CRN Interview: Gary Bloom, Veritas Software

EDITOR'S NOTE: VARBusiness VARBusiness

CRN and VARBusiness: When you look at the channel and the adoption of your products, how would you assess your current position?

Bloom: I'm extremely happy with the way we're operating with the partner base. And a lot of it deals with business reality, which drives you to deal with your partners more. We've talked pretty endlessly about doing a larger volume of small transactions, and if you look at it from a business-model perspective, if we didn't have a channel, we would never have been able to fulfill or service that volume of transactions. All the direct people in the world can't make up for the scenario that says we're delivering good quarterly revenue results with no large transactions and a massive volume of smaller transactions. The partners are helping fulfill that.

So, as far as the distribution model goes, we have a huge dependency on our partner base and are well aware of it. Now what we're looking at is, we're saying, 'How can we take more advantage of it?' In the spirit of a win-win perspective, how do we take advantage of it? And how do we grow our channel business on an ongoing basis and at the same time, how do we take some of our resources where we do have some conflict,I wouldn't sit here and tell you we have no channel conflict. Anyone who does is probably lying to you unless they're 100 percent channel, which we're not,and take the resources where we do have some conflict and get them calling on accounts where we otherwise don't have anyone calling at all.

CRN and VARBusiness: You talk about how you have senior-level support within the organization behind the partner agenda. Can you describe how you are reinforcing that within the sales force in terms of compensation or links you're making between the channel division and the sales division that maybe you haven't had in the past?

Bloom: One part is simply that there are [fewer] layers of people involved. That is somewhat of a temporary situation in that I'm running sales directly, so that's part of it. We also had a lot of different channel voices and a lot of different channel marketing focuses spread out through the business historically, and now we've got that much more consolidated. So we've got Michael [Sotnick, vice president of partner sales], as kind of a single voice and spirit of the channel, combined with Julie Parrish [senior director of channel marketing] with the centralization of all the channel marketing. So now we have kind of the concept that there is a team that works with the channel to drive business. And [Veritas Chief Marketing Officer] Jeremy Burton, having come in on the marketing side, is very good at doing relatively interesting go-to-market programs with the partners as well as getting them trained and certified and getting information flowing to them.

CRN and VARBusiness: What are your customers telling you they want from you and from the collaborative effort between you and partners to deliver the solution?

Bloom: One thing that the customers have no tolerance for is partners fighting with each other. So when you think about what's their No. 1 requirement, they are looking for a cooperative spirit on both sides that says ultimately the one [thing] that matters is the customer. If there's anything the customers are demanding every minute, it is virtually every customer saying, 'I want to be the center of attention here.' And with two major metrics here: Give [the customer] better service levels, and drive out costs.

To go back to your earlier question on compensation, I think one of the key things isn't how the mix has changed as much as really the heart of our question, which is, 'Can our key leaders and our key district managers and the people that are selling out there, can they make and meet their financial goals with or without the partner?' And I'll tell you, I don't know anyone in a management-type role, where there is a consolidation point of revenues and such, who can hit their numbers without working with the channel. They are certainly not getting it by large deals, because our large deal mix has gotten so small. The biggest quarter in the company's history was the fourth quarter of 2002. We only had 12 deals over $1 million. ... The sales guys are absolutely dependent on that high volume of small transactions and that partner relationship to drive business. And we do it just as well up in the enterprise accounts, too, where a reseller or a partner has a presence or offers a distribution capability or a software publishing capability, or whatever it may be, where they add value, where they add local service.

CRN and VARBusiness: When you look at these smaller deals, are they coming because you are moving to the midmarket?

Bloom: We are certainly doing more business in the broader small- and medium-business market than we ever have before. We're doing interestingly more business in the high-end enterprise market in the sense that we are in more of those accounts. But across the board, what I see is a consistent trend, which I call 'just in time' buying. [Customers] are not buying five years of requirements. They are buying what they need for the next 90 days or the next year. The accounts where we did $1 million transactions,in the $1 million to $2 million range,they are coming back nine to 12 months later and doing another million or two. Whereas if you think about the mentality two or three years ago, they would have done a $12 million deal up front and we would have been taking it all at once and servicing it over time. So, while technically this is not a subscription business, the world is buying on a subscription basis.

CRN and VARBusiness: Does that raise the cost of sales on your part and on your partners' part because you keep having to visit the account?

Bloom: Not really. It raises it on the up-front side, so today, is it harder and a little more costly for the partner? Yes. But down the road it's going to be much lower cost, because what we see in those accounts that have purchased this way for two or three years [is that] when they come back in for the additional sale, there is no competition. We are not competing with anybody. [Customers] are not putting the deal out for bid.

CRN and VARBusiness: What role does the custom systems builder channel play in your channel, or what role might it play in the future?

Bloom: More and more we package our technology, we call it an appliance model, which is probably not the best term for it. But we do packaged solutions that third parties can take. We have a program called "Veritas-Enabled." And the program on a broad basis allows our technology to be integrated into a whole host of different kinds of solutions.

CRN and VARBusiness: How big is the government market for you?

Bloom: The two verticals that have been the strongest for us are government and telecom. We've done very well in financial services as well....You know telco was the most distressed sector. And the reason we did great in the telco sector is that we drive down costs, and we do it very quickly. The return on investment is very fast. They will spend money if they can see it come out in the same financial period. The timelines matter. In government, our competition is not really technology trends or spending trends or anything else. It's our ability to expand and cover more of the government market. It's a matter of building capacity. I think we've grown head count probably 40 percent to 50 percent in the government business over the past 18 months.