VMware Adds 30 Percent Margins And Rewards For Tanzu Partners

‘Our goal is to take the profitability questions that our partners have had, particularly around Tanzu, off the table,’ Richard Steeves, VMware’s partner go-to-market leader for Tanzu, tells CRN.

VMware is putting its money where its mouth is when it comes to incentivizing the channel to sell Tanzu by tripling up-front margins, paying $25,000 for driving proofs of concept and enabling better co-selling between partners and VMware.

“Our goal is to take the profitability questions that our partners have had, particularly around Tanzu, off the table,” Richard Steeves, who leads VMware’s partner go-to-market for Tanzu, told CRN. “We want to be the richest, most compelling opportunity for partners to invest in a modern application practice within the industry—period. Full stop.”

VMware partners can now receive an up-front margin incentive of up to 30 percent for new customer opportunities when selling VMware Tanzu, the company’s innovative Kubernetes portfolio of products and services. Partners can receive the 30 percent up-front incentive via VMware’s Advantage+ deal registration program when bringing in new Tanzu customers.

In addition, the Palo Alto, Calif.-based virtualization and software superstar is enhancing partner rewards for presales and post-sales around its Customer Lifecycle Incentives suite for Tanzu.

Channel partners can capture up to $25,000 for conducting Tanzu proofs of concept, $20,000 for Tanzu solution deployments, and up to $15,000 on customer technical assessments.

“This is about building an ecosystem of connected and capable partners. The only way that we’re going to do that is to make it incredibly profitable and easy for our partners to engage in that portfolio with us,” said Steeves, senior director of worldwide partner modern applications platform sales.

Partner: VMware Is Making Tanzu ‘Worthwhile’ To Sell

Bob Keblusek, chief innovation and technology officer for Sentinel Technologies, a Downers Grove, Ill.-based top VMware channel partner, said he’s excited to see that VMware is striving to make itself more profitable for channel partners.

“In the past, we’ve found it a bit challenging to make a lot of money on VMware. Customers had to have it, but as far as margins went, it just wasn’t very high. I’m happy they recognized that because it’s really a wonderful product,” Keblusek said.

“I like that they’re trying to make sure that Tanzu is profitable for us. Because unlike simply selling VMware or selling an upgrade to VMware from a hypervisor perspective—which we still have a tremendous customer install base for—Tanzu is a deeper dive,” said Keblusek. “You often have to bring different parties to the table. It’s going to take more cycles, some sort of proof of concept. VMware rewarding us for all of those efforts is great. I’m grateful that they’re acknowledging that and making it worthwhile for us to continue to pursue that route.”

In addition to the increased up-front margins on new customer opportunities, Keblusek said VMware’s pre-sales and post-sales rewards are a great win for channel partners, especially the $25,000 for conducting Tanzu proofs of concept.

“Not every proof of concept is going to result in a sale, obviously. So sometimes you go through the cycles, you ship product, you put it in, you get it working, you let the customer see the value, and they still don’t buy it,” said Keblusek. “So rewarding that activity, for both the wins and losses on doing the POCs, makes a lot of sense. It increases the win rate for the manufacturer, while at the same time compensating us to put in the time for those cycles. It’s a great move by VMware.”

VMware Boosting Co-Selling Initiatives

In another move to help partners’ modernize legacy applications for their customers at a higher profit, VMware is doubling down on co-selling engagements with channel partners.

To facilitate co-selling engagement with VMware sales, deals with top investing VMware partners will automatically become eligible for joint pursuit planning via the Partner Value Registration program. Particularly, VMware is looking to drive co-selling of its newly launched Tanzu Kubernetes for Operations offering, which helps customers scale cloud-native platform operations.

“We’re helping our partners invest in practice activation, enablement and skills in order to help their customers quickly get their Kubernetes environments up and running,” said VMware’s Steeves. “Harness the opportunity to quickly get automated policy-driven management across the portfolio.”

VMware is also launching a new Learning Subscriptions on-demand education program to help the channel build a Kubernetes practice for Tanzu.

The new Learning Subscriptions program is for platform operators and application developers to help reduce costs and time commitment toward developing Tanzu technical expertise.

Overall, VMware’s new channel investments are aimed at better enabling and making partners more profitable around Tanzu’s growing Kubernetes business.

“We’re putting the dollars where our strategic intent is. It’s part of that ongoing commitment around our partner-first culture,” said Steeves. “It’s a significant investment in recognizing the role that our partners are playing in, quite frankly, leading this in the industry and helping to accelerate the adoption of Kubernetes and application services and modernization capabilities across the industry.”