Okta Channel Chief Hustad: Partner Contribution Growth Can ‘Go A Lot Higher’

Bill Hustad speaks with CRN ahead of his company’s Oktane22 conference, which runs Tuesday to Thursday.

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Okta’s new channel chief Bill Hustad plans to announce a new partner program at the beginning of 2023, with new incentives, enablement and other resources for partners to grow alongside the identity and access management vendor and build predictable revenue.

Some of the features of San Francisco-based Okta’s new partner program Hustad is vetting include a badging or point system for ascending tiers, rebates for partners to invest in their practice and business and market development funds (MDF), and advisory groups to elicit partner feedback, Hustad told CRN in an interview.

The new program “is a product,” Hustad said. “It’s my product to the company, and my product to the partners, and we’re going to treat it as such. So we‘re going to have a roadmap. We’re going to talk about what’s coming.”

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What is an Okta partner?

Hustad spoke with CRN ahead of his company’s Oktane22 conference, which runs Tuesday to Thursday in San Francisco.

He joined Okta in July, taking on the formal title of senior vice president of global partners and alliances. He previously worked at Splunk for more than five years, with the last portion of his time with Splunk in the role of vice president of alliances and channel ecosystems.

Today, Okta has about 1,200 partners worldwide, with “about 10 percent growth in partner contribution over the past couple of years,” Hustad said. “That can go a lot higher.”

He’s met with about 65 partners so far and continues to seek partner input as he develops the new partner program. And he wants to help partners get the most out of the Okta portfolio, including subsidiary Auth0.

“From a partnering point of view, there‘s a tremendous amount of opportunity to build out what it means to be working across the entirety of the partnering spectrum,” he said.

Manak Ahluwalia, CEO of Waltham, Mass.-based Okta partner Aqueduct Technologies – a member of CRN’s 2022 Managed Service Provider (MSP) 500 – said his customers haven enjoyed the simplicity of Okta’s single-sign on authentication platform.

As more customers embrace cloud-based services, a way to secure identity and access and streamline the user provisioning process also becomes more important, Ahluwalia said. The same goes for customers going through mergers and acquisitions and ones building more robust processes for a growing workforce outside of the office.

“It just gives them a really good workflow to be able to universally take somebody in and out of the entire application stack,” he said.

He said that if Okta invests in its channel partner program, he’d like to seemore enablement around its applications as well as its identity storage features plus more best practice integration guides for interoperability with Okta.

In Okta’s corporate hierarchy, Hustad reports to company Chief Revenue Officer Steve Rowland, who reports to Susan St. Ledger, Okta’s president of worldwide field operations. St. Ledger reports to CEO Todd McKinnon.

During the company’s most recent earnings call back in August for the second quarter of fiscal year 2023, Okta reported total revenue of $452 million, an increase of 43 percent year over year. Subscription revenue was $435 million, an increase of 44 percent year over year.

The company reported a net loss for the quarter of $210.5 million, an improvement from last year’s net loss of $276.7 million during the same period.

Here’s what else Hustad had to say.

What have you learned so far as Okta’s channel chief?

When I look at partner contribution as a whole, there’s a lot more we can be doing there.

We’ve seen about 10 percent growth in partner contribution over the past couple of years. That can go a lot higher. … For me, when I look back at where we’ve been and where we are, and we‘ve really done a good job of, I would say, taking advantage of the traditional channel.

And when I say traditional channel … resell, distribution, creating scale, extension of our sales force, all those things. There are some really great things we have done there that I want to be able to amplify.

But as we‘ve grown up alongside that, and we haven’t really taken advantage of modifying or modernizing that approach, you tend to start to see conflict in areas.

And you start to see in that traditional channel model, where you get those that participate across the cycle and then those that find and disappear and those that transact and disappear.

So I think there‘s an opportunity for us to really reinforce that middle. … From a partnering point of view, there’s a tremendous amount of opportunity to build out what it means to be working across the entirety of the partnering spectrum.

So where do our SIs (systems integrators) play a role in that? I‘ve learned now, when you think of SaaS companies, what you get value(wise) from your partners is pretty equal across every type. They just do it differently. … So I look at it as the spectrum of all the partners in which we can have them provide value and behaviors that are good for our business – but at the end of the day, really good for our customers. … And then the other piece around them, which is how do we get them doing more service providing solution creation. And you start to get those adjacencies built around identity.

And I think uniquely here at Okta that I‘ve learned is this notion of creating a developer persona within our partnering community is extremely important. … Getting early into that where we are creating the easy button for them to understand how to work with us, work with our APIs (application programming interfaces), get plugged in so they can focus on solving those customer issues early and then knowing how to get it plugged in very quickly into the enterprise and getting it using and solving those outcomes much faster.

Why should partners look at the new Okta program?

If you can think about a partner that can contribute across many different facets that lead to customer success that are valuable to us, there are a couple things I believe. One is they will create a better economic model of why they‘re partnering with Okta. … Two is they will create deeper and more intimate relationships with their customers.

