NetApp Cloud Transition: Hybrid Cloud Is for ‘Dying On-Prem Vendors’

NetApp doesn’t want you to think of it as just an on-premises storage provider. Nor its partners.

NetApp executives tell Channel Futures that while the company remains invested in traditional “big iron storage,” the market is mature. Meantime, customers are more and more interested in areas like application development and artificial intelligence. Brett Roscoe, vice president of marketing, says demand is rising for products and services that help companies manage and optimize their data.

NetApp expanding beyond on-premises solutions is an indication of this trend.

“We’re not afraid of our customers running to public cloud, because we can help them there as much as we can help them on-prem, unlike many of our competitors,” Roscoe said.

Brett Roscoe

NetApp executives say many of their rivals are desperate to protect their traditional infrastructure business as customers threaten to move to the cloud. One of the methods of fighting this is the notion of hybrid cloud, a strategy that Dave Hitz, executive vice president, urges his partners not to adopt.

“I’ll tell you how customers interpret hybrid cloud. Hybrid is what dying on-prem vendors say when they’re admitting there’s a little cloud, but they really want to sell you gear.”

NetApp isn’t abandoning its on-premises business but says it and its partners are going to take a “cloud-first” approach to selling to customers.

“I absolutely believe that we can gain share, and I believe working with you we can gain share together if we start with the cloud, sell lots of cloud and end up handling all of their IT imperatives together across the board,” Hitz said.

The company made multiple moves in the last year to prove that it is not just an on-premises storage company.

NetApp this year divided its portfolio between three business units: storage systems and software; cloud infrastructure; and cloud. Although Hitz said that NetApp would still be profitable if one of the new units made the others obsolete, the three are “synergistic” together. That’s why NetApp didn’t spin off a new cloud company.

“One of the questions we get asked sometimes is, ‘Will this cannibalize your existing on-prem business to do this cloud stuff?’ And I will tell you that is not what we see,” Hitz said.

The company announced a public-cloud partnership with Google in May, adding to pre-existing agreements with Microsoft Azure and AWS. It launched its Cloud Volumes Service last year as a SaaS offering for AWS, Azure and Google Cloud. Meantime, the company launched a new version of its all-flash array and launched a hyperconverged infrastructure (HCI) platform last fall.

The company expects that its Cloud Volumes storage offering will help customer move to public clouds, that its HCI will help customers build their own private clouds, and that its all-flash storage will “modernize traditional enterprise IT.”

NetApp outlined those three goals along with various expectations for partners at its Channel Connect Conference in Scottsdale, Arizona, last month.

The objectives are high. The company expects partners to make the Cloud Volumes offering a core part of their portfolios, earn at least $1 in HCI and continue to drive services through the FlexPod converged infrastructure offering that NetApp delivers in partnership with Cisco.

Jeff McCullough, vice president of Americas partner sales, encouraged partners to figure out ways to obtain “attached profit.” The most profitable NetApp partners earned $7.41 for selling secondary products and services for every $1 of primary products. Those services included implementation (31 percent), integration (24 percent), advisory (16 percent) and residency (16 percent). And the most profitable partners did a better job of branding their services as their own.

McCullough told Channel Futures that FlexPod is one of the best opportunities for partners to incorporate additional services.

NetApp’s leaders recognize that getting partners to go all-in with a cloud-first approach is a challenge, and the company is offering multiple carrots to get partners on board.  A recent Channel Partners article outlined the full list of incentives NetApp announced last month. Aside from the numerous rebates and new marketing tools, McCullough said joining hands with NetApp during this transition will allow partners to mirror the quarterly growth the vendor has been seeing.

“If our partners align with how we’re going to market, they’re going to participate in those results,” he said.