VMware Oracle SAP Cisco IBM Rackspace ChannelIncentives

FY15 VMware, Oracle, SAP, Cisco, IBM, Rackspace Channel Incentives Joonseok Oh, Partner Incentives Team Worldwide Partner Group

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Summary

Ease of use (rank)

Sales Method Incentive Elements Key Differentiator

VMware 1 Indirect through Disti-Reseller

various front/back-end rebates, SPIF, MDF

limited time incentives, localized rates and eligibility, profitability for reseller much higher than disti, partner can't claim both influence and sell fee

Oracle 2 Direct and indirect (through SIs)

"sell" rebates up to 10%

3 rebates all stackable

Microsoft 3 95% revenue through partners

Enterprise, Cloud, SMB, SAM incentives

large partner network

IBM 4

Hardware: 33% through partner, Software: 15% through partner

fees for identifying, selling, and fulfilling

limited time incentives, 2X incentive for displacing competitor

Cisco 5 80% through partner

various front/back-end rebates, SPIF, non-monetary rewards

localized rates, 6 month design cycle, high bar for eligibility, incentive for displacing competitor

Rackspace N/A Not known referral fees, 5-15% hosting, 5-15% reseller discounts

progressive rates

SAP N/A 20% through partner

MDF (3-5%) various non-financial benefits

VMware

As of 2014, VMware has 17,585 partners in North America1. VMware sells through a two tier disti-VAR

channel. VMware allows distributors to receive on average 1-2% margin and VARs typically get 10%

through backend rebates.

Solution providers (=Resellers)

Professional Enterprise Premier

Financial

Benefits

Solution rewards

Sales rewards (SPIF)

Advantage+ Opp Reg / Development Fund contribution

Volume Purchasing Program

Enterprise License Agreement preferred pricing

Premier rewards

Requirements 1xVSP/VTSP 2xVSP/VTSP/VCP* 4xVSP/VTSP/VCP

1 http://www.crn.com/partner-program-guide/ppg2014-details.htm?c=190


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Infra & virt competency Infra & virt + 2(1 developing)

additional competencies

$10,000 ($2,500 developing)

revenue

$1,000,000 ($500,000

developing) revenue

*VSP: VMware Sales Professional, VTSP: VMware Technical Sales Professional, VCP: VMware Certified

Professional

Consulting and integration partners (=SIs)

Regional National Global Global Premier

Financial Benefits Advantage+

Volume Purchasing Program

Requirements 3 competencies 3+ verticals 3+ verticals

1 service line 2+ service line 2+ service line

Solution rewards is a quarterly backend rebate to resellers with an eligible competency calculated off

the list license value of all eligible strategic product sales that are relevant to the partners solution area

of expertise. This is stackable with Advantage+ incentives, does not have minimum deal size

requirements, and available to all partner levels. Product eligibility and rates are adjusted every six

months.

Eligible competencies for Solution Rewards Rate

Server Virtualization (formerly Infrastructure Virtualization)

Management Operations

Management Automation (formerly Cloud IaaS)

Business Continuity

Virtualization of Business Critical Apps

Hybrid Cloud (vCHS)

Desktop Virtualization

5% for ThinApp, vCHS, Site

Recovery Manager

10% for Horizon View, vSphere

with Ops Management

Advantage+ incentives consist of 3 different rebates. Opportunity Registration discount provides up to

12% discount when partners resell. Development Fund Contribution (similar to Microsofts Coop)

provides up to 12% in marketing funds when partner influences sale but the deal is fulfilled through

other partner. A partner can get either opportunity registration or the development fund but not both

on the same deal. Product accelerators provides additional discounts for specific strategic products

and are evaluated every six months. The minimum deal size is $6,000 list license value. Starting May 12th

2014, the Advantage+ applies to US Federal opportunities.


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Volume Purchasing Program (for SMB and CTM customers) allows the partner to give the end customer

volume based discounts. Points are accumulated for each deal after the initial order (2 year roll-off). 1

VPP point = $100 VMware MSRP.

Level Points Discount

1 250-599 4%

2 600-999 6%

3 1000-1749 9%

4 1750+ 12%

Enterprise License Agreement preferred pricing offers 10% discount to the transacting partner or 10% as

development fund contribution if the approved sale is fulfilled by another partner.

Premier Rewards provides Premier level partners with a 2% quarterly rebates if they have met or

exceeded quarterly net license and support and subscription revenue targets set by VMware. Rate

multipliers are applied on a sliding scale of attainment from 80% to 120%. The Partner can earn 1% in

development funds if attainment falls below 80%.

Renewal rebate offers Premier Solution Partners a 2% rebate for all qualified renewals.

Cloud Credits Purchasing Program allows customers to buy credits from an SI partner and redeem it for

hosted services. Premier partners get 2% backend rebates.

According to the 2012 Infotech survey as part of the MPN Loyalty project, partners said that they were

satisfied with VMware incentives payment accuracy/timeliness, rules and requirements, and incentive


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dollar amounts whereas partners were less satisfied with Microsofts opportunity management,

incentive dollar amounts, and rules and requirements.