And those two things combined together mean that they have more predictability in their business. They have more visibility in their business. And my goal is – they have choice. They have a choice to partner with anybody in the market in identity. I want them to choose Okta. I want them to choose Okta because of that predictability and visibility and how we align to their business case. … We want them to deliver not only post-sales success, but everything that comes along with it.

So adjacencies, solutions, offerings. Start thinking about those… And so I want to build up that competency with them as well so they know what it means post-sale and how they carry a customer through those use cases and build more long term upsell, cross-sell opportunities. … And then lastly is transact.

And I want transact to be as easy as possible. … A customer can transact where they find the easiest and best and what is most aligned with their business, whether that‘s a marketplace, through a reseller, through a distributor. … The goal is that we get you really good at those things that you innately are good at. But then we also create a program that allows you to understand how you move across these different motions.

And as I mentioned, as you move across the value chain to you in your economic model – because I know it‘s just not selling more Okta licensing – and the value to the customer increases. … So a lot of what we’re doing in action is focusing on what a new partner program needs to be.

That is the playbook for our partners. That is their comp plan. That‘s how they get motivated. That’s how they align with us. That‘s how they create the business planning. … We are on path to announce a new partner program at the beginning of next year.

Now, my point of view on a partner program is, it can‘t be the end all be all at the beginning. There are going to be multiple launches throughout the year. But to my view, it’s a product. It‘s my product to the company, and my product to the partners, and we’re going to treat it as such.

So we‘re going to have a roadmap. We’re going to talk about what‘s coming. We’re going to get validation from the market through partner experience.

We‘re going to really drive to create one voice from Okta to our partners so they always know that coming through this vessel allows them to get visibility of how they’re succeeding, whether they‘re just focused on delivery, or finding business or even transacting.

So the partner program is going to be a really big pivotal point to really reinforce all the words I say. … Do they see a new level of incentives? Do they see a new level of approach? A new level of enablement and guidance …We‘re looking at all of that. … Whether it’s a badging process that we look at to get there, a point system to create equalization across the different motions so you can actually progress through tiering, based on any of it.

And then at the other side of it, a rich new set of incentives that go well beyond just discount. So I‘m looking at rebates. I’m looking at a reinvestment system where these rebates can not only just go back to the top-level partner, but they can actually take them and reinvest them back in building their practices and business with us.

I‘m looking at monetizing MDF (market-development funds) to make sure that MDF is something that just doesn’t sit on a shelf that people pluck off when they want, but actually becomes part of the business planning and becomes tactical. And we make more of that available to you as you continue to grow. All the way to a broader set of opportunities. I joked with Todd (McKinnon, Okta CEO) that maybe it‘s even a lunch with Todd.

But you can imagine in that model, we can do a lot more around how we motivate partners to do a lot more in delivering. But they see the other side of it, too.

What do you want partners to know about the tools at your disposal today?

One is we’re doing a lot of investment in making sure that programming gets out there. That’s important. … Part of the program to me is being that one voice to the partner.

So that‘s looking at all of our partner initiatives we have internally. And we have some good ones – all the way from the integration network, developing that developer persona, our go-to-market network, our technology partners network. And then also we’re still working on our customer identity – our Auth0 – partner network. Bring that all together so we have that one voice.

The other is establishing a partner experience team. And that partner experience team to me is not, hey, how are they navigating through the resources we have? To me that‘s – are we doing our advisory groups? Which we haven’t done here yet. So we‘re going to be doing advisory groups as part of our partner listing tour.

We‘re going to be doing things that are around polling our partners more often. I would like us to invent something like a partner satisfaction index score and really understand – here’s where we‘ve begun, and here’s where we‘re ending. So we can always poll that and get that back-and-forth with partners.

We‘re also going to be doing a partner-voice-based model where we’re going to hear from them around where they are in their study around what‘s happening. And so that also is going to support these industry conversations we have. That’s the back end.

On the front end, in the field perspective, what they‘re going to find is really that we’re going to be very, very focused on the business of partnering. … Everything that leads to a transaction are going to be all the areas we‘re really going to start to break down, all the way from demand-generation activities, pipeline development, all the way to better connectivity with our field, to then making sure that we’re understanding what‘s happening on the transaction side.

And that‘s going to be reflected in a lot of three-year planning, collaboration agreements, which is – we have it on paper. Now let’s really agree that this is where we‘re going.

How big is the Okta partner ecosystem today?

So we have roughly about 1,200 partners worldwide, which is a lot. But when I look at that, it‘s also kind of dividing up our attention and dividing up the equity of partners a lot.

So my point of view is really about how we‘re going to start to shrink that focus down but not lose those partners. I’d love to create a partner program that is universally acceptable and beneficial to anybody who wants to be part of it.

But to do that, you actually have to have a very purposeful longtail process where there is self-service, where they know how they can win, how they build, how they get enablement.

That‘s behind the scenes for this year, how we start to build that. The majority of my focus this year is really saying – when we think about these partners, how can we put them in the right segments of partnering and know that we’re putting the right resources against those segments. And we have some partners that we can really double down on because we know if we put $1 in, we get $3, $6 out.

