 Okay, we're back here at EMC World. This is theCUBE, our flagship program to grab the events. I'd like to see them from the noise. I'm John Furrier. I'm joined by co-host. I'm Dave Vellante at Wikibon.org, and Jeff Taylor is here. He's the Vice President of Global Channel Strategy and Operations at EMC, and welcome. Thank you, very excited to be here. You guys are making a big push in the channel. On the last earnings call, I think it was Joe Tucci or it was David Goulden who said that you guys are about 50% through the channel now. So obviously you made a big push there. EMC for years wasn't known as a channel-friendly company. You guys have made that transformation. How did you make that transformation, and where are we today? Sure, thanks. So first of all, we're here at our second annual Global Partner Summit. We have over 3,000 partners. Attendance is up, excitement is up, and I think it's an example of some of the things we're doing differently to drive. What really is, we include all of our channel partners. More like 60% of our revenue goes through the channel, and if you look at certain product business units, it jumps to 80%. So we've had great results, and what are we doing differently? Well, I think we're listening better than we have and listening in a really structured and systematic way. We want our program, we want our business to be increasingly more and more partner-built, and those references and those revenue and booking numbers reflect that. We do, for example, a partner survey, Voice of Partner, Greg referenced it, Billy referenced it. We twice a year survey our partners, we had 2,000 respondents come back this year, and they rated us 25% above our peer group, both hardware and software, in terms of satisfaction and loyalty. Over 80% of our partners think of us as a trusted advisor, and an important trusted partner with them. So I think we're listening differently, we're driving a partner-built program, and that has a series of actions and implications that we take here. I got to ask you, I'm a huge fan of the channel. Dave knows, I always get lit up when it's channel conversations, so I spent a big part of my career at HP during the 90s, late 80s, early 90s, during the channel boom of resellers and whatnot, insistent integrators, VARs, Vabs, ISVs, whatever you want to call it these days, but there's a challenging time right now, because obviously in the channel business, gross margins, everything, right? You got it, and these guys want to make margin. And commodity hardware, like PCs, have shown that services can be nice wraparounds with that driving margin, but now you guys also sell hard drives that have good margin, decent margins, but yet around them we've heard about these transformation messages. What are some of those high-powered, high-octane services that you hear from your partners, that you guys that gets wrapped around EMC? Is it more cloud? Is it more big data? Is it more, I mean, what are some of the things that you can highlight? Yeah, sure, I think there are three things that are margin enhancing for our partners, right? The first is Vspecs, right? So what we do with Vspecs, one, it's the fastest growing reference architecture in the market, 2,200 units have been sold to date, and we're expanding, based on partner feedback, the applications, including Microsoft SQL in exchange and enhancing the performance, adding and announcing today Vplex for continuous availability on our solution. Why is it important and why is it help services? Well, we build and test those solutions and stacks in our lab, and then we give tools for size and configuration and deployment to our partners, so they don't have to do that. They can sell services all around that stack. So you reduce the steps that takes them to sell them and then deploy it? That's right, so that's certainly one. The second thing we do is we have and launched last year a cloud services provider program. If I was seeing 40% year-over-year growth in that program, we see increasing expansion and the diversity of offerings our partners use based on our own technology. Again, the concept of really increasingly more sophisticated enablement and pre-building of solutions so that our partners can take on what we have, take it to the market and sell it. So what specifically did you guys do to enhance your programs? Can you talk in more detail about sort of what you offered channel partners and what the impact was? Sure, so I think there are a couple of things we were trying to do, right? We want our program to always be simple, predictable and profitable. So for simplicity, we took and made it more sales friendly. We took the implementation engineer requirement out. So we want partners who can sell and pre-sell but we made it easier for our partners to get on board, get specialties and start earning rebates and increase margin. The second for predictability, we have a dollar one rebate that's targeted at more of our strategic products, the VNX, the Data Domain, our Extreme IO products. So that adds a bit of predictability to our partners. And then in terms of profitability, we increasingly expand the products that are available including things like Mosey and Atmos and bring those into our product portfolio so partners selling any portion of EMC can gain margin. So those are three big important changes. So how do you get people trained up? I mean, obviously the channel business is very high leverage and you guys