Red Hat reveals major changes to its distribution strategy
Red Hat is shifting to a co-creation model, encouraging a “sell with” rather than “sell to” partnership approach.
The Red Hat channel is going through “fundamental changes”; therefore, partners will soon see a different strategy in how the company engages with them.
So says David Farrell, SVP of Global Strategic Alliances at Red Hat. He says the company is moving to a channel strategy based on co-creation with partners.
Farrell maintains that distribution, and the added value it brings, remains central to Red Hat’s distribution plans. However, it “moves away from a distribution-centric mindset that leverages the ecosystem for scale,” he said. “Red Hat has made significant investments in how we engage with our partners before they develop their own solutions. An example would be what we did with Accenture and SAP running on our Red Hat stack. It’s about looking at a market opportunity and bringing in people from our product development organization. We dedicate resources to our partners to help them create a solution with them. »
Farrell said the move resulted in “a lot more headcount and investment dollars.”
“We didn’t used to do that, just to be completely honest,” he said. “It was, ‘Here’s our technology, here’s a helpline, here’s some engineers to help you. Good luck.’ Now it’s a lot more around ‘What’s the opportunity? How can we build new capabilities together?’
From selling to, to selling with partners
The second area of investment focuses on how Red Hat sells with its partners. Farrell said the supplier is moving from selling to — or through — partners to selling alongside them.
“This ‘sell with’ movement around go-to-market is something we’re really investing in,” he said. “This year, we have set up dedicated teams in each of our geographies around the world. Our salespeople are focused on the success of our partners’ solution in their given market. Working not just with our sales teams, but with partners and other ecosystem partners, to help them win.
Farrell also said Red Hat has changed its incentives to reflect this new sales model.
“We made two changes to our in-field incentive model earlier this year to incentivize co-selling with our partners. For our global ISV program, we have established a landing credit compensation model. When one of our ISV partners takes their solution to a customer and integrates Red Hat technology, we pay our local sales team to attend. They help explain the technology…provide the technical resource they may need, the expertise, the roadmap, whatever they may need. Field salespeople are motivated to help ISV partners who adopt our technology get to their customer. »
Red Hat has targeted its second incentive to its best Premier and Advanced Partners.
“We have an acceleration bonus, so the Red Hat field team earns more when they sell Red Hat technology with a partner. We see other people in the industry doing it. You need to be mindful of these things because we have a lot of partners in our ecosystem. And you want to make sure the sales team is adding value. So we have a lightweight process around that.
“But those are two big things our partners are asking of us – ‘Help me market and scale my solution.’ “And having that pull movement coming from the thousands of Red Hatters helping position our partners’ solutions to customers.
The executive says the landscape has changed and the bar is now higher for what partners expect from the vendor.
“It’s more than MDF,” he said. “It’s more than kind of those classic things that we’ve all done on the channel. It’s now about creating value, and that’s really where our focus is.
Farrell estimated that he does about 75% of his business with or through partners.
New Managed Cloud Services
Farrell was speaking at the launch of Red Hat Summit 2021 on Tuesday. He said the company has focused many of its product announcements this week on DevSecOps, edge, hybrid cloud and managed services.
For example, Red Hat announced the expansion of its portfolio of open hybrid cloud technologies with new managed cloud services. Services now include Red Hat OpenShift API Management, Red Hat OpenShift Streams for Apache Kafka, and Red Hat OpenShift Data Science. These “provide a fully managed and streamlined user experience when organizations build, deploy, manage, and scale cloud-native applications in hybrid environments.”