In June 2014 VMware launched its new vCloud Hybrid Service program with additional enablement,

partner incentives, customer promotions and enhanced support to benefit its entire U.S. and UK partner

community. As of June 1, partners now have access to incentives focused on delivering vCloud Hybrid

Service - Disaster Recovery, Virtual Private Cloud and Dedicated Cloud to its midmarket customers

through the new Mid-Market Cloud Surge Program. From June 2014 to December 2014, partners will be

paid a quarterly back-end rebate for signing up mid-market customers (=New Logos) that are new to

vCHS (rates below). A one time rebate of $500 will be earned for each qualified sale during June up to a

maximum of 300 qualified sales per quarter per partner. In addition, a one-time rebate will be earned if

the qualified sale includes certain vCHS SKUs. The eligible SKUs and rebate rate are below. Minimum

payout threshold is $100 and max cap is $100,000 per SKU.

In addition to the partner incentives, VMware is providing all end-user customers with a price promotion

for a three- or 12-month Virtual Private Cloud, vCloud Hybrid Service Disaster Recovery, and Dedicated

Cloud. Details on this promotion, including up to a month of free service are available here. As a way of

providing additional training for its partners, VMware has also instituted a Hybrid Cloud Solution

Competency initiative meant to help resellers get up to speed with the new service and sell the vCloud

system to end users.

With VMware, resellers have more to gain financially than distis and the partner can only claim a

transacting or influencing incentive but not both, so SIs are free from LSPs claiming both influence and

sell fees. The company also runs accelerator incentives for short periods of time. VMware announced

during Partner Exchange 2014 in February that they will now allow partners to join the VMware Partner

Network without having to identify with a specific program (Solution Provider, Reseller, Distribution

etc.) This is a way of protecting partners from cornering themselves into an individual partner program.

The company also announced Elite Partner initiative where qualifying partners will be provided with

access to early tech and go to market strategy behind it. Also Professional tier partners will now be


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eligible for the Advantage+ sales rewards (SPIF for sales reps) with the rate increasing for Enterprise and

Premier tier partners.2

During the EMC World 2014 Conference in May, EMC announced the new Business Partner Program,

offering rewards for building investments with the company across EMC and its federation of

companies. The company is offering partners qualified in VMware, Pivotal, RSA and VCE programs cross

program training credits, with additional incentives added for reselling solutions built using a

combination of EMC, VMware, Pivotal, and VCE technology.

VMware Transactional Purchasing Program (TPP)

TPP provides tier-based volume discounts for partners to offer to U.S. Federal customers. For most

products, one TPP point is roughly equal to $100 in U.S. Federal List Price. TPP points are assigned as a

calculated value, and vary by product. TPP discounts are only applied to the license portion of a

customers purchase

TPP Level Point Range Discount

1 50-599 5%

2 600-999 7%

3 1000-1749 10%

4 1750+ 13%

VMware defines US Federal Government Customer as

- All Federal agencies, departments, commissions, boards, offices, councils, or authorities,

including Government Agencies as described above situated in U.S. Territories outside the

Continental United States, Hospitals, Medical Centers, and, other Health Facilities operated by

U.S. Federal Government agencies.

- All U.S. Tribal Government entities, including, but not limited to those listed at this site:

http://www.usa.gov/Government/Tribal_Sites/index.shtml, including For-Profit entities

operating under the authority of a governmental bureaucracy such as Indian Gaming Casinos

- All Federally Funded Research and Development Centers (FFRDCs)

- All Resellers or Systems Integrators (also referred to as "Prime Contractors") operating on the

behalf of an otherwise-qualified Govt User (as identified in the first four bullets) is considered a

Government Customer for the specific tasks performed for that End-User

In September 2014 VMware launched a new partner program for ISVs called vCloud Air. Through this program, ISVs will be armed with the tools they need to help guide customers on their hybrid cloud journey, including information on key hybrid cloud use cases, such as dev/test, packaged application migration, and disaster recovery. ISVs taking part in the program can get their apps certified with "VMware Ready" status, which shows the app has been tested and validated to run on the vCloud Air

2 http://m.thevarguy.com/information-technology-events-and-conferences/021214/pex-2014-vmware-unveils-channel-partner-program-enhanc


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public cloud. The program has three levels -- 'Access' is the entry-level, 'Elite' is the midrange and 'Premier' is the top tier. Each comes with a logo for ISVs to display on their websites. The vCloud Air ISV Partner Program also includes business, sales and marketing assistance for ISVs that are looking to adjust their business models to the cloud. . VMware has been running the program as a pilot with "key" ISV partners.3

To target the education sector, partners can gain the academic specialization and become eligible for

Academic SKUs and pricing.4 A typical academic/non-profit discount is 40% off US list cost on licenses.5

For higher education institutions VMware provides a $250 annual subscription (VMware Academic