do a lot of success there. You mentioned the numbers earlier. How do you get guys ready to sell? Because that's a key thing. Because you're representing, they're representing your brand, right? But at the same time, they need to be savvy to know where to plug. It's not just that simple to say, oh, here's the solution for EMC. These are a wide range of solutions. So how do you guys handle that whole working with the channel there? Yeah, I think there are two things. For a long time we've focused on accreditation. So getting our partners trained and accredited on our solutions and we have what we believe to be differentiated product training in terms of our portfolio and the solutions associated with that. What we've done recently though is extend from accreditation into competence by getting our partners out into the field and doing endorsements with our reps and with our DMs. So in the US alone, there are over 400 endorsed partner reps. We've started EMC ready for partner pre-sales as another training element. We have over 100 pre-sales reps today and it's growing literally every single day as partners want to get access to our sales force, get access to our selling acumen. So we really are focused on sales engagement and driving training again in a broader enablement really out into the field that the customer face. Yeah, you're really trying to make it as an extension of your internal sales force. So are sales folks, is it comp neutral for them? How does that all work? Yeah, so for the majority of our sales forces and the majority of our accounts which are channel only, it's comp neutral. They're incented to work with partners. They get the same benefits as they do. We don't comp our reps on services because we want the partners to pick those up. We see that as an increasingly larger portion of their margin in their business. So we want our partners to take on the services. We continue to service enable them. We want that to be a bigger portion. That's a nice channel message. I mean, that's pretty much, that's their bread and butter for partners. They make a lot of money and 100% gross profit on those services. Right, exactly. In most cases. Right, and last year we announced our collaborative services, for example, which is a way to take all of our engineering capability, put it in the back office to allow testing on a variety of products in a variety of environments that our partners can pre-sell as a testing tool for them. So how do you guys go to market joint sales calls? You guys provide more tooling for the partners. Explain that a little bit. Sure, I think we divide into two segments. One at the very top at the enterprise, which is an increasingly smaller number of accounts. It decreases more and more. We go with partners. We lead those accounts. Those are our global most important accounts. And we lead those accounts with our direct team and we bring in partners to supplement us. So that direct team's not taking orders or pushing the orders to their partner? So at the top end of our enterprise, like most other vendors, we have global accounts. If we run those direct and we have a whole complement of resources to do that. Got it. But below those very small number of accounts, you enter channel-only territory. And then that channel-only segment from the enterprise select all the way down to the SMB, we go joint sales calls. The rules and engagement require that our reps go on a second sales call with partners. We enforce those rules and engagement. We drive enablement and mentorship and require our reps and sales engineers to mentor our partners through those sales calls. Jeff, you mentioned the cloud service provider program. Is that the velocity partner program or is that something different? It's something different. So last year we realized that we wanted a separate and distinct cloud program. So we have a velocity solution provider program, which is for the resellers. We have the velocity VGAP program, which is for alliance partners. We have a service provider program that goes across both. So we realized that the alliance partners, that effectively every reselling and alliance partner wanted to be a service provider. So we created a universal program that's accessible to any of our partners that could be part of our service provider program. And what do you call that program again? The velocity service provider program. That's the velocity, okay. So that velocity service provider program. Can you talk about, so cloud is a channel, right? Sure. And you've got the channel partners, you've got the cloud becoming a channel. How are your channel partners responding to the cloud? It's disruptive in a threat on one hand and on the other hand it's an opportunity. So how are they making it into an opportunity? I think they see it in a couple of ways. Some of those, some of our bigger partners are investing in moving forward and joining that program and becoming infrastructure providers and platform providers. And as I said, we've seen great growth and a great adoption of that. I think other partners, smaller partners are looking for brokerage opportunities, trying to connect with other larger partner infrastructure players as a way to offer a solution that when they know they don't have the capital resources to become a service provider. So we're working on ways to broker those opportunities through our partners and to get those, to connect those dots. And are they transforming their