AppDynamics Sales Going 100% Channel-Centric

Looking to accelerate Cisco’s full-stack observability strategy, all of AppDynamics sales will flow through partners. AppDynamics, the application performance monitoring (APM) provider that Cisco acquired in 2017 for $3.7 billion, revealed the plan on Wednesday.

AppDynamics said it plans to phase its combined direct and indirect sales to a 100% channel-centric sales model. Mark Maslach, AppDynamics VP of global channels and strategic alliances, announced the shift at the company’s partner program launch event.  AppDynamics has operated as a separate Cisco business unit since the networking giant acquired it four years ago.

“This will provide closer alignment to Cisco’s sales motion and give partners the confidence and opportunity to build out full-stack observability practices with AppDynamics and Cisco,” Maslach explained in a post announcing the move.

Janet Schijns, founder and CEO of channel consultancy JS Group, said moving to a 100% channel model will align AppDynamics with Cisco’s longstanding focus on selling through partners.

JS Group’s Janet Schijns

“The sheer volume of products and services needed for customers to have a full solution means the partners are their first call and a vendor has difficulty getting a seat at the table unless they are a big brand and a large part of the solution,” Schijns said.

AppDynamics has expanded the partner program to a three-tier structure that includes a new top-level Elite category, according to Maslach. The Elite tier builds on AppDynamics’ existing Alliance and Titan levels.

Established for AppDynamics’ largest global partners, the Elite tier “creates the optimal conditions to fully exploit the full-stack observability market opportunity across AppDynamics and the wider Cisco portfolio,” Maslach noted.

Competition and Revenue

Although AppDynamics is part of Cisco, it has faced mounting competition from a growing number of players. Among them are Datadog, Dynatrace, New Relic and Splunk. While Cisco doesn’t break out AppDynamics revenues, it’s a small percentage of Cisco’s $49.8 billion in fiscal year 2021 sales. The applications business that AppDynamics, Webex and other software businesses falls under $5.5 billion for the year. Applications revenues declined 1% for the year.

Meanwhile, Datadog, which has a $46 billion market cap, reported second quarter revenues of $234 million, up 67% year-over-year.

Schijns said that its new partner focus could boost AppDynamics growth.

“This is a good move on AppDynamics’ part, but the proof will be in the performance of their promised benefits and partner support,” she said. “I’m hoping they innovate and offer more unique marketing, demand and services programs than in the past.”

AppDynamics has launched new incentives as part of its expanded partner program. Among them, AppDymamics is adding:

• Stackable margins: The most active partners will be entitled to more rewards.
• Expanded rebates: Elite and Titan tier partners can now earn per-deal rebates.
• Redesigned FastPath Program: Expanded co-investment in partners with funded head count, case studies, and training and certification.
• Improved access to MDF: Partners can access the new Funds Manager platform.
• Updated training and sales support: Now, partners can participate in AppDynamics’ sales and engineering boot camps.