F5 Touts Partner Gains Behind Encouraging Growth

It's been a year of strong gains for F5 Networks, and the challenge now is for the company to keep growing at similar pace as it cements its position as the top application delivery controller (ADC) vendor in IT.

F5 executives used F5's partner conference in Chicago last week to make sure solution providers know how integral they were to that momentum, and to assure them that F5's emphasis on the channel is only going to get stronger.

"We're under no illusions that F5 by itself is doing this, though we do feel we have some fantastic solutions for the market," said Gary Abad, vice president of North America channel sales, in a recent CRN interview. "We're no longer selling load balancing. We're selling multiple control points in the data center. Partners need to be more and more equipped, and the channel will see much more coverage from us from a sales and marketing perspective."

In late July, the company reported $230.5 million in revenue for its fiscal third quarter, well north of the $218 million expected by Wall Street analysts. That figure was up nearly 12 percent from the $206.1 million it reported in the second quarter, and up nearly 46 percent from the $158.2 million in the third quarter a year ago.

Thanks to the changing nature of many customers' data center needs and the migration toward cloud computing environments, strong application delivery networking (ADN) solutions are in demand. F5's average number of deals over $200,000 has grown "dramatically," Abad said, and its average number of $1 million deals has grown as well.

"A $1 million deal for F5 was, a year ago, a big deal," Abad said. "We still do celebrate them, but there are a lot more of them coming now. What bears that out is the strategy that we have in not just leading with LTM (local traffic management) but leading with total ADN solutions."

Count on major channel investments from F5 in three major areas, said Abad, who joined F5 Networks in the North America channel chief role in December 2009.

Marketing resources will be one, additional channel systems engineers (SE) will be another, and in Chicago, the company announced a third: F5 Academy, a deep-dive training program to offer VARs more targeted knowledge. "It's not just teaching them about LTM for example, but the breadth of how big the opportunity for investment is there," Abad explained.

"I have to do a better job at utilizing our channel resources around their reach, their market and their customer base," he added. "You're going to see continued investment in areas we didn't play well in the past. We're going into our strategic partners and figuring out how we can do more around joint marketing. This is an important time for us to pick up our branding so you're going to see literally more capital investment from F5."

NEXT: F5's Next Challenges

When Abad was hired, six months after F5 significantly revamped its channel program, the company had two key issues on the docket. First was a branding problem; as former North American -- and now global -- channel chief Dean Darwin pointed out to CRN last December, there are still plenty of solution providers who think of F5 as a load balancing company.

Traction for BIG-IP, its application delivery controller family, has certainly helped, and solution providers have cottoned to BIG-IP's mix of flexibility and versatility. BIG-IP's different product modules, for example, run the gamut from local traffic managers (LTM) and global traffic managers (GTM) to WAN optimization and access policy management.

VARs also see strength in F5's TMOS platfom, and also BIG IP's various feature sets, especially in increasingly volatile areas like the growth of IPv6 traffic.

The second key issue is that for the partners who already do drink the F5 Kool-Aid, the challenge now is to get them to look beyond F5's ADC stronghold and sell more of F5's broader portfolio.

That's easier said than done; ADC products account for the majority of F5's revenue -- more than 90 percent in the third quarter -- while other areas, such as F5's ARX storage management offerings, are much smaller contributors, despite themselves posting growth (ARX's year-over-year was nearly 25 percent) in the period.

But F5's channel chops are unquestioned. David Lesser, president and CTO of Nexum, a Chicago-based solution provider and longtime F5 partner, said he admired F5's continued investment in its products and channel in a down year, and how F5 has kept up with the changing role of ADC products in evolving data centers. "I'd love to give kudos to everyone, but it has so much to do with their technology and the positioning of their technology," he said.

Nexum sells all of F5's product lines, and its F5 business has grown more than 100 percent in the past year, Lesser said. In the first half of 2010, he added, Nexum's F5 sales were 140 percent higher than all of their F5 business had been in 2009.

"They understand the channel in a way a lot of vendors don't," said Helen Lesser, Nexum's vice president. "The registration program, especially, is full built out and well thought-out. They work with us in our accounts and we rely on F5 to protect us a lot in established relationships."

It's tough to find any partners sour about the F5 channel, let alone many. "It's one of the best partner relationships we have," said Tim Abbott, solutions architect at Trace 3, an Irvine, Calif.-based solution provider.

Abbott said what had helped F5 was not only its commitment to channel partners but re-focusing on what it was good at -- ADN -- after years of sometimes-helpful, sometimes-unfortunate acquisitions. "They broadened faster than they should have," Abbott said. "They refocused, got back to their game, and now they're tops in the market."

"[President and CEO] John McAdams would be the first to laugh at himself and his team and tell you which ones were the good ones and which were the bad ones," added Nexum's David Lesser. "I think they really have a keen understanding of the technology and that there's so much that can be grown just from the existing technology. They're pretty sustainable right now with their existing technology."

F5's expansion into other markets and technologies continues to come up, and while solution providers don't see F5 getting comfortable, they also caution the company from sticking a finger into markets it might not serve well.

Trace 3, for example, has a strong practice with WAN optimization heavyweight Riverbed Technology, whose products, Abbott says, complement what Trace 3 can offer for F5 products, especially in large data center jobs.

"Riverbed is a big piece of our business but only fits with strategic accounts," he explained. "Where F5 is important is when we talk about cloud stuff we talk about loud balancing across public and private clouds, and figuring out how to move unstructured data in and out of those clouds. That's big."

"One of the greatest mergers of all time would be Riverbed and F5 together," David Lesser laughed. "Neither could buy the other I think, but what a formidable combination that would be."

Turning more serious, Lesser said, "F5 tried the WAN acceleration stuff and I just don't see them as needing to right now."

NEXT: What F5 Could Do Better

Abbott cited a greater number of joint case studies -- especially video case studies, where observers are walked through how a solution provider talked up and sold a solution -- as something he'd like to see more of from F5.

Helen Lesser sees a broad opening for F5 leveraging its partners' services capabilities more effectively. "I'd like, and I understand this is already on the docket, for them to look at our services as an extension of them," she said. "We make sure our customers really know everything available on the F5 line card. We do training in-house for F5, because we notice that more people coming in for training spreads the word."

Technology sales aren't something they worry about, though. F5's ADC offerings, in the eyes of many channel partners, broadly outgun their most immediate competition, which despite advances from Citrix, A10 Networks and others, remains Cisco and its application control engine (ACE) product.

"Cisco is a fantastic company and a great competitor and is certainly out there with a strong, loyal fanbase," Abad said. "Citrix and A10 we do see showing up, but not as often as the obvious Cisco competition. We have a very good win rate. When we get in there, we're winning 9 times out of 10."

Once customers see it in action, in other words. "It's just so far ahead of what else is out there that it's totally dominant," David Lesser said. "Cisco, or the Citrixes or the A10s, if people have them and want them, we usually say, ok, we'll see, we'll be back in two years."