Program) that offers unlimited downloads of their most popular products, with renewable 365-day fully

functional licenses (limited to a single license key per product, per user), lab Installation, eLearning

material, and discounted vouchers for Certification Examinations.6 In addition, vSphere, View, and

Zimbra qualify for E-rate funding (administered by USAC, provides discounts to schools and libraries on

tele/IT services).7

Airwatch Partner Program

VMware acquired Airwatch earlier this year. Effective July 1, the AirWatch Enterprise Mobility

Management Platform through Subscription Cloud (SaaS) SKUs will be available on the VMware price list

to our global network of more than 75,000 VMware partners

VMware partners who are not already enrolled in the AirWatch partner program can complete a four-

hour on-demand AirWatch Cloud Partner Training and pass a short exam to gain access to the SKUs.

Current AirWatch partners can now also join the VMware Partner Network. Partners who currently

participate in both VMware and AirWatch partner programs can either continue to purchase as they do

with AirWatch or chose to instantly transact with VMware SKUs via authorized VMware distributors.

AirWatch sales will remain a separate sales and channel organization, and will continue to sell directly

and through channels.

- Referral Partners are organizations that may or may not have a strategic presence in the

enterprise mobility marketplace. AirWatch Referral Partners identify new opportunities

and are compensated for their involvement in the selling process. All business is sold

through AirWatch with the referring partner receiving a commission upon AirWatch

receiving payment from customer. No fees to join.

3 http://blogs.vmware.com/vcloud/2014/09/introducing-new-vmware-vcloud-air-isv-partner-program.html?utm_source=rss&utm_medium=rss&utm_campaign=introducing-new-vmware-vcloud-air-isv-partner-

program 4 http://www.itx.com.au/updates/documents/VMware_document_9403.pdf 5 http://www.softchoice.com/licensing/vmware/ 6 http://labs.vmware.com/academic/licensing-overview 7 https://www.vmware.com/files/pdf/VMware-Eligibility-for-E-Rate-Funding-FAQ.pdf


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- Reseller Partners are organizations that have a strategic presence in the enterprise

mobility marketplace. AirWatch Reseller Partners identify new opportunities and are

compensated by purchasing AirWatch solutions and services at a discounted margin

from MSRP and selling at a partner-defined price point. Fees: $2,500.

- Service Provider Partners are organizations that currently deliver mobility solutions to

their customer base. AirWatch Service Provider Partners maintain control of their

environment within the AirWatch-hosted infrastructure and provide their customers

with enterprise mobility management as a managed service. Service Provider Partners

can "white-label or rebrand AirWatch solutions to maximize partner brand recognition.

Fees: $5,000.

- Technology Partners are empowered to integrate their hardware or software systems

with the AirWatch solution to increase market opportunities and provide a

comprehensive solution to customers. Our mutual customers benefit from this

combination of industry and technology knowledge in the mobility marketplace.

Technology partners include device manufacturers, software vendors, OEMs, and

service providers. Fees: $0.

- App Partners are concerned with developing enterprise-grade applications with built-in

security and management controls. AirWatch App Partners leverage the AirWatch

Software Development Kit (SDK) to integrate the same features and functionality

provided by AirWatch into their own custom-built applications.

Oracle

Oracle Partner Network (OPN), which is targeted at global system integrators, now has 25,000 partners.

Revenue from the indirect sales efforts has continued to grow.8 In June 2014 Oracle announced a two-

tier distribution program for the Oracle Cloud portfolio, engaging the value added distributors (VAD) to

extend Oracle's reach in the broad market and scale its network of Oracle Cloud resellers.

Oracle has three stackable rebates for VARs and VADs. The Registration Rebate is a 3% rebate on the net

license and/or hardware revenue recognized by Oracle for Broad Customer Base transactions that are

registered by the reseller under the Oracle Open Market Model resale initiative. Strategic Hardware

Rebate is a 5% rebate on the net license and/or hardware revenue recognized by Oracle for named

Strategic Products in Broad Customer Base transactions. Added in June 2013, Oracle on Oracle Rebate is

a 2% rebate for registered Oracle partners who sell both hardware and software to the same end user

within 90 days. In June 2014 the company has announced that they will be moving rebate payment from

8 FY13 Microsoft Compete Retreat Priority Competitor Handbook by Gartner


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quarterly to monthly and added the Oracle Virtual Compute Alliance Infrastructure system (integrated,

software-defined converged system designed to run any application) to their Strategic Products List,

making it eligible for rebates.

In EMEA, public sector end user transactions are eligible for these rebates. In Latin America, public

sector end user transactions are eligible for rebates provided that both the VAD and the reseller

involved in the transaction have met Oracles due diligence requirements. In Japan and Asia Pacific,

public sector end user transactions are eligible for rebate credits, but rebates will be paid only in the

form of credit memos that may be applied against future purchases of Oracle products. In North

America, transactions by and/or with public sector entities are not eligible for rebates under any

circumstances. For purposes of the OPN Incentive Program, a public sector entity is any government,

legislature or decision-making body, judiciary, instrumentality, department, or agency at any level

(national, local, municipal or otherwise); entities managed, controlled or majority owned by government

interests; public organizations or foundations of any kind (including political parties, political

organizations, or political candidates); and any public international organization, such as, but not limited

to, the International Red Cross, United Nations, or the World Bank.

