Brought to you by The VAR Guy
Salvatore Patalano bleeds channel software. He began developing software for Apple PCs in 1983, the year before that infamous Macintosh commercial positioned Apple as IBM's rebellious, edgy competition for the home computer market during the 1984 Super Bowl. He went on to be involved in a series of channel software companies through the 1990s and 2000s, then joined Big Blue’s corporate team as a vice president in its Software Group in 2007. After a stint at CA Technologies as vice president of marketing for its Global Partner Organization, Patalano assumed the role of chief revenue officer for Lenovo Software last year.
At Lenovo, Patalano is a self-described software guy in a hardware world on top of being a one-time channel partner who’s now in management for one of the biggest IT vendors on the globe. But if either of those roles makes him feel like a fish out of water, you’d never know it. The VAR Guy sat down with Patalano in preparation for next month’s Channel Visionaries event for industry channel chiefs to talk hardware versus software, which trends hold big opportunity for partners and what he wishes everyone would understand about the channel.
Last year at Channel Visionaries, your session was voted as the crowd favorite. What did you say then that resonated so well and does the message still apply today?
When you’re presenting to a group, you have to give them something new to think about. That’s what people are looking for: "Tell me something I don’t already know. Convey to me a position I haven’t already thought about or considered or adopted." That’s number one. Really, it doesn’t even have to be anything they agree with. People come to these things and either want to leave with something they didn’t know before, or they want to be provided with a new way to do things. What resonated with the talk we did last year is just that. We presented some new perspectives on how to deal with the shifting paradigm over to a SaaS or subscription-based pricing model. What should vendors be thinking about? What should partners be thinking about?
Candidly, there was no magic in it. We gave them a new way to look at it. The things we said, they might not have been thinking about. One of the big challenges in selling SaaS solutions today is churn. If you’re not all over your customers and you don’t know exactly what’s going on and you’re not maintaining a level of contact with them that’s really unprecedented in the last 50 years, you’re going to lose them. It’s as simple as that, because they can jump ship with a couple of clicks of the mouse. It’s not like when they bought enterprise software with a three-year license [and the power was with the VAR].
That’s what resonated. We provided some new perspectives and new ways to look at [the sales model].
Your topic this year is “Vuja de—all over again!” What does that mean, and what message do you want attendees to walk away with?
Vuja de is the opposite of déjà vu. It’s when you take something you’ve done lots and lots of times and you try to do it differently or make it more effective or not look at it the same old way. The idea is to look at the things you take for granted that you do every day, the mundane tasks, the blocking and the tackling, and look at it in an entirely different way by taking a whole new perspective on it. What I hope people will come away with is an understanding that we’re not doing anything differently. We think we are because we have iPhones and Androids, the Internet, all this connectivity and social and fifteen seconds after something happens we see it on the news. We think we’re doing different stuff, but we’re not. We’re doing the same exact stuff we’ve always done. We’re actually doing the same stuff our parents and our grandparents did. We’re talking, we’re communicating, we’re selling, we’re providing services…we’re doing the same stuff, we’re just doing it differently.
You’ve built a successful career on both sides of the software channel, both as a partner for 16 years and then at IBM, CA and now Lenovo. What key trends are driving best practices in partnering today?
It’s the same thing it’s always been, it’s just more prevalent now because partners can jump ship so quickly. In the old days, the partner would come and they would invest in a vendor relationship, and it took you years to really develop your skill sets and your relationships and your reputation and push your integrity out there to be successful with a line of products. That’s not the case anymore. Partners can literally, a month out, jump to another security provider. They can jump to another CRM provider. They can adopt whatever they want. The learning curve is not as long, the onboarding is not as long and the relationships are not forged the same way.
I think that’s driving us back to this thing I’ve been talking about for the last two or three years, which is the partner experience. As a former partner, [I can tell you that partners are] looking at vendors and they’re asking two primary questions. Number one: "Does it work?" Let’s say we get past that. The next question the sales guys are going to ask is: "Can we make any money with it?"
I’ve been to this party a hundred times as a channel partner. [After determining] this stuff works, it’s competitive and we can make some money at it, now you get to the meat and potatoes, what partners are really looking for. Now they start looking at what kind of systems and tools you have to support them. "What are your marketing programs like? What’s your communication like? Have you got rules of engagement out there? Are you in two-tier distribution? Tell me about your training programs—are they web-based, online, are they proctored?" Those are the elements that make up the partner experience. If you want to win today as a vendor, you’d better put a partner experience out there that really wins. You’ve got to be easy to work with. You’ve got to deliver on the partner’s needs. That’s the key. Vendors are finally getting to that.
It’s all about the experience. It’s about the vendor creating a positive, fluid, smooth, effective relationship with the partner. If your products work, the partners can make good money selling them and you give them a good experience, they’re going to stick with you.
So what are the biggest challenges that channel chiefs face in providing that kind of experience today?
The biggest challenge is getting buy-in at a high level in corporate [settings]. Most of the big vendors still have a direct selling mentality. I call it the dirt method: it’s as old as dirt. You hire a rep, you send a rep out. If he or she sells something, you pay them commission. If they don’t, you fire them and hire somebody else. They’re all still deploying the dirt model, and many of them still view the channel as secondary. Not all of them, but a lot of them. They come in and build all of their programs and campaigns around direct training, direct sales, direct direct direct. Then they say, "oh yeah, let’s 'partnerize' this."