skill sets? I mean, for instance, are they focusing more on security or do you mention sort of cloud brokering? How are they transforming their skills? Well, so I think they're learning more about where the workloads are heading and talking more about, you know, talking more with business drivers where building workloads and putting them into cloud and changing the focus more from the, as much as the IT and the data center administrator over to the business leader. And how are you guys sort of supporting that sort of skills transformation? I mean, what kind of resources do they get access to and how do you accelerate that? Sure, well one, I think as we talked about before we have a world-class training program in terms of what it means to offer a platform as a service. We have solutions and solution kits that enable partners to get on board. We have a specialty team of sales leaders that are out working with the partners to build their business and to drive leads and educate our sales force. Those, that specialty team will go on calls with the business leads, communicate the opportunities and they know our service provider community and what capabilities they have and they're directing opportunities to that larger group. How do you manage the variability across, you know, regions, you know, within North America even and then globally? It's got to be, you know, quite a bit of variability and you're trying to get as much commonality as possible. How do you deal with that challenge? Sure, I think we face that on, you know, all the things we've been trying to do for the last two years is to create a globally consistent program and what, you know, the way we approach it is we define an end state that we're driving towards. Take anything, our global program, the enterprise select, our focus program, all the elements and key initiatives we're driving and we define an end state that we're moving towards and each of those markets is at different stages of maturity and how far they've come and our own capabilities, the market's capabilities and so we monitor and manage and drive that activity and let those theaters develop towards the same end state over time. So it takes careful management and diligence and oversight but we allow the theaters to develop and mature as they are, as they're working their way. Jeff, you talked about some of the survey work that you guys did. I want to drill into that a little bit. So what set EMC apart? Can you share with us some of the, you know, examples or proof points? Sure, I think what, one of the main things that partners look for is a product portfolio because they need innovation and they need a differentiated point of view. So consistently we rate amongst our partner population, you know, head and shoulders about the competition in our product portfolio, right? And I think, and I'll chill down that one for a second if I could, you know, take a concept like big data, right? That's something that's confusing. It's worrisome for most, for our customers and our partners, it's hard, they don't understand it. They're, you know, so if you talk to them quietly they're worried about being overtaken as, you know, by a variety of competitors and a variety of different offerings. And what we've done with EMC is we've launched Pivotal, right? That adds, that will add a proof point and a pathway with a legitimate visionary, you know, G's already legitimized it with a hundred million dollar investment. So we will develop a path for our partners and our community to take advantage of big data and give them an on-road to have right now interesting discussions, give them, put them on the forefront. And those are the kinds of things that our partners look for us to do. It's to deliver them the power of our vision and something they can translate into their own strength. And the big data with Pivotal I think is a perfect example of that. Jeff, talk about the biggest misconception people have of your channel business. You know, people describe it as concept of old tapes and I think there was a time 10 years ago or some years ago where EMC was a very strong direct selling engine. And there was bad behavior in the field. And I think if you really go and investigate and talk to a whole tranche of new partners and our existing loyal partners, what you really see and we hear it consistently. I'm not talking to partners, talking to customers all the time. What you see is really a different phase. They see that EMC has changed. They see the demeanor, the posture, the disposition has changed. And you know, they're welcoming and we're seeing the results and we're seeing the growth that that of our partner can be. And they're making money. Big money. Which is what it's all about in the channel. And you see the attendance. You have over 3,000 people here, they're excited. You know, they show up and they're vocal. Right. Okay, Jeff Taylor with EMC's channel business. Obviously the channel's great way to go to market with this tsunami of transformation. Big data, software-led infrastructure. A lot of opportunities for partners. System integrators to new breed of consultants to the old school. A lot of opportunity, a lot of gross profit and ultimately customers get modernized infrastructure. So this is theCUBE, our flagship program. We go out to the advanced instructor to see them from the noise. I'm John Furrier with Dave Vellante. We'll be right back with our next guest after this short break.