The licensing for education sector is based on the Oracle CAMPUS model, with significant discounts of

more than 60%. For example, university departments that participate in the CAMPUS license will not be

charged a licensing fee, and departments will not need to procure and negotiate a license directly from

Oracle. Maintenance fee is shared across University departments. CAMPUS licenses are eligible for

Oracle rebates.

According to the 2012 Infotech survey as part of the MPN Loyalty project, partners said that they were

satisfied with Oracle incentives payment accuracy/timeliness, clarity of support availability and

resolution, and incentive dollar amounts whereas partners were less satisfied with Microsofts incentive

setup process, incentive dollar amounts, and claim submissions.

SAP

20% of SAPs revenue come from the channel.9 As of 2014 SAP has 2950 partners in North America (75

Gold, 145 Silver, 890 Bronze, 1840 Open)10. Through their PartnerEdge program for VARs, Service

Partners, Software Solution/Tech partners, and Authorized Resellers, SAP provides various support

including tools and training. For VARs SAP offers a standard discount (rates not known) on the list of

products that the VAR is authorized to sell, commensurate with the VARs program level (Bronze, Silver,

Gold). The VARs can also accure MDFs (Bronze 3%, Silver 4%, Gold 5%) as percentage of current SAP

customer license sales calculated at the beginning of the month for the previous months performance.

9 http://www.asugnews.com/article/new-and-improved-a-look-at-saps-channel-strategy 10 http://www.crn.com/partner-program-guide/ppg2014-details.htm?c=148


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Cisco

Cisco has a mature sales / marketing organization that exists in a matrix design that allows them to align

resources and expertise (particularly vertical) with client need. Programs like the Global Enterprise

Theater allow Cisco to focus deep sales, marketing, and technical expertise on a limited number of

strategic accounts where Cisco is interacting directly with the CIO. Cisco has approximately 18,000 sales

and marketing FTEs with 16,000 devoted to the core networking / DC offering and 2,000 focused on UC.

Direct / partner sales both count towards a sales persons quota. Cisco attributes 80% of its revenue to

its partner ecosystem, which is made up of over 69,000 partners worldwide (more than 13,500 certified,

plus 45,500 registered partners). Cisco reorganized its sales efforts into two global go-to-market models

(partner led and customer led) to better allocate resources across the various customer segments, and

to develop programs to support the ecosystem's diverse partner models. The partner program benefits

from a historical commitment from Cisco to partner success augmented by clear rules of engagement.

For example, Ciscos HCS UCaaS solution is essentially private labeled and only available through the

channel. Customer must leverage the channel for service delivery, which dramatically lowers the

channels concern about competing with Cisco.11

Ciscos incentive offerings to partners are similar to Microsoft in terms of diversity.

Cisco-Funded Network Assessment Program (NAP) - Offers partner with an ability to book a $200k deal

$1000-$5000 incentives for performing on-site network audits in targeted end-customer accounts over

1,000+ PCs/Servers/Nodes. This is the equivalent of Microsofts Software Asset Management.

Cisco Rewards - Cisco Rewards is open to Account Managers and Sales Engineers of Cisco Select

Certified and Registered Partners in participating countries within Emerging Markets. Points are earned

for selling eligible Cisco products and solutions and through participating in Cisco activities. Points can

be redeemed for brands, enriching experiences, travel, and other non-monetary rewards.

Opportunity Incentive Program (OIP) - Gold, Silver, Premier, MSCP and select certified partners are

rewarded for identifying, registering, and closing new business opportunities. Partners receive 8%-25%

incremental discount on global price list (minimum deal size $10,000) at the time of placing the OIP

order. Reduces Ciscos cost of sales by promoting partner independence. The account manager

automatically approves the incentive as long as the opportunity is not in the Cisco Forecast. The first

partner to register the opportunity is awarded. The rates are usually 8 points extra from partners

discounts. Normal Gold discount is 42%, so 50% total.

Teaming Incentive Program (TIP) - Rolled out in Aug 2011. Rewards Gold, Silver, Premier and select

certified partners by creating tighter alignment with Cisco Partner Account Managers and partners by

teaming early in the sales cycle to win the opportunity. Partner must complete 2 pre-sales activities and

have Partner Value Statement. The program grants 5 margin points to partners identified early in the

11 FY13 Microsoft Compete Retreat Priority Competitor Handbook by Gartner


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sales process jointly executing with Cisco on sales opportunities. Minimum deal size is $50,000 ($25,000

for first order). This provides Cisco with a partner loyalty lever, reduces cost of sales, and increases

win %. This requires proof of engagement and approval from the account manager.

