Palo Alto Networks Boosts Incentives For Partners Selling Full Portfolio

Palo Alto Networks has modified its partner program in a move that makes partners selling its full security portfolio up to five times more profitable than those partners reselling a traditional firewall.

The full security portfolio incentives – including a new rebate opportunity – are part of a modified partner program that displaces the traditional discount structure that was based primarily on sales volume.

"As we revamp the foundation of this program and the model, we look at not only a volume commitment, but [also] what the value commitment is," said Karl Soderlund, senior vice president of worldwide channel, in an interview with CRN. "The value is to look across all areas of the market."

[Related: Palo Alto Networks Shareholders Oppose Executive Compensation For 2018]

The Santa Clara, Calif.-based platform security vendor also said it would combine the bottom two tiers of its NextWave Partner Program into a single tier, reducing the overall number of tiers from four to three.

Solution providers selling network, endpoint and cloud technologies from Palo Alto Networks with services wrapped around that can expect to be up to five times more profitable than partners that are only reselling a traditional firewall, Soderlund said.

"Everyone's looking at it and saying 'Wow, I really have an opportunity to execute and make more,'" said Soderlund. "And that's something that has been different than in the past. In the past, whether you added an incredible amount of value or limited value, the margin threshold was very much built in the same range."

The updated program now allows partner to align to the full Palo Alto Networks portfolio from endpoint to network to cloud, said Soderlund. "We are incenting them in the right way by giving them an ability to boost their margins to sell this technology and align them to it," he said. "And that's aligned to the way our salesforce is measured. I think we're one of the few companies that aligns their partner program with their salesforce compensation to make sure there's a unified approach of how we go to market."

Tera Davis, managing director for Critical Start, a Plano, Texas-based services partner that grew its Palo Alto Networks business by 62 percent over the last year, said Palo Alto Networks is opening the door for the channel community to take advantage of more cloud products and easily integrate them.

"Trying to stay relevant by just selling hardware and software isn't going to work," Davis said. "The industry is moving more and more as a whole to a cloud and SaaS-type model."

Davis is pleased to see that Palo Alto Networks, which is Critical Start's largest vendor, has very specific metrics in place to judge how much value a solution provider is adding rather than just relying on the subjective whims of an account rep. The process is relatively easy to go through, Davis said.

Palo Alto Networks continues to innovate with its product set and invest in its top partners, Davis said. "The changes they have coming out are going to be really good for the channel community," Davis said.

The updated program goes beyond awareness to provide a programmatic, repeatable process for partners to build out a services practice, Soderlund said.

The NextWave program now provides partners with a complete services offering kit that includes resources, access capabilities, and reference architectures, according to Soderlund. The kit is designed to support the entire services lifecycle, from assessment services on the front end to deployment services after the sale to a full-blown suite of managed services, Soderlund said.

"The partners driving the most volume are the ones who want to enhance themselves and drive the best solution, wrapping services around it," Soderlund said. "Our largest partners are the ones with the biggest appetite to do more with us."

The Palo Alto Networks PaaS (Platform as a Service) program traditionally was set up to provide partners with discounts based solely on the volume of business being transacted, said Soderlund. But now, Soderlund said the company is also considering the value specific partners provide by looking at their technical and sales competencies, services capabilities and resources.

From a programmatic standpoint, Soderlund said Palo Alto Networks has consolidated its bottom two tiers in the NextWave program – Silver and Gold – into a single Innovator tier. The top two tiers – Diamond and Platinum, respectively – remain unchanged, Soderlund said, with Palo Alto Networks providing tiered discounts at each level based on both the traditional volume as well as value.

In addition, Soderlund said Palo Alto Networks has, for the first time, introduced a rebate program for its Diamond partners so that they have more profits to reinvest back into the partnership. Soderlund said the company will consider both volume as well as the extent to which the partner sells across the Palo Alto Networks endpoint, cloud, and network security portfolio to determine who qualifies for the rebate.

"When this company came to fruition 12 years ago, what we really focused on was network security," Soderlund said. "And since then, we've evolved to provide incredible solutions for an endpoint, and we believe we have the best cloud security in the marketplace right now."

Soderlund declined to provide the size of the rebate or the margins partners can expect when selling one piece of the Palo Alto Networks portfolio versus selling the company's entire portfolio.

Finally, Soderlund said Palo Alto Networks will provide new systems, new processes, and automation to make it easier for the partner community to work with the vendor. Even as Palo Alto Networks increases its product count and expands the number of divisions it has, Soderlund said the company must continue to be easy for partners to work with.

"We're listening to them," Soderlund said. "We respect and hold their opinion in the highest regards, and we'll continue to be channel-centric moving forward."