Turbonomic COO On Accelerating Cloud Growth With Microsoft And AWS, And 'Stacking The Deck' With New Channel SVP Chris Sullivan
Mark Thurmond spoke with CRN about the channel's role in Turbonomic's rapid growth in the last year and the significant revenue opportunities for partners in 2018.
Stacking The Deck
Turbonomic COO Mark Thurmond likes the way things are going. Growth is accelerating more customers use Turbonomic to optimize and automate workloads across the data center, private, hybrid and public clouds. Now, the company has made another blockbuster hire, bringing on Christopher Sullivan as senior vice president of global alliances and channels.
The channel, Thurmond said, is becoming more adept at realizing opportunities and driving growth in an increasingly public cloud-oriented world. Sullivan is tasked with expanding Turbonomic's channel globally while Jennifer Heard, the 22-year Microsoft veteran hired as channel chief less than a year ago, will focus exclusively on driving relationships and growth with Microsoft and AWS.
"This was a chance for Turbonomic to stack the deck with Chris and Jennifer Heard," Thurmond said. Heard "is going to be focused strictly on cloud partnerships because we're seeing such adoption with Microsoft and with AWS."
Partner recruitment will be among Sullivan's most important tasks, Thurmond said. "We're going to continue to aggressively recruit now that Chris is on board. We expect to recruit at a steady pace. We're up over 300 partners today, and we're going to continue to recruit and build out globally. We're going to increase our channel presence in EMEA and APAC significantly. That's a big, big focus for Chris."
What follows is an edited excerpt of Thurmond's conversation with CRN.
What was growth like for Turbonomic in the last year?
We are growing significantly. When you look at the Turbonomic journey, we've had an incredible year. By all the metrics we use, we hit it out of the park. We're up and over 500 employees. Our channel business now is 70 percent of Turbonomic's business. That's up from 58 percent last year. We're in 48 different countries with regard to customers around the globe. We've got 95 of the Fortune 500 companies using Turbonomic now. The pace is very rapid in the Fortune 500. More than 45 customers have spent more than $1 million with Turbonomic. We're starting to do some really big deals. We saw a double-digit increase in our ASPs this fiscal year, which is incredible, and it is in all segments: Commercial, enterprise and overseas.
How big a role has the channel played in that growth?
More than 50 percent year-over-year increase in registered deals in the channel and our pipeline was up 97 percent. That's crazy growth, and it's coming in from all different parts of the stack, whether it's on-premise, hybrid or public cloud deployment. We see robust traction in all three, and especially around hybrid and public cloud. That has really taken off over the last six months with some significant customer adoption of our technology.
What makes Chris Sullivan a good fit for Turbonomic?
Chris did a great job at Hortonworks, grew their channel business over 300 percent while he was there. He did an incredible job before that at VCE. He was right around employee No. 30 with no product, no revenue, and was able to drive channel alliances for VCE to over $1.5 billion. He had a great run at Cisco too. I worked with Chris at VCE when I was at EMC, and he is, in my opinion, one of the top channel and alliance executives in the industry. It was a chance for Turbonomic to stack the deck with Chris and Jennifer Heard. Jennifer has done an incredible job at driving our cloud partnerships, so she is going to be focused strictly on cloud partnerships because we're seeing such adoption with Microsoft and with AWS. Jennifer lives in Seattle and she's going to work very closely with our Executive Chairman Bill Veghte in building out and driving the cloud partnerships.
Does that signal a deepening relationship between Turbonomic and Microsoft?
To have someone who knows Microsoft and AWS so well and have her focused in on those partnerships is great. We just became Microsoft co-sell ready. We, over a very short period, have been able to partner up with Microsoft and have significant traction with that in the field and are now Microsoft co-sell ready. That's really where we want Jennifer to be focused because that's where we really see the growth. Those are a lot of the customer conversations we're having right now, working with Microsoft, working with AWS, and we wanted Jennifer, an executive of her caliber, to be focusing on those relationships.
Do you see a day where that side of the business is everything, or most of, Turbonomic's business?
I wouldn't say it will be everything, but it definitely is the faster-growing part of our business. What we're seeing around workload automation when customers really optimize their workloads on-prem and then decide to move it into the public cloud. It's on-prem optimization and then making the right decision about what type of workload and when to move it. That's the motion we're starting to see right now.
What are partners getting right to capitalize on that growth potential?
For partners, there are a few different selling motions. The one that is still resonating is going to their install base and being able to optimize their on-prem assets and to look at driving application performance, driving cost efficiency in an over-provisioned data center or an over-provisioned IT stack. They're driving compliance and the optimal state for the environment. The other one we're starting to see pick up a lot of traction is partners driving cloud migration services and cloud migration technology discussions with customers. We're seeing a lot of partners adopt Turbonomic to allow them to go in and get full visibility into the workload on-prem and in the cloud and be able to optimize and allow customers to set up their strategy around how they migrate, when they migrate and how they optimize that workload. Those are very significant discussions around optimizing that workload into the cloud. Migration services to the cloud is a very big area.
That probably wasn't the case a year-and-a-half ago.