And we have other partners where we don‘t have that historical view yet. So with those, I want to do a lot more of that development orientation. What are we doing to build them out?

And so you can almost imagine internally is what we have is this matriculation process where we have the longtail, which could be infinite in size eventually, and then they move into development partners, which creates some level of focus and investment pods – all the way to a focused partner, which creates a more substantial focus pod.

But also those are the ones where we know that it‘s predictable in nature. Good for them. Good for us. So that’s going to be a lot of what we‘re doing this year. … And it’s good for them, too, because what a traditional tiering structure doesn‘t tell you is how you really get to the next year.

And how we‘re hoping you get there. Because that’s our goal, which is continuously matriculation from longtail all the way to focus. … The partnering strategy isn‘t a build strategy. It’s a company strategy.

And it only works when the company says, ‘We‘re thinking about doing this. What are we doing direct? What are we doing indirect?’

And when those conversations happen at that level, then it is pervasive across everything. And that was a lot of, before I even came on, frankly, that was a lot of what I wanted to make sure everybody felt and what they‘re looking on. And it’s been completely reinforced. … There‘s huge market opportunity if you think about our traditional workforce product, and now within that same infrastructure, having the opportunity to cross-sell and upsell with extended workforce, from an upsell perspective. … And then cross-selling with customer identity, which is really emerging a lot in our enterprise, but also in the developer area.

So that‘s a really big opportunity for partners to learn a lot more. And you’ll see a big focus on that … around learning tracks, certification tracks, we‘re going to do rapid certifications. That’s a great opportunity.

Lastly, we want to create a program that helps partners get more intimate with their customers. And we are absolutely looking for that opportunity for them to be able to have more predictability in their business and have more predictability in their customer relationships.

How do IT distributors fit into your strategy?

If you think about even aligning distribution to those segments, where they play such a critical role in augmenting our go-to-market strategy, about being where we can’t be, providing uniqueness and value in transaction. Like Carahsoft being our predominant distributor for federal. We would not have that business without them, and we recognize that.

We would not have business in some of the Latin American countries without these distributors. So that‘s a really good point of view.

The other is that distribution by nature, especially as we‘re seeing it build up in SaaS companies, is that they are extending their capabilities even more, too.

So you can almost look at distribution as a resell-managed distribution, where they‘re actually providing demand-gen(eration) activities for their resell network. They’re doing enablement. Obviously, we have to help them with all of this. They‘re doing enablement, they’re managing pipeline, they‘re doing all these things.

And so for me, those are huge opportunities. Those are big, scaler-based motions. And we need scale. And so those will be the areas that I focus on with our distributors.

Does an Okta partnership go well with other vendor partnerships?

(Yes.) We‘re going to be doing a lot of work around our ISV relationships. They need Okta, and they need identity just themselves.

But when you think about us, plus another vendor, like a Zscaler, a CrowdStrike, connected together with AWS (Amazon Web Services) in the background, and maybe a WWT (World Wide Technology) that‘s building a solution above it.

We’ve just created the easy button for WWT to focus on what the customer needs. And you replace WWT with any other integrator, service provider.

And when they look at the subset of technology companies that we work with – over 7,300-plus different integrations with technology – but knowing that we‘ve done the hard work to connect these big companies together so they can focus on that is going to be a lot easier. … That ISV technology partner thing and program we’re building is going to be much bigger than just, ‘Hey, we now work with, we now work with, here‘s our integrations.’

It‘s also going to be about how it creates momentum for our partners to do more unique things with their customers.

ny Okta partner program data points that have pleased you so far?

One of the biggest areas that I‘ve been impressed with is a lot of the leaning in with partners. We see a great deal, probably in 50 percent of all our partner-contributed revenue, partners are doing POCs (proofs-of-concept), they’re leading customers to technical wins. And, they‘re finding us a good amount of that business as well.

So divided across those three and 50 percent of everything we do in our partner-contribute business is a very good sign. And that gives us a lot of room to kind of start to spill into the other stuff. And also taking those bookends of find-and-disappear partners and the transact-and-disappear partners and getting them going toward the middle is a huge opportunity. … (As for a percent of total Okta deals with partner attachment), still working on that, to be honest.

I look at the 10 percent contribution growth that we‘ve seen from partners and I just think that’s super low.

Any data points from your time with Splunk that Okta partners should know?

I really enjoyed my time at Splunk. And it was a very hard decision to leave Splunk … and very similarly to the way I‘m looking at things here is a notion of reinventing the way we do our business.

And Splunk had very different dynamics. We still had a very heavy on-prem business, and we had a very emerging and growing cloud-based business. And so we had to straddle both sides.

But with that, just last year, I launched a program that was built and fit for Splunk. So I‘ve done this before. And our partners were really excited about that as it painted where they needed to go and how they contribute.

So I would say there‘s a lot of good overlap in our partner ecosystem. … They’re looking for that and expecting, hopefully, the same thing for me here.