Commvault’s Nimergood: VAR Community in a State of Evolution

Commvault’s just-announced record Q4 2017 numbers – quarterly software revenue of $84.7 million, representing growth of 15 percent over Q4 2016 – show how robust demand is for specialized data protection and management technology. For the full fiscal year, total revenues were $650.5 million, an increase of 9 percent over FY 2016.

Channel Partners recently sat down with Ralph Nimergood, vice president of worldwide channels & alliances at Commvault, to see what’s keeping its offerings fresh after some 20 years in business and how it continues to attract new partners and customers.

Part of the story is breadth of offerings — Commvault supports 40-plus cloud providers, a huge list of VMs and applications, and databases ranging from MongoDB to Oracle. Some is smart partnering, like tighter integration with AWS and a deal announced in March with Pure Storage and Cisco to help improve application performance. Attention to globalization and verticalization helps. But much of the sales driver for comprehensive data protection is change: IDC says more than half of enterprises will subscribe to upwards of 10 public cloud services over the next year, while a recent Red Hat survey showed 84 percent of that company’s customers have cloud strategies, 70 percent say cloud is their top spending priority, and 59 already have multi-cloud deployments. Data volumes are growing at a near incomprehensible pace, and so is ransomware and business demand for insights.

Nimergood has deep channel experience, having served as VP of Cisco’s global partner organization along with stints at Avaya and HP. Here is part of our conversation, edited for length and clarity.{ad}

Channel Partners: Tell us about Commvault and its channel ethos.

Ralph Nimergood: Commvault at its heart is a company that deals with data. Everything we do is about the data management space, and as a company we consider ourselves expert on the topic: Being able to ingest all forms of data, being able to move data, to index data, to migrate data, protect data — you’re getting the theme here — and then ultimately being able to orchestrate that data and information and serve it up to other applications or within our own application for use by primary and tertiary users.

The channel has always been an important part of our go-to-market strategy as well as who we are, from a DNA perspective. We have roughly 3,300 partners around the world, and in any given quarter our channel touches between 82 and 90 percent of all the business we transact. We’re not just discovering the channel, it’s been part of our 20-year continuum.

CP: What are some notable technology and channel alliances?

RN: We have layered on other routes to market: our global system integrator route, which is a …

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… sell-through model; a managed-service model; and a consultative endorsement model. If you look at roughly the 14 largest GSIs around the world, we have a team of business developers and technical consultants that work with that community.

We also layered on, if you will, our service provider community, companies like Rackspace and Verizon. And then there are our global strategic alliances, relationships with AWS, Microsoft, Cisco, Oracle, Pure Storage, Nutanix, NetApp, HDS —our global footprint players.

And then of course there’s the traditional enterprise VAR and distribution.{ad}

Our strategy as relates to the channel is to enable our partners to participate in all versions or forms of the data protection journey.

CP: What’s the trajectory of that journey?

RN: A race, not just a movement, to the cloud. If you look at public cloud suppliers like AWS and Microsoft, the workloads — meaning data — that have been moved to those public clouds by Commvault software has been growing in the order of magnitude of about 150 percent per year. We have some 75-plus petabytes of data that is under protection by Commvault in public cloud environments.

CP: Where does the channel come in with all that movement?

RN: As you know, our VAR community is in a state of evolution.

There are the traditional or legacy lifestyle VAR players, there are the born-in-the cloud players who are coming on the scene with the express purpose of building applications, or building consulting services, around customer movements to cloud, and then you take what I would call “transitional” or hybrid VARs, who are almost to a person, to a company, transitioning into some form of either being a cloud broker or a managed service provider.

Our objective with our channel programs it to be accommodative of all those models. We do that through a plethora of both financial reward systems as well as really deep enablement and deep competency building.

The VARs that are with us are very committed to our portfolio, not only as a standalone solution but also building up managed services with Commvault practices.

We also have a very strong what I call ‘attached play’ around the main-line businesses that partners are aligned with in the infrastructure space. Take Cisco as an example; we’re the only data protection product that has a Cisco-validated design in place. It’s a pretty rigorous process. The most recent one we released was …

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… FlashStack, and now Commvault is a native protection tier inside that solution.

We take those solutions and drive them together back through our common VAR community, so that provides a great monetization opportunity.

Also, with AWS, we put reference architectures in place so that partners can easily recommend and customers can consume that in the cloud. [Commvault is an AWS Partner Network Advanced Technology Partner and a Storage Competency Partner.]

What we do in addition that is differentiated is what we’re calling key initiative programs with our big alliance partners. We’re doing that with Microsoft, we’re doing that with Cisco, we’re doing that with HDS, we’re doing that with AWS. We’re together identifying the target markets we want, here are the customers that we believe are right for, say, data center modernization projects.{ad}

In the case of Cisco, we have 330 enterprise accounts that we have now validated and gotten sales leadership buy-in on both sides. We then go to our joint partners.

In the case of Microsoft, we were the pilot partner in its Partner Connect program. Now not only do we have it instrumented on their side through Partner Connect, we build the instrumentation dashboard for all these key initiatives inside of our tool. ‘Here are the accounts, here’s what the funnel looks like, here’s who the partners are.’

While it’s meet in the channel, it’s a much different level of play than, ‘Hey, we have a joint solution, wouldn’t it be nice if our common partners sold it?’

It’s a little bit meet-in-the-channel on steroids.

CP: You wanted to go back to cloud.

RN: Cloud has moved beyond a destination to be a philosophy of how I implement IT today, in 2017. We have gone beyond ‘Can I move a workload to the cloud’ to ‘Can I actually operate and manage and do things in the cloud so it’s not just a big dump bucket where I load up storage.’