Absolutely. It's incredible. I've talked to at least five partners where if you went back a year-and-a-half, AWS and Microsoft weren't even in the top five vendors they were working with. It was the traditional Dell EMC, HPE, the typical hardware providers were their top five. It's now AWS and Microsoft in the top five for a lot of partners because they're realizing that server spend is declining, and storage growth is declining. They're saying, 'Where is the growth?' The growth is in the migration services as customers start moving workloads to the public cloud. Microsoft and AWS and their channel programs are getting huge leverage because a lot of the traditional VARs and resellers are transitioning their business models.
What does that mean for the traditional hardware market as a whole, and for Turbonomic's relationships with that end of the market?
We're still going to have very, very strong relationships. The most strategic and important relationship we have as a company is with Cisco. We see massive growth, and deals, and pipeline and synergies with Cisco, not only into their UCS offering, but coming down the round into integrations into app development, and other parts of the Cisco stack. As they have these transformational conversations with their customers around the Cisco Workload Optimization Manager, we're seeing huge pick-up. You'll continue to see us be able to go in and have a conversation with customers to optimize their current infrastructure in data centers. If you use Turbonomic, you can improve the efficiency of your data center and in a lot of cases, it allows you to keep more workloads on-prem, because you're running them in a much more cost-efficient manner. You're able to take utilization rates in server, storage, network, memory and go from 20 percent utilization to 80, 85 percent utilization. That allows you to be able to manage that workload at a much lower price.
And that customer doesn't have to worry about overpaying for public cloud when that time comes?
When you optimize that workload, and you want to get it to the public cloud, it's going to go in at the right size, at the right cost, the right template, the right region, compliance, disaster recovery, all of those things are done autonomically with Turbonomic when you move to the cloud. It's a beautiful thing. Customers and partners need to really understand that Turbonomic is the only company that has one single code base that allows you to see the workload on-prem, hybrid and public cloud. It gives you visibility across your cloud environment and your data center environment. It allows you to do numerous things with regard to driving application performance, cost efficiencies and standardizing compliance.
What's your outlook for partner recruitment this year?
We're going to continue to aggressively recruit now that Chris is on board. We expect to recruit at a steady pace. We're up an over 300 partners today, and we're going to continue to recruit and build out globally. We're going to increase our channel presence in EMEA and APAC significantly. That's a big, big focus for Chris. He's got tremendous relationships and experience in EMEA and in APAC. We're going to make sure, especially in the Americas, that we're enabling and training. A lot of our investment dollars, I'm allocating a big portion of the budget to do training and enablement for partners to make sure they can position and sell Turbonomic effectively and efficiently.
What do you need from existing partners that you're not getting today?
The biggest thing that we need from our partners really comes down to enablement. When you look at our partner base and how they're morphing their business to be more focused on cloud services, cloud migration, optimizing the data center, we do incredibly well once we're able to train and enable the pre-sales and consulting organizations within those companies. They get the value proposition of Turbonomic pretty quickly. Once they do that, they see significant opportunities within their install base. It's more awareness, more brand awareness, more awareness of what workload automation really means and workload optimization. Once you're able to articulate that to partners, and then train and enable, that's when these relationships start to get significant traction.
What's the revenue opportunity for partners with Turbonomic?
It's significant. We're seeing partners really transform their business. We hit all of our financial metrics we needed to hit this year, and having 70 percent of our business going through partners, they're starting to see a significant opportunity. We are seeing very large deals. We did three deals over $1 million in Q4 that went through partners. We fully expect that trend of large deals to continue through our ecosystem of partners.
Can you tell me about one of those large deals?
We have a great partner that is in the Northeast that is working with a Fortune 1,000 customers selling servers, storage and network to that customers. We were able to work with their pre-sales organization and go in and show this customer not only how they could optimize their on-prem data center costs and avoid additional storage purchases, but also be able to talk about how they were leveraging public cloud and the capabilities they needed with regard to moving workloads to the public cloud. Because of the partner's relationship at the CIO level, we were able to get access to buyers and do a $1 million-plus deal and it's had repeat business with the customer to optimize their on-prem assets and help them plan migrating workloads to the public cloud. The partner was crucial to getting us to the right level, understanding the business problem the customer had – very expensive data centers and cost avoidance.
Was that the customer's first venture into public cloud?
It wasn't their first venture into public cloud. They were very early. They have an extremely aggressive goal to get a significant percentage of their workloads to the cloud. It's one of the CIO's initiatives to drive a percentage of workloads to the cloud. They had a bunch of departments that were using the cloud and they want to get control of all of that spend, and understand what workloads are where, and that's a huge benefit of Turbonomic, getting full visibility of the workload environment. Then, they're able to optimize those workloads and get a larger percentage of them to the cloud. The customers saw game-changing value not only in our software, but in the services associated with it.
Do you think workload optimization and automation are driving public cloud adoption?
AWS is an $18 billion entity growing at 45 percent. It shows you the adoption. We're seeing customers coming to Turbonomic now knowing that there really isn't any other company out there that has the type of algorithm, and has the code base around matching the demand of the application with supply of the hardware in real time. No one else can do this. They're coming to us saying we want to look at the workload that is on-prem and optimize our hybrid environment and our private cloud. They optimize and are able to move workloads into the cloud at a better, more efficient, lower cost. They're moving the workload, right-sized, into the cloud at significant cost savings. I can't think of a customer conversation that hasn't centered around how are we going to aggressively move more and more workloads to the cloud.