Why These 3 Disruptive Tech Vendors See Channel Partners As Indispensable

Growing Partnerships

During the recent XChange 2016 conference in San Antonio, hosted by CRN parent The Channel Company, CRN convened a roundtable of vendor executives whose companies are seeing major growth with businesses based on disruptive technologies. The three companies represented were Concerto Cloud Services, a provider of solutions for public, private and hybrid cloud initiatives that’s based in Tampa, Fla.; LogicMonitor, which offers a software-as-a-service performance monitoring platform and is based in Santa Barbara, Calif.; and Star2Star Communications, a provider of hybrid cloud communications solutions that’s headquartered in Sarasota, Fla.

Executives for the three companies (left to right) -- Concerto President Steve Terp, LogicMonitor CEO Kevin McGibben and Star2Star President Gary Testa -- all discussed how working with channel partners is central to their success thus far. During the roundtable discussion, the executives were asked, ’Do you expect you’re going to be more or less dependent on the channel moving forward, and why?’ The executives all said yes--and what follows are their explanations of why that’s the case.

Steve Terp, Concerto

We spend a lot of time in enablement ... the ’partner care’ part of it. We work with ISVs, we work with MSPs, we work with consulting firms, advisory firms, we spend a lot of time enabling them. One of the things we found [is that] they said when they surveyed customers about the cloud, 83 percent of them said, ’I would prefer to be led to a cloud solution by my current [solution] providers.’

To leverage those relationships, [that are] in the marketplace already, is a way faster time to market. These sales reps, I know sales reps that I’ve worked with since 1991 ... They are still selling to the same companies now. There are some really longstanding, trusted relationships there, and for us to think that we can duplicate that and replicate that and get out to the market fast enough, it just wouldn’t work … And when they allow us to come in and help enable them, it’s pretty phenomenal.

Kevin McGibben, LogicMonitor

We have a split business where we have 60 percent of our business is directly to web tech and enterprise, and 40 percent are through our partners, and I will tell you, the partner business for us is only going to grow in relative importance … 20 percent of our business [is from] customers headquartered outside the United States. I expect that will increase, and our go to market model will more heavily leverage partners particularly outside of North America. But overall we are going to heavily rely on channel partners to develop our business over time.

We have to in order to be able to deploy our product as widely as we believe that we can. Since it’s so horizontally applicable across industries, to build that big of a direct business would be probably financially a challenge to do. Why not use service providers that are expert in that market?

Gary Testa, Star2Star

When you build a direct sales force, what you’re really doing is relying on yourself, and you are relying on the fact that you are able to build all those relationships in a timely fashion to get to market. Time to market is far more important in this environment and partners offer the fastest way to get there.

The channel is really the only way to build a credible, expert sales team to sell complex technology, and to do it over a broad base. Today I have over 800 partners that are actively engaged in selling our product. We’re expanding into Europe and Asia-Pac, all of that is through partners. And the fact is, they recognize ... our technology differences, they speak the local languages, they understand the local problems, they understand the go-to-market approach. And so for me to make that investment, particularly as a cloud-based company, it’s almost impossible.

Steve Terp, Concerto

I think we are going to be more dependent on the channel only because what we’re finding is the enablement [is] sticking with these guys … And so the tradeoff for that is an expanded sales force, faster time to market, and access to lots of customers that we would take years and years to be able to get to learn ...

I spent 15 years in the consulting business, and when you’re in the consulting business and you meet somebody and they say, how’s business? And you say, I’m up to 50 people, or I’m up to 1,000 people, or I’m up to 5,000 people. And that’s the measurement of success, unless you’re a public company ... In our business the measurement of success is, can you do it with less people? And the only way to do it with less people is to take advantage of the channel that already has all those relationships.

Kevin McGibben, LogicMonitor

[We are] starting with more of a focus on that indirect, channel partner business ... because our partners are not only acting kind of as resellers, but again, they are consuming our products, they are acting as professional services partners of ours within regions. So it’s a way that they can pull in additional business from those customers that they’re servicing with our technology.

That’s kind of a win-win for them. So we are laying down some bets that we think are good for both us and for our partners, and we fully expect it to continue to accelerate the business. For us, more dependence on the channel partners as we go.

Gary Testa, Star2Star

I'm 100 percent dependent on the channel today. The question would be, can it go up? The answer actually is yes. The question is how? What I’m seeing in my space, is that I have a number of very large competitors that are building direct sales forces, and competing with the channel. It's wonderful--I love nothing more than to watch them sow the seeds of discontent into the channel. Listen, you know when you are a big company, you start to look at margins, what is the fastest way to grow your margin as a supplier? Cut out the channel, they take a big chunk of that business.

As I see my competitors do that, we make sure we go right in behind them and show the channel the love and care and opportunity to stay in--but stay in with a far more competitive product then they had to start with.