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“Egnyte launches channel program for hybrid cloud solution”

By Mark Cox
eChannel Line
March 8, 2011
SME-focused Egnyte, which makes hybrid cloud file server solutions, has launched its first formal channel program to recruit and assist partners to sell Egnyte services.
Mountain View CA-based Egnyte is four years old, and their target market is companies with up to 1000 employees, although they have some that are larger than that.
“We are not in the backup business, we are in the cloud storage business,” said Filip Kesler, Egnyte VP of Business Development and Channels. “What we offer is a model where we address the needs of business to collaborate in the cloud and on premise, providing security, credentials, and centralized security policy. We offer a solution for the company who wants to be able to manage 500 users in the cloud, and control credentials policy.”
Kesler indicated that the company’s business model evolved as they reacted to the perceived needs of the market.
“We started as a cloud file server company, to solve the problems of physical cloud servers. But we realized very quickly that there are some inherent challenges with the cloud we had to address. Not having a local copy of the data has been unacceptable for a lot of businesses, who want it for security or simply peace of mind.”
Kesler said that latency issues with the cloud are there to stay until the infrastructure is all fiber, and that and the desire for many to be able to work while offline led them to the local cloud, in a hybrid model.
“It’s a component on your desktop,” he said. “The hybrid cloud is a combination of the cloud file server combined with the local cloud, an agent that sits on desktop that synchronizes between the cloud server and local cloud in a hub and spoke model, and Egnyte keeps every version, so nothing gets lost.”
Kesler said their model has other features that customers and partners find attractive.
“We built interfaces that let you get work done regardless of online or offline status. There is a kill switch if you lose your laptop, which removes privileges.”
Kesler said the local cloud is also leading to a bigger class of accounts — companies that need to sync data between multiple accounts.
“That’s the largest growing business among my resellers, companies with multiple offices and roaming users. All the files are synchronized. In addition to being able to work locally and have copies of the data, you can map a drive to the cloud, and there are multiple ways to configure your access to Egnyte. You can get to any version of any file very easily. This drives channel adoption.”
Egnyte didn’t start with a channel model.
“We sold direct originally, but we realized last year that SMEs are adopting the cloud, that it was not a question of if, but how soon, and we needed partners to reach into that. The direct business is still a majority of the business, but our channel has doubled since October. Our growth in the channel has been 40 percent month over month, largely through word of mouth. We enrolled 120 new partners in January, and have about 500 now, of which 50 percent have more than two deals with us.”
Kesler is well aware that the cloud has become a hot competitive market, but he thinks that Egnyte is well positioned, through its new channel program, to positively differentiate itself to partners.
“The margin-based model today is under a lot of stress, and resellers are having to adapt to the cloud,” he said. “They are having to position themselves to avoid the great washout in the channel that is coming.
“Resellers are less leery of us than our competitors,” Kesler said. “They want to make money. They want simplicity, not multiple levels of certification for backup. They want leads, and they don’t want channel conflict, or models that give them referral fees and tell them to go away.”
Kesler said the hybrid cloud offers many positive features for partners, and is a real differentiator for them.
“It lets them build not only their business, but their relationship with their customer, with the on-premise component,” he said. “They can provide additional services around Egnyte. Netgear VARs like us because then can sell their boxes, provide first level support, all these services that we will not be in the business of providing. We don’t do that and we can’t do that.”
Kesler said the program really has three core themes to it.
“The first is that the program is straightforward and simple. No fees. Recurring revenues in a tiered structure, with a higher percentage of revenues depending on how much you sell. Passing of leads. No certification levels, but a lot of training tools.”
The second theme revolves around improvements to the product for partners.
“There are not provisioning fees. We’ve improved the product customization and the integrations with on and off premise components. The ability for reseller branding, with ‘powered by Egnyte’ is not new, but we’ve tweaked it, and made it clearer.”
The third element is the launch of a reseller portal.
“It lets them manage customers and get access to deeper technical documents that customers don’t see,” he sad. “Since the cloud is new for many customers, setting the right expectations is important.
“These three components will let both the partners and me run our businesses in a more streamlined fashion.”
Kesler said their ideal reseller will have several characteristics.
“They will know the infrastructure business, be familiar with the cloud, in terms of how it works, and what it does and the pricing model. They have an existing customer base, and their customers have one or more offices and 10 or more employees. Many of them pick a few of their clients, and move them to Egnyte, using the pricing model that is best for them. Once they crack that nut, they bring others in, in a model that works for them. We don’t impact how they bill their customers or in what way.”
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