Value Incentive Program (VIP) - This program is geared toward partners with focused practices on

technologies that are part of Cisco architectures such as Collaboration, Data Center and Virtualization,

Borderless Networks, or Express (SMB). Participating partners will receive a semiannual backend rebate

(rates not known) when they meet or exceed program requirements. The program is re-launched every

6 months. VIP 22 launched in Aug 2013 brings a new 90-day grace period on select SKUs so partners can

adapt to new product transitions quickly and with less impact on their payout. VIP supports partners in

developing tech within a Cisco practice and the resulting tech is a Cisco app/solution. Partners enroll to

this program and must have minimum $50k in UC or Video sales. Products are grouped into different

rates ranging from 5-20%. For UC/Video they have 16-18% kickback for the yearly revenue. The partner

must meet the customer satisfaction (CSAT) score threshold from minimum of 10-20 valid responses to

be eligible for payment. VIP reduces Ciscos R&D costs.

Not for Resale (NFR) - Allows eligible partners to purchase discounted Cisco hardware and software for

use in non-revenue-generating activities such as labs, demos, and internal course development or

training.

Technology Migration Program (TMP) - This global program gives trade-in credits to customers for most

major products offered by Cisco and for select competitive products when upgrading to a new Cisco

networking solution.

Solution Incentive Program - Ciscos solution incentive program is targeted at business solution

providers and not SIs or equipment resellers. SIP provides partners discounts when developing and

selling solutions that integrate vendor-partner business applications and services using Cisco technology.

At least one part of the solution must have advanced technologies such as voice and security, and it

must be repeatable (meaning the partner has to sell it more than once to qualify). This is a Trojan horse

for Cisco and increases Cisco participation in deals.

Partner Pre-qualification

- Cisco Gold, Silver or Premier, MSCP Certification

- Cisco specialization in relevant advanced technologies, depending on the solution

- Focused sales staff selling the solution (Minimum of 2 sales people for SMB solutions; Minimum of 5

sales people for enterprise solutions)

- Reference solution architecture that includes Cisco as the networking component

- Business plan template for selling the solution (Solution overview, GTM strategy, support model,

reference architecture)

- Forecast for Cisco hardware, software & services validated by Cisco acct team

Solution prequalification


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Solution is repeatable, must include proprietary or third-party business-relevant application, solution

expands need for network bandwidth resulting in upgrade of core networking technology and/or re-

engineers a manual business function to leverage networking technologies, solution includes all

required end-customer planning, design, implementation and operation support services for both the

network and applications components, Cisco products and services are no more than 80% of overall

solution based on net value of the total solution.

Deal requirements

Minimum $10,000 Cisco list price in SMB solutions or $100,000 in Enterprise market solutions, solution

is approved 12 months from approval date

Discounts

Up to 54% discount off list price for eligible products, up to 25% discount for eligible services, stackable

with VIP.

Cisco is also known to have a compete program targeted at Microsoft where a partner can get up to 65%

discount and access to SKUs where they can give 2 for 1 endpoints by displacing Microsoft.

Public sector deals are eligible for Opportunity Incentive, Solution Incentive, and Network Assessment

Program (SAM equivalent) but the rates remain the same. There are no incentives aimed specifically at

government customers but the company does provide General Service Administration (GSA) pricing to

federal agencies. For the academic sector, education deals are eligible for Opportunity Incentive and

Solution incentive with a similar/same rates. Ciscos solutions are eligible for E-rate discounts (between

20-90%) and schools not eligible for E-rate can leverage various financing options (payment deferral,

tax-exempt lease purchase etc.) through Cisco Capital.12

During the Cisco Partner Summit in March 2014, Cisco announced that the current 15,000 SKUs eligible

for VIP will be reduced in August to focus on hybrid IT, and activation and renewal will also be incented

through VIP. In the second half of 2014, Cisco will bring all of its deal registration programs (SIP, OIP, TIP)

12 http://www.cisco.com/web/strategy/docs/education/Education_Financing_Options.pdf


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under a single umbrella called the Cisco Deal Registration Program to make it easier for partners to

apply for incentives and be rewarded for their full value. Cisco will still provide incentives in all the same

areas in deal registration, but will now do so through a single program, and will increase margin lift for

solution selling from five points to eight points of incremental margin. Cisco will also phase out the Silver

partner tier over the next 24 months. Currently, the company has about 300 Silver partners worldwide,

and for most, the tier is a stepping stone. For partners with narrow and deep specialization, it is a step

en route to a Master specialization, and for broader partners touching more Cisco technologies, it is a

step en route to Gold partner status. Partner feedback was that the value proposition and brand

strength of Silver was not very strong.13

According to the 2012 Infotech survey as part of the MPN Loyalty project, partners were more satisfied

with Microsoft compared to Cisco in every aspect of incentives including incentive dollar amounts,

payment accuracy/timeliness, and clarity of support availability and resolution.