If you’re a channel chief, the biggest problem you have today is getting buy-in from senior leadership to say "hey, we’ve got to invest in this." We have to build the right systems and tools. We have to avoid adversarial and predatory practices with our sales team versus the partners. The channel chief has got to make sure that he or she has the support they need within the organization in order to build the partner experience that needs to be built. It’s as simple as that. Lenovo is a great example. Our channel programs are phenomenal. We probably do 85 percent or more of our global revenue through the channel. Our programs are simple. They’re clean. They’re easy. We’ve got the most automated tools out there. We’re incredibly responsive to our partners. Lenovo is a great example of a partner program that really builds on experience. Everyone is bought in from [CEO Yang Yuanqing] down. Everyone understands the criticality of the channel.
You’ve got to convince upper management that the channel is a force multiplier. There’s a big front-end load, but when you make that investment, you get huge returns on the back end. When is a partner not a partner? When you recognize they’re a customer. It’s not just end users that are the vendor customers. Your partners are customers, and if you don’t adopt that mentality, your channel program is not long for this earth.
What is the one thing no one understands about the channel?
Vendors should understand there’s not a difference between them and a channel partner. I tell my teams all the time that just because you meet a guy or a gal who’s got a 50-person company [instead of a 1,500-person company] doesn’t mean we’re smarter or we know more or we’ve got more experience or we’re more creative. They could just as easily be working for us; [or] you could be working for them. A lot of vendors out there see partners as secondary. “We’re corporate America. We’ve got $128 billion in cash in the bank.” It’s all nonsense. These folks are the same. Vendors aren’t the only ones who get it. Corporate America isn’t the only place where there are smart people. We don’t have the only engineering smarts in the world. Some of these Silicon Valley startups can run circles around most vendors when it comes to engineering. But vendors do have a tendency to look down their noses at partners. I can tell you from personal experience that some of those small vendors are making lots more money than most of the guys and gals in corporate. I lecture at the MBA program at the University of North Carolina occasionally, and this is what I tell all these 20-and 30-somethings in the room: The only difference is how much money is sitting in the bank. It’s the same exact people.
Is this the ethos that drives your channel focus in your role at Lenovo?
Absolutely. I always tell my teams to look at it like this. When I was running my own company with about 140 people, $40 million in revenue, when a vendor came in with a new concept—pick this up, run this program with me, learn my product, show my product, sell my product, etc. There was a cost of about $300,000 to pick up a new product, all in. That was my money. I had my partner and some shareholders, but my partner and I controlled most of the stock, and at the end of the day, that was my cash. I was reaching into my pocket to pay that. I tell my people that all the time. Just remember, when these partners do something, that’s money that’s not going into their kid’s college fund. It’s not paying bonuses out to their employees. When they join forces with us, if they don’t sell our software and don’t make money on it, they can’t meet payroll. At Lenovo, IBM, VMware, we still get our direct deposit every two weeks. They don’t. Always remember what this money means to people.
As a former partner for 16 years, I see everything from the partner’s perspective. The fact of the matter is I suffered through it. I went through the positives and negatives and trials and tribulations. I was that animal. I know how it hunts. I try to remind my teams of that. And I have to credit Lenovo. They look at it the same way. As big as we are, Lenovo does look at the channel that way.
What makes a software-centric ecosystem so different from a hardware-centric one?
Well, that’s been the conundrum we’ve been dealing with for the last 30 years. The problem you have is they’re two very different skillsets. It’s like a carpenter and a plumber. They’re both good with their hands, they both understand basic engineering and construction, but at the end of the day, you wouldn’t have your plumber come in and build your vanity. It’s the same thing with hardware and software. They’re motivated differently.
Hardware salespeople spend their days having a fight in a phone booth every day. They have knife fights in phone booths all day long, if you can visualize that. Software is completely different. It’s green fields. It’s wide-open spaces. It’s a very different selling model. You’ve got huge amounts of profit to work with. You can throw a lot more money at the sales cycle, a lot more money at marketing, demand gen, campaign generation. You can throw a lot of cash at it. You don’t have that luxury in hardware.
In this environment of digitization, the IoT and connectivity, where are you seeing the big opportunities emerge for resellers?
This is a little biased because I’m on the software side. I’m not a hardware guy. I got brought in to try to build a commercial software business within Lenovo. I have a very different perspective than they do. But one of the trends we’re seeing that’s really significant [with business IT] is the whole bimodal thing is really starting to bite, starting to gain some traction. Meaning that in the old days, [new hires were told], 'Welcome aboard. Here’s your desk, your phone, your computer. Now sit down, shut up, and go to work." That’s not what we’re seeing today.
Because [Lenovo] makes cell phones all the way up through servers, including tablets, PCs, laptops… we really see how IoT plays across the whole range of hardware devices, all the way up through data centers. What we’re seeing is the trend toward BYOD and the trend toward work anywhere, anytime. [People are saying], "just give me access to things." I don’t care where the applications are, what the applications are, don’t tell me what device to access them with. One day I’ll do it with my tablet, one day my phone, one day I might be sitting at a workstation. We’re seeing a great deal of cross-device utilization requiring a consistent interface. The channel is much better positioned to deliver on that ask than the vendors are.
Channel partners are out there in the streets, dealing with the day-to-day meeting the customer needs. The customer is saying, "look, we want to be able to use any device whenever we like from wherever we like, and we want to be able to get to everything we need to get to." They want Lenovo to deliver the functionality they want from the device, and on the software side, they want to know that they’re going to be able to get to what they need when they need. We’re seeing a lot of the BYOD play across our multi-platforms.