To customers who want to be able to have a cloudlike experience in an on-ground, if you will, environment, we say, ‘We’ll give you the cloudlike experience back here on the ground.’

We’re not making partners choose.

CP: One reference customer is moving from tape by 2018. Is tape ever going to die? We’ve been talking about it for years.

RN: We understand that companies have made a significant investment in tape for long-term storage. But when we sit with CEOs, one of the things that we hear them say over and over is, ‘I’ve sunk a lot of money into storing an awful lot of data that’s sitting around. How do I get access and full value from it?’

That’s where Commvault can come in and say, regardless of where your data is sitting, because we index it and …

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… understand it, as you move it into long-term storage, we can bring that value back and expose it to analytic engines and so forth.

To answer your question, I think tape is not going away, not for the foreseeable future. It may continue to diminish, but the cost of very, very long-term storage, as it relates to retention and requirements in certain industries, make it viable.

CP: Do you support Google Cloud Platform?

RN: We support Google, and we’re certified to run on it. We’re just in the infancy in terms of our go-to-market, if you will, from a formal alliance perspective. We’re further ahead with Microsoft and AWS.{ad}

CP: You have a fairly extensive consulting business around data. How does that benefit partners?

RN: We have a deeply skilled professional services organization that serves two functions. One, we consider ourselves experts on data and data policy, data movement, and we have a pretty deep bench of consultancy capability. However, it’s that same organization that supports me and the channel community from a program that we call Service Advantage. It’s that exact community that is also building the secondary, deep competency skills for channel partners so that they can do design, implementation, consulting around cloud, converged, hyperconverged, data policy.

CP: Can you talk about the structure of the channel program?

RN: The umbrella framework is called Partner Advantage. It has different tracks depending on your business. The foundational program for the VAR is a metal-based program that has an authorized level — we’re in evolution with our new program here, we’re going to change a couple of things, so we’ll just call it a middle tier — and we have our top tier, which is called our market-builder tier.

The requirements for each of those tiers are a combination of factors. When I was at Cisco, it was a competency-only based program. At HP, it was a volume-based program. At Commvault, we have what I think is the best of both worlds, a combination of a volume and competency. In order to achieve the different levels you have to have certain levels of competency, some certifications, and you have to have some minimum threshold requirements.

We also have a very large sales force relative to the size of our company; compared with the dollar value of our company, we have a pretty big channel organization; and we have what I call a partner business manager construct which takes care of all our, if you will, named and direct-managed VARs. And then we have disti managed programs that …

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… take care of our authorized or long tail.

CP: Which distributors?

RN: In this country we’re in a closed distribution model, and our two distributors are Arrow and Avnet — you can reach pretty much everybody with those two.

CP: What are the opportunities for partners to come in and work with you?

RN: The opportunity is actually quite large, and that’s where our focus has been. In the GSI community, as mentioned, we’re typically seeing that motion being a subscription-based, managed services model, and the born-in-the-cloud integrators are working with those agents like the Microsoft integrators to recruit, train, enable, and reward that class of partner who will never resell.

And, in fact, with the advent of this fiscal year, we added a resource here in North America with the exclusive purpose of working only with that Microsoft SI space, for the Azure cloud. This is not an opportunity only for VARs. In fact, we want to make sure our buyers are moving along in a progression into the next generation, to make sure they make the transformation.{ad}

CP: What are typical margins for your major types of partners, and are you going to do better as a VAR versus the services side?

RN: The program is designed to not incent one behavior vs. another, so I’ll leave it at that. The margins are well into double digits.

It is important to have a good margin profile, but what I prefer to not do is unintentionally direct traffic based on this.

CP: If you look ahead three years, what is the biggest change that we’re going to see in the channel?

RN: VAR partners will have had to get off the resell belt and will be into some level of industry specialization, deep technical consulting or managed services, or all three kinds of businesses. While they will drag hardware and software with that, it will be not the end game. The end game will be to build an annuity-based relationship with recurring revenue and appliances, which they serve based on most excellent customer service, tremendous insight into a particular vertical or application. I think that’s where they’re heading.

Would you agree with that?

CP: I absolutely do, but they may say, “Well, how do I make the bridge from big, one-time sales to that model?” That’s not easy. They’ve got to incent the sales people.

RN: We could spend the rest of the day talking about algorithms to incent MRR versus professional salesmen. We’re trying to help by, for example, working with …

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… some of our distribution partners and absorbing the cost of capital. If we took a VAR who’s moving to a subscription-based model and they sell a three-year deal, we worked out relationships here in North America to ensure that they can monetize that upfront. We pay for the cost-capital as another service for the partner.

That doesn’t take away every barrier, but I think it’s fair in terms of our contribution to that transformation.

CP: What do you think is going to be the next hot vertical?

RN: We’re doing a lot of business in the public-sector space. The challenges that commercial CIOs are facing are part of the same challenges that public-sector CIOs are facing. Federal, state and county level, they are all dealing with antiquated architectures, very siloed organizations, they’re facing the same kind of regulatory pressures that the commercial side is facing, they’re stuck in terms of their ability to scale investment, the availability of great talent and people. So we’re writing an extraordinary amount of business in the public sector space.{ad}

Just look at the Trump administration, they’ve come in and said we have serious security issues, government isn’t operating efficiently, we’ve got to fix this. They’re not unique. The U.K. government is facing this, the French government is talking about it, Germany is all over it. That, for us, is an extraordinary area of focus.

CP: Is there anything I didn’t ask?

RN: We’re going to update our partner program and offering as we head toward the beginning of our new program year for partners, which starts July 1. We do have a big customer event, we call it Commvault GO, the first week in November in Washington.

Follow editor in chief @LornaGarey on Twitter.