IBM

As of 2011 partners led about one-third of IBM's hardware sales and served as the fulfillment channel

for about 50 percent of hardware deals. The channel generated 15% of IBMs software sales.14 50% of As

of 2014, IBM has 140822 partners worldwide (3441 Premier, 4865 Advanced, 132516 member).15

According to the 2012 Infotech survey as part of the MPN Loyalty project, partners were relatively more

satisfied with Microsoft compared to IBM in all aspect of incentives except the incentive setup process.

Partners were not satisfied with the incentive dollar amounts and the claims submission for either

companies. IBM provides the following incentives to partners.

Software Value Incentive

Software Value Incentive (SVI) is an IBM initiative designed to reward Business Partners (Value Add

Resellers, Independent Software Vendors, Consultants, and Integrators) for the value that they

contribute across different phases (Identify->Sell->Fulfill) of a sale of IBM Passport Advantage

Middleware licenses. SVI allows IBM Business Partners participating in the Identify and Sell phases to

earn a fee payment (paid directly to the IBM Business Partner) for demonstrating a contribution in these

phases. These fee payments are independent of any discounts and rebates earned by Business Partners

participating in the Fulfill phase (paid through their Value Add Distributor). The first IBM Business

Partner to register an opportunity and demonstrate active engagement with a customer will be

approved to earn incentives. Incentives are contingent on the customer completing the purchase but

may be earned independently of how the transaction is fulfilled. Thus, IBM Business Partners who are

investing time to perform value-add sales activities such as proofs of concept around SWG middleware,

or who design solutions integrating IBM software, can invest their sales time with the confidence that

13 http://channelnomics.com/2014/03/27/cisco-scrap-silver-tier-next-channel-program/ 14 http://www.crn.com/news/channel-programs/232602448/ibm-raises-the-bar-for-2012-channel-sales.htm 15 http://www.crn.com/partner-program-guide/ppg2014-details.htm?c=80


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they will earn incentivesif the customer buys. They need only to register and be approved for the

opportunity, and provide proof of performance. Once IBM Business Partners are approved for Identify

and Sell phases, they can earn incentives regardless of who fulfills the purchase. This protects the time

invested in selling on behalf of IBM. Each incentive element has two components; a base fee and a

premium fee for transactions that are sold to end users that are designated by IBM as general business

(GB Accounts).

In order to be eligible, the partner must have a current software IBM Sales Certification and two current

software IBM Technical Certifications in at least one brand Product Group or in one Brand (for open

distribution products). The partner must be approved by IBM for SVI participation. Approval for SVI is

granted at the Product Group level. Product Group approval criteria for SVI will differ based on the

distribution model for the country and the product. Ability to register SVI opportunities for products in

one Product Group is independent from ability to register for products in another product group.

Business Partners are not eligible to receive fee payments for the same value-add under more than one

program.

There is a dedicated IBM channel incentives team responsible for evaluating opportunities submitted for

SVI eligibility and approving them for Identify and Sell incentives. IBM will review the registered

opportunity records to determine whether or not the opportunity is known to IBM and the Business

Partner will be notified whether or not the registered opportunity is eligible for SVI fees. This eligibility

decision is determined at the Brand Family level (ex., WebSphere App Servers, Tivoli Security Data

Services, Lotus Notes/Domino) and it is possible for brand families within an opportunity to have

different eligibility decisions. For example, if a Business Partner registers an opportunity at an end

customer which includes products in both WebSphere App Servers and Lotus Notes/Domino brand

families, but there is already a known opportunity to IBM for Lotus Notes/Domino at the same end

customer in the same country, the Business Partner may only be approved for the WebSphere App

Servers content of the opportunity.

If more than one Business Partner submits a registration for the same opportunity, the first Business

Partner to register is the one who may be eligible to earn incentives. When a Business Partner submits

an opportunity for SVI eligibility consideration, the SVI Expiration Date is set 270 calendar days

(approximately 9 months) from the date it is submitted. If the opportunity is not closed prior to the

expiration date, it becomes ineligible for SVI fees. To be approved and receive an SVI Identify and/or Sell

fee payment, the Business Partner must demonstrate active selling engagement with the customer for

the IBM products by providing supporting documentation that shows their activities that contributed to

the customers decision; and the customer must complete the acquisition of the IBM products.

Examples of supporting documentation would be a proposal for a solution, statement of work, proof of

Concept, etc. and must support the forecasted revenue in the opportunity in order to be approved.

The Business Partner must indicate when the opportunity is won and provide supporting documentation

to show their influence of the customers buying decision when they submit their SVI payment request.


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After a registered opportunity has been matched to an IBM sales order, the Business Partners sales

documentation is reviewed by IBM to determine whether or not the sales activities performed by the

Business Partner met the Sell criteria.

Once the SVI eligible lines items in the resulting IBM sales order for an eligible SVI opportunity for which

payment has been requested are determined as payable, the Identify and Sell fees are calculated for

each of these line items based on the SVI fee schedule. There are no caps on the amount of SVI fees that

can be earned for an eligible opportunity; however revenue eligible for the SVI fee payment cannot

exceed the revenue forecast as described below.

