to overcome foundational and infrastructure challenges when it came to engaging its GSI partner relationships. The global and complex nature of GSIs didn't easily fit into NetApp's existing partner programs. NetApp had to address new program requirements — including the fact that most GSIs don't resell products — often a primary requirement for partner program participation. These new programmatic elements included such things as building proof-of-concept projects, practice groups and reference architectures. These GSI relationships rely heavily on client influence and the GSIs' belief that the products NetApp develops will help in winning consulting and professional services business.

NetApp executed its strategy by looking to partners already entrenched in the market position it wanted to occupy. It also invested in pre-sales resources capable of having the right type of conversation with enterprise accounts. Finally, it looked at ways to scale its new strategy.

Pilot Study Helps Identify Partnering Criteria
NetApp started by reworking its alliance framework with Accenture to determine which components were necessary to build an effective and efficient GSI program. Working with Accenture, NetApp identified best practices that led to an overall GSI partnering strategy that contributed to its subsequent successes with the other GSIs. The best practices included understanding what would create "stickiness" within the GSI, appropriate coverage models and go-to-market (GTM) approaches. Working with Accenture served as a pilot and test case for NetApp to ensure its approach made sense across the market. The aim was to study how to build traction with these large GSIs and determine which others beyond Accenture would best fit NetApp's newly formulated partnering criteria for GSIs.

These partnerships differ from other channel relationships in two key areas:

• GSIs typically don't make money reselling equipment. Their business models revolve around selling services to implement their methodologies, which span a range of hardware and software solutions. The GSIs are competing on their innovation and service capabilities, making client discussions more about business outcomes than about the cost of the technology to make it so. Broadly speaking, there is some participation by GSIs in influencer programs (where GSIs receive payment for helping sell hardware), but this business practice appears to be slowing, especially in Europe because there are concerns that it looks like a "kickback." Therefore, GSIs are more interested in selling their services and methodologies around the technology than in selling just the technology.
• They are, by definition, global — with key practice directors sitting in one country — influencing designs, practices and GTM for the practice, on a global basis. This requires a very different coverage and management model. It must take into account all the varying country requirements, business objectives of the regions and customer demands.

Embedding Offerings in Repeatable Methodologies Helps Build Relationships
The study proved the importance of developing stickiness with the GSIs up and down the organization from leadership to "feet on the street." The only way to achieve this was to embed NetApp's offerings within the GSIs' repeatable methodologies (such as reference architectures for IT infrastructure or as component of templates and blueprints). This required NetApp to provide more insight into solution development to get closer to the needs of users and GSIs. Doing so demonstrates to a GSI's consultants that NetApp can provide the solutions its clients are looking for and proves that NetApp is willing to invest alongside its partners.

Push-Pull Approach Helps to Drive Mind Share
NetApp also looked at how it could drive the right level of mind share within the GSI organization. This demanded better visibility for NetApp into the reference architectures and required work at the executive level, the GSI's practice director level and the street-level sales executives. NetApp realized that this required a push-pull sales strategy. The push would come from the GSI practice directors who hear the "buzz" about NetApp solutions from consultants and architects. The pull would come from the street-level sales executives that help nurture leads and could see the business NetApp was capable of influencing for them.

NetApp saw that this approach was necessary on the sales side and the technical side. A big "revealing" moment came when NetApp realized it needed to invest in technical architects (or storage infrastructure solution architects), which it did not previously have assigned to GSIs. There were "deal" or "transactional level" system engineers in place, but not necessarily architects that would influence technology/methodology road maps within the GSIs. They put these resources in place at the global practice director level and the country level. At the practice director level, they architect the NetApp portion of the reference architectures, working alongside the GSI's resources. The messages and solutions at both levels are similar. But the conversations differ depending on whether the discussions are on the technical or business developments side because these have different needs.

Building Support Infrastructure Helps NetApp Scale Its Partner Program
This goes beyond staff levels to include aspects such as contracts ordering and back-office and operational processes for reselling and invoicing. The GSI partners do not generally resell, but they still need to understand how the pricing will work for their clients. GSIs also need demonstration equipment, marketing funds and support, and training on the product/solution. In some cases, they also expect an influence or referral fee. Part of NetApp's problem was that it did not have any of these in place, especially anything that was globally scalable. It had to set up this infrastructure to support its three-tiered model consistently at a global level. This was especially important when looking at hosted platform deals.

As NetApp enters the fourth quarter of its fiscal year, the influence and resale via its five GSI partners has grown faster than any other channel, and faster than NetApp as a whole. The addition of more than 20 staff globally to support these deals partly fueled this growth.

By shifting focus from 20 accounts to five, and building a three-tiered global support model, NetApp has increased revenue from its longest-term relationship by 73% year over year.

NetApp is at different stages of the relationship building with each of its five GSIs. It is in 25 reference architectures, although half are still in the define and plan stages, and have not reached full market deployment.

Taking a systematic approach. NetApp spent time developing a phased approach to reference architectures. It starts by defining itself in these architectures, then plans the architecture and develops proofs of concept before launching internally at a number of events with a GSI. After this, NetApp incubates the opportunity with defined pilots at several joint customers and finally grows the deal with general availability.

Using a lengthy vetting process. The right coverage model is extremely resource-intensive. You must focus on the right partners, or the results may fall short of expectations. NetApp looked at the strength of its executive relationships, revenue momentum in place, current reference architectures that had some level of adoption and field sales feedback to determine the right list of GSIs to work from.

Demonstrating commitment to partner success. The combined impact of NetApp's investments in its partner program shows purposeful commitment. By making these investments, NetApp demonstrates it has "skin in the game," which signifies to potential and current partners how important this program is for business growth.

Understand how GSIs work and contribute to their success. Broadly speaking, GSIs are not interested in reselling because they focus on delivering business outcomes. This requires a repositioning of strategies, messages, incentives, rewards and commitment on the part of technology providers to ensure they focus on what matters most to the GSIs and their clients.

Pick the right resource and funding model. NetApp thought the best way to get this model funded was to have each geography fund it via its budget. The worldwide budget would then fund the global resources. But the long lead times on such projects versus the pressure to make immediate sales meant that the geographies weren't interested. NetApp believes that the solution is to fund the initiative globally when seeding deals. You can then put pressure on geographies to sign up when there are sales to harvest.

Don't expect immediate results. Investments can take a couple of years before they reach a point where you see the payoff. This is another reason why it is important to fund these initiatives at the global or corporate level.

Go beyond revenue to measure your success. NetApp discovered that it is best to measure the number of reference architectures that you are a part of rather than just year-over-year growth in revenue. Otherwise, it is too easy to for discussions to revolve around the source of the influence in a deal.

Change the compensation plan to fit the sales role. It is often difficult to put the right type of sales staff into these alliances. NetApp is moving away from MBO-based compensation schemes and will reward performance against milestones in its reference architectures, such as the plan, develop, launch and incubate phases. This provides better motivation to deliver the architectures and increases NetApp's credibility.