AppDynamics Revamps Partner Program With Margin Boost

AppDynamics revamped its partner program to help protect margins on its application performance management software, the company said Wednesday.

The San Francisco-based company's software enables companies to have visibility into their application stacks to diagnose problem areas and see patterns. It has been rapidly gaining traction in the market since its launch in 2008, posting a 175 percent year-over-year increase in bookings. The key to that growth is an "exploding" channel program, which is "by far the fastest-growing part of the business," Joe Sexton, president of worldwide field operations at AppDynamics, told CRN.

AppDynamics launched its channel program in 2010, and it already has grown to 10 percent to 15 percent of the company's overall business. Sexton said that the company is rolling out a new partner compensation model to help protect partner margins in the competitive software marketplace.

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"I've always tried to think in terms of what would interest partners. In the end, it's about making money," Sexton said. "The challenge of that is when you get into competitive situations, by the time all things are said and done the leftover margin is not as interesting as it could be."

Under the revamped program, partners will receive 20 percent margins on the first $500,000 of business, 25 percent up to $1 million, and 30 percent above $1 million, according to Sexton. Renewals, which typically occur at a 96 percent rate, will yield 10 percent margins and 20 percent margins with support.

AppDynamics' goal is to bring partners on board that are looking to move up the stack and add additional value to their portfolios. Sexton said the company is specifically seeking partners with infrastructure experience that want to improve their value in the application space.

"The ability to do that well and move those costs from infrastructure to systems of record [is key]. We really feel like this is an exciting space, an exciting company and really a best-in-class program. I'd almost challenge you to find one as rich," Sexton said. "That’s deliberate, it's by design and we want partners that want to be in a hot space, in a hot company and make a lot of money."

Chad Cardenas, chief innovation officer at AppDynamics partner Trace3, said he is "super excited" about the partnership because of the company's application performance management software and its potential for success. The technology behind the software as well as the new partner program structure enable a more innovative approach to client relationships, bringing the Irvine, Calif.-based company closer to the business needs of the end user, said Cardenas.

"They’ve got the killer technology solving a big problem ... and the margin levels that come with the engagements are very, very healthy," he said. "It turns the heads of the right consultant in the field very quickly and paves the way for folks like me building bigger partnerships. It lets us put speed and scale behind this."

As the AppDynamics partner program continues to evolve and solidify its foothold in the market, Cardenas said he would like to see margins protected for short-term gains and plans developed for long-term joint solutions with popular storage infrastructures.

"Really, what I think it comes down to is the manufacturer's ability to put [itself] in the shoes of the partner and what matters to them -- what matters to them from their own personal brand perspective, but also what matters to them to get them motivated to want to build a great relationship," Cardenas said.

PUBLISHED MARCH 19, 2014