To calculate SVI fees, IBM will use an approximated Suggested Volume Price, approximated suggested

retail price or approximated special bid price, as applicable, for the Eligible Products included in the sales

order deemed as payable. IBM sets this approximated dollar amount. If the forecasted revenue for a

brand family in an eligible opportunity is greater than the actual revenue in the associated eligible sales

order line items for that brand family, the incentive will be calculated based on the actual revenue

amount (provided the actual revenue amount is greater than the minimum order threshold for the

GEO/Country) for those line items. If the forecasted revenue for a brand family in an eligible opportunity

is less than the actual revenue in the associated eligible sales order line items for that brand family, a

25% uplift will be applied to the forecasted revenue for that brand family. The SVI incentive fee

percentages will be applied to the lesser of the actual revenue in the associated eligible sales order line

items for the brand family, or the uplifted revenue amount for the brand family (provided the actual

revenue amount is greater than the minimum order threshold for the GEO/Country). Effective, July 1,

2014, IBM has limited influencer fee payments for Software Value Incentive (SVI) and SVP Solution

Incentive The new maximum influencer fee payment is $250,000 US per Business Partner, per

transaction. The new influence fee maximum payment rule applies to all influence opportunities world

wide, except as follows:

SVI opportunities submitted and approved for eligibility prior to May 12, 2014, will be honored

at the previous limit amount

SVI opportunities submitted and approved for eligibility and SVP Solution Incentive

opportunities approved after May 12, 2014 and with a sales order date prior to July 1, 2014

have a payment limit of 500,000 USD.

SVI and SVP Solution Incentives when the Business Partner fulfills the licenses continue to have no limit.

A transaction for SVI, SVP Solution Incentive or a combination of both incentives is defined as:

1. A single opportunity or multiple opportunities against the same IBM sales order submitted by

the same Business Partner.

2. A single opportunity with multiple IBM sales orders submitted by the Business Partner.

This change will assist IBM to rebalance its available incentive budgets and funding to focus partner

incentives and rewards on the Enterprise Non-Select and Mid Market end-user customers where the

opportunity for growth is greatest for the foreseeable future.

Identify (Fee Payment) Sell (Fee Payment)


15

Base (Enterprise/GB end user) 5% 5%

Premium for GB end user +5% +5%

The IBM Renewal Value Incentive (RVI) is an incentive on the sale of IBM Software Subscription and

Support for IBM Business Partners who continue to provide value add to customers to whom they sold

the new software license and received a value incentive through IBM Software Value Incentive, IBM

Value Advantage Plus, IBM Value Advantage Plus for Government or IBM Solution Software Value

Incentive.

The Up to Double (2X) SVI Competitive Incentive is designed to reward Business Partners who displace

specific competitive software with eligible IBM software products (as defined by IBM part number). The

competitive replacement opportunity must be submitted for SVI, and must meet all standard SVI

requirements. Business Partners must provide supplementary sales documentation which shows clear

communication with the end user regarding the competitive replacement. To receive the full doubled

amount of fee payment, Business Partners must provide a commitment from the customer to be a

reference.

Solution Accelerator Incentive

The Solution Accelerator Incentive rewards the simultaneous resale by a single IBM Business Partners of

eligible IBM servers and/or storage with eligible IBM software products (minimum $20,000 revenue).

This incentive has a base reward and a solution bonus reward (Additional channel reward for selling

predefined solutions of hardware and software. Additional reward only applies to the eligible software

content of the solution). Exact rates not known. Partners can also earn a 5% rebate by including optional

IBM Technical Support Services that are eligible for the Solution Accelerator Incentive.

Value Advantage Plus

Value Advantage Plus is an IBM initiative designed to financially reward Business Partners who deliver

solutions through applications and/or services. At least 30% of partners revenue must be value add

components. If these solutions are built around or designed to operate on IBM Software, they may be

approved and qualify for financial incentives for the specific IBM software when it is sold by the Business

Partner as part of their solution. Business Partners are not eligible to receive both Value Advantage Plus

rewards and the SVI Sell incentive fee for the same product sale. They can be eligible for Value

Advantage Plus rewards and the SVI Identify incentive fee if they meet the SVI eligibility submission

rules for Identify and Sell and are approve for SVI fee payments. The Value Advantage Plus incentive is

delivered through rebates paid to the Business Partners Preferred Distributor while eligible SVI

Opportunity Identification fees are paid directly to the Business Partner by IBM. Partner that fulfils with

a Value Advantage Plus solution in GB Enterprise receives 28% rebate (VAP 15% + Fulfillment discount

13%) while a solution in GM MidMarket receieves 40% rebate (20%+20%)

Public Sector


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Government deals are not eligible for the Software Value Incentive, but are eligible for Value

