NetApp practically wrote the first chapter on how to build a well-functioning and contented channel, but that was before it was squeezed by cloud providers and converged storage upstarts.
One of the major challenges facing Elliot Howard, the newbie at the top of the NetApp’s UK management tree, who recently replaced Dave Allen, is to overcome growing supplier unrest.
Multiple channel businesses are complaining of conflict between their sales team and NetApp’s internal reps, which they say are pushing branded professional and support services more aggressively.
“For a decade NetApp was channel friendly,” said one of the vendor’s nearest and dearest in channel, “but [the way it has changed] is probably representative of the challenges it faces with declining revenues”.
“District sales managers have too much control, and they are being more selective on margin and getting involved in customer opportunities so they can be sure they are maximising their share.”
One argued that with the legacy storage vendors, Microsoft and AWS pushing online storage, and the likes of Nutanix and Pure giving the old guard a run for their money, there isn’t enough business to be had, and this has forced companies, including NetApp, to discount heavily.
NetApp’s top line has not advanced in recent years with forex conversions and weak sales execution blamed for the latest revenue wobble: it fell nearly four per cent year-on-year to $1.55bn in Q3 of fiscal 2015, way below Wall St forecasts of $1.6bn.
The company lost a number of senior sales people in enterprise and managed accounts over the last twelve months including Richard Agnew (now UK boss at VCE), who decided it was time to move on.
If things progress at the current run rate then NetApp’s sales are on course to decline in its current financial, the first annual decline in years.
Operating profit has also been on a downward trajectory for years. The business remains in the black but financial analysts, investors and channel partners want to see evidence of progress.
R&D spending has been increased over the last four years, so the company is keeping up efforts in this respect, but it needs to keep channel partners happy too, as they account the lion's share of revenues.
Another unhappy camper in NetApp’s channel community agreed, “the biggest issue is between its end user sales force and the channel’s sales people. There is a lot of pressure in the storage industry”.
NetAp’s UK boss Howard joined the company in February, and previously he was exec veep at Sopra Banking Software, UK boss of Tieto, and prior to that was global client business manager for HP.
He succeeds Dave Allen, who was promoted to veep and GM for northern EMEA almost three years ago, but kept control of UK ops on a caretaker basis.
So the company has brought in someone outside of storage who may bring a fresh perspective on the business, and if partners are heard, will seek to improve relations with some that feel a little bruised.
We are awaiting comment from NetApp, and if it arrives we'll update the article.
In a classic corporate statement sent to us, Pete Rawden, Net App director of partners and pathways, said the firm is looking to "win" new punters but insisted "our commitment to the channel remains firm".
"We believe that the extra support offered by our internal sales teams is well received by our partner community and we always welcome feedback from our partners on how we can improve the relationship we have.” ®