The Hosts With the Most

VARBusiness takes a look at three prominent hosting companies and the changes and additions they've made to attract more business through solution providers.

Verio
Late last year, Verio developed its viaVerio Consolidator Promotion, an aggressive campaign to gain momentum with SMB-focused VARs. Under the viaVerio promotion, the Englewood, Colo.-based hosting company rewards partners for migrating their customers to the Verio hosting platform from competing platforms.

ViaVerio has been enormously successful so far. Verio says the number of new VARs participating in the promotion has doubled each month this year and that Consolidator sales have accounted for 25 percent of all new customers for the hosting company since the program was launched last December.

"Part of what we wanted to do this year was put more resources in place to help the channel make sales," says Doug Schneider, president of small and medium enterprise hosting at Verio. "We want to drive more indirect sales because we want to become more of a global player in hosting."

Currently, Verio's indirect sales represent about 30 percent of its total revenue, but channel executives say they're aiming for 50 percent channel sales by the end of this year.

"In the past, we took a passive approach with the channel, and we got away with it because there were so many Web developers and integrators out there," Schneider says. "Now, we're actively recruiting partners."

One such partner, OpAve, a solution provider based in Chelsea, Mich., has moved all its hosting accounts to Verio. "We've been very happy with Verio," says Steve Daut, chief strategy officer at OpAve. "It developed a lot of excellent programs and support services and put together a great overall package for us to sell to our customers."

Schneider says Verio, which is owned by telecom firm NTT Communications, is aiming for regional VARs focused on SMBs for Verio's shared hosting partner program. Verio also offers an enterprise hosting and broadband partner program for larger systems integrators and enterprise solution providers. Together, the two programs account for more than 7,000 business partners.

Craig Schlagbaum, vice president of channels for Verio's enterprise hosting and broadband unit, adds that the company has invested more than $1 million in its channel business, including the creation of a dedicated partner portal, training, Web seminars and road shows, in the past year.

Interland
Unlike some larger ASPs and hosting firms, Interland is an example of a smaller hosting company that weathered the recession well and is poised to grow. But the Atlanta-based hosting company has apparently become a victim of its own success: Interland recently suspended its popular Catalyst Bonus Program for channel partners in order to overhaul and automate the program--a move that has triggered some concern with partners.

The Web-hosting company stopped the Catalyst Bonus Program on April 1 to "incorporate all the great feedback our resellers have provided over the past few months," according to Interland's Web site. Tiffani Bova, vice president of channel sales and marketing, says the bonus program is on hold until this summer because the company is building an automated system to deal with partner accounts.

"We've killed ourselves to keep this going manually, but we just couldn't keep it going like this," Bova says. "When you have a large volume participating in the program, it sometimes makes it difficult [to manage]."

The Catalyst Bonus Program was introduced last summer and became a popular component to Interland's partner offerings, granting cash bonuses of up to $12,500 a month to VARs. Bova says the program, which was launched as an "acquisition tool" to attract new partners, now has more than 600 members and has made nearly $500,000. The company says partners that made Catalyst Bonus Program sales prior to March 31 will still receive their payments. In place of the bonus program, Interland is reviving a promotion that offers Interland's shared Web-hosting platform to partners free of charge for up to three months.

Bova stressed that Interland isn't planning on canceling the offering. "We're continuing to grow our VAR program," she says. "We've made several enhancements and additions to the program. For example, we've never had a partner portal until recently."

To that end, Interland relaunched its channel program last month, adding IPACT, a dedicated Web portal for partners. In addition, Interland received a boost with its recent acquisition of Trellix, which gave the hosting company a much-needed Web-development toolset.

Matt Service, president of Service Internet Solutions, a solution provider in East Windsor, Conn., is an Interland Referral Partner. "Interland has made some good steps since last year with its partner program," Service says. "It has great, low-cost products and services for partners and customers."

Bova says the company is also working to increase partner profitability as well as Interland's indirect sales. The hosting company's channel revenue grew from 15 percent to almost 30 percent in the past year; when the Catalyst program returns, Interland may well see another rise.

Digex
Digex, like Verio, also had the backing of a large telecom parent company. The only problem was that company was WorldCom. Digex severed ties with the infamous bankrupt corporation and is now an independent company looking to get back on its feet. Bobby Patrick, vice president of strategy and CMO at the Laurel, Md.-based hosting firm, says the company is now "retrenching" and concentrating on building up its presence in the data center space.

"We've had a bit of a rocky road since WorldCom, but we're a much healthier company now," Patrick says.

Specifically, Digex is hoping to replace the heavy, expensive enterprise systems-management software from the likes of IBM and Computer Associates with its enterprise-hosting services. "There's no service-level agreements with those types of software, and you're just adding more applications to the picture," Patrick says. "We think our enterprise-hosting solutions are the better alternative."

To capture more data-center business, Digex is turning to the channel. But while Interland and Verio have built strong positions with SMB VARs, Digex is targeting global systems integrators like BearingPoint and Computer Sciences Corp.

"We still have a number of Web-developer partners, but the systems integrators are the sweet spot for us now," Patrick says.

Digex recently unveiled a broad set of new services and strategies for its enterprise-hosting push, including new managed services for the latest enterprise applications, such as Siebel 7, PeopleSoft 8 and Digex's AppSpect application security-inspection service. Patrick believes the enterprise-hosting offerings will help attract integrators and customers alike.

In addition, Digex is revamping its channel business by building dedicated support teams for partners with major accounts. Patrick says the company also retooled its IT systems so that partners can better interact with the hosting firm and also go to market with co-developed solutions.

"We wanted to make it easier for integrators to tap into our operations and develop joint offerings," he says. "We're finding more acceptance with the systems-integrator community now."

Patrick says that Digex is taking a narrower approach to the channel this year, seeking to form deeper relationships with solution providers instead of adding droves of partners to the mix. Now that it has broken off with WorldCom and emerged from financial restructuring, Digex is hoping the channel will be an ally in its new incarnation.