Advantage Plus for Government rebate when selling pre-approved solutions with at least 20% in value

add.16 The rebates are only for fulfilled orders and are received from the VAD. Partners can get up to

20% rebate for General Business (GB) customers and compliance reviews are held after purchase. A

proof of the partners influencing activities are required. For Education, the IBM Academic Initiative is a

no-charge program providing educators with the training materials, curriculum guides, software and

hardware needed to teach in-demand business and technology skills. Faculty members, research

professionals at accredited institutions, and IBM employees whose work supports the Academic

Initiative can join. Membership is granted on an individual basis. There is no limit on the number of

members from an institution that can join. IBM offers discounted lease and purchase options to

educational institutions whose faculty are Academic Initiative members. Members can also download

some IBM software at no charge.17

Rackspace As of 2014, Rackspace has 3000 partners in North America (500 Referral Program, 300 Reseller

Program, 50 Strategic Program, 200 Digital Program, 50 VC Program, 220 Cloud Affiliate Program).18

Referral Program

When partner refers Rackspaces dedicated bare metal, Rackspace Private Cloud (RPC), public cloud,

and email hosting to their customers and prospects, Rackspace pays the partner the commission in a

single payment, reflecting the average monthly recurring revenue of the lead the partner passed to

Rackspace.

Product Minimum

spend

Term

(months) Commission payout

Dedicated

Servers

and/or

Rackspace

Private

Cloud*

No

minimum

12 1x Average

Monthly

Recurring

Revenue

(MRR) of the

first 3 full

months paid

invoice

24 1.5x

36 2x

Cloud

and/or

Email

$50 None 1x

16 https://www.ibm.com/developerworks/community/blogs/5b3fcdff-c109-435b-bb73-e6a34fa4b66f/resource/MYR_06-2011/MYRSWGSalesIncentivePrograms_May2011-Vrabel.pdf?lang=en 17 https://www-03.ibm.com/ibm/university/academic/pub/page/pow_lease 18 http://www.crn.com/partner-program-guide/ppg2014-details.htm?c=136


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* Rackspace Private Cloud Service Orders for recurring monthly support services during a specified

minimum term only.

Cloud Affiliate Program

Partner uses web banners and links in their website to refer cloud business to Rackspace and earns the

following commission.

Partner refers: Partner earns:

$150 $50

paid invoices per referred

customer within a continuous

12-month period

per referred cloud

account

Reseller discounts are as follows. Reseller also receives marketing support from Rackspace depending on

level.

Level Revenue attainment Discount

Associate $1,000 - $4,999 5%

Preferred $5,000 - $14,999 10%

Premier $15,000 + 15%

Requirements: Have at least 2 Rackspace-trained non-technical staff, Provide first-level support to your

customers before leveraging Fanatical Support, provide billing and accounting support to your

customers, complete deal registration.

SAAS program

Discount to partner for their dedicated hosting (up to 15%) and cloud hosting ($1500 cloud credit for

first 12 months of account ownership) needs.

Strategic Partner Program

Partners program tier is based on the points that they accrue through referring or reselling Rackspaces

full suite of hosted solutions. Below is a breakdown of the points / opportunities required for each tier

level, as well as the compensation percentage associated with it, for each product set.

Dedicated Hosting 0.70 = 1 point

Cloud Hosting 0.70 = 2 points

Email Hosting 0.70 = 5 points

Member Silver Gold Platinum

Points Required and

Opportunities Closed

500 points or

1 opportunity*

2500 points or 2

opportunities*

30,000 points and

2+ opportunities*

75,000 points

and 2+

opportunities*


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Dedicated and Cloud Hosting

(Reseller and Referral) 5% 10% 12% 15%

Rackspace Email and Hosted

Microsoft Exchange (Referral

only)

5% 10% 12% 15%

Rackspace Email (Reseller only) 66% 68% 70% 72%

Hosted Microsoft Exchange and

SharePoint (Email Reseller

only)

20% 20% 20% 20%

By mixing-and-matching multiple compute platforms the partner can accelerate their tier level and

increase their Program earnings. Below is an example scenario of a partner providing multiple solutions,

which demonstrates which tier level they would fall in.

Points Earned Points Earned

Partner refers 1 Managed Hosting deal for

1750 MRR (1750 / 0.70) x1 2,500

Partner then refers 1 Cloud deal for 500 (500 / 0.70) x2 1,429

Partner refers an Email deal for 250 (250 / 0.70) x5 1,786

Total Points 5,714 -> Silver Tier

Rackspace announced through their blog in September 2014 that they are introducing a Master

Agent/Agent Program, a program through which a new segment of partners can offer Rackspace

Managed Cloud and Fanatical Support to their end customers. Through this new partner program,

Rackspace will provide the highest level of support to ensure that an agents clients enjoy a smooth

cloud implementation and support experience, which ultimately will enable agents to focus on building

their business and engaging with clients. Partners that join the Master Agent/Agent Program will have

the opportunity to leverage market competitive compensation, pre- and post-sale resources, and

training and sales enablement.

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