September 2012 Feature

Making Your Way Out of the Forest of Metrics – A Discussion with Ko Mistry from VMware

by Anna Johnson

In a world where channel programs and partner sales are quantified, dissected, distilled, sliced, diced, and fried up in a pan, vendors are inundated with so many details that it’s no wonder heads spin in confusion. Vendors are so busy collecting volumes of metrics that they aren’t able to see the general health of the channel.

These vendors will find the remedy by implementing key performance indicators (KPIs) that measure progress toward organizational goals. However, making the leap from collecting individual program and sales data to rolling it up into KPIs is one of the hardest evolutionary challenges for vendors to overcome. VMware (NYSE:VMW), the global leader in virtualization and cloud infrastructure, has made this evolutionary leap. Channel Management Insights was fortunate to speak with Ko Mistry, senior director of partner investments and operations at VMware, who shared his insights about KPIs and metrics with us.

Sept ImageQ: Do you differentiate between key performance indicators (KPIs) and metrics or do you use them interchangeably?

I use the two terms differently. KPIs let us know if we’re on the right path and if we’re achieving our goals. They are a meld of different metrics that help determine if things are working the way we intended them to work. A metric is just a statistic, like how many partners achieve their target in a rebate program as opposed to a KPI that shows how many partners we need to achieve their target in order for us to achieve our total sales quota.

Q: Which KPIs do you consider essential for managing partners, and the programs under their umbrella, to track today?

That’s a tough one – they vary by program. To determine the overall health of the channel we look at a three KPIs. We’ve attempted to keep it simple to resonate throughout the organization:

KPI #1 is the number of transacting partners – this helps us determine if we have enough ecosystem partners consistently engaged in the business to help accelerate and grow with us to achieve our coverage goals.

KPI #2 is the average number of transactions that partners are conducting. This KPI helps us monitor partners’ productivity efforts as we invest in demand generation and enablement programs.

KPI #3 is the average solution/sales price. This KPI is especially interesting because we’re looking at the anatomy of what and how our partners sell our diverse portfolio of offerings. Are deal sizes increasing or decreasing based on the solutions partners are selling? VMware responds by putting programs into place that enable partners to “move up the stack.”

The reason why we look at all three of these KPIs together is so we can see trends over time. You can measure channel health based on current growth rates – and how the channel is trending toward achieving the overall goals. At VMware, determining what influences these three KPIs helps us determine which investments to make – whether it’s training, rewards, or investment dollars. Every dollar we spend on an event, training, or rebate program influences partner productivity.

Q: How long have you been with VMware and how have you seen the KPIs evolve, both at the company and in the industry in general?

I’ve been at VMware for four years and in that time I’ve noticed that everybody goes through similar cycles. You start by measuring the basics, but it doesn’t take long for the data to become so complex that it gets diluted and re-focused on individual initiatives. Suddenly there’s no view back to the broader picture. Eventually, you realize that you’re buried in the details and so you go back to focusing on what really matters – sales performance. And that’s what VMware has done. We’ve gone through the phase of looking at a lot of metrics and combining them in order to get a basic bird’s eye view of our overall channel health. The three KPIs are essentially what we call our channel health metrics.

Currently, we’re taking these three KPIs and layering them across the different segments of the business. For example, if you want to learn more about emerging markets, you take a slice of their data and filter the KPIs based on the emerging market lens by product solution and partner type. Looking at a single set of data, sliced and filtered in different ways, ensures that all activities are aligned with the KPIs.

Q: What metrics are important to your team in order to make the decisions that drive improvements in your channel programs?

We compare the investments we make on different activities by different geographies. Next we look at the percentage of dollars that were used in demand generation in contrast to training and/or sales incentives. We determine how much was spent in one territory as opposed to another territory and who achieved their goals and who did not. And then we build on some best practices and share them across territories.

For rebate programs, the ultimate goal for KPIs is to determine how closely partners get to the pin. Setting a target too low so that the partner blows their number out of the water is almost as bad as setting a target so high that there’s no chance of a partner achieving it or seeing any value in the program.

For partner registration programs, we measure the participation, deal anatomy, customer growth due to the value-added partner engagement, and related partner behavior against program conditions (for example: expirations, deals size requirements, and so on).

Q: What sort of data would you like to capture but are currently unable to?

The challenge the whole industry is struggling with right now is measuring partner influence. How many partners influence an opportunity and how to get visibility into those partners is a major challenge. When your product is vastly distributed, you run into situations where you have partners who don’t necessarily want to resell your products but are still a direct link into your company because of their influence over the opportunity. That’s a big black hole that we’re spending some time and effort to address by implementing various field tracking mechanisms.

Q: How often do you look at your KPIs and who do you share them with?

We review them quarterly and share the KPIs with peers, channel sales and marketing management, and executive management.

Q: Do you share KPIs with partners?

So, we don’t share corporate KPIs, but we do share trending information and metrics specific to that individual partner and its territory. Trending information and individual metrics are especially useful when doing quarterly business reviews. The information we share helps to ensure our partners’ goals are aligned with ours.

Conclusion

Using KPIs to define and measure progress toward organizational goals helps team members make long-term and short-term investment decisions  to support the business. The ability to see the relationship between metrics and KPIs and how they effect one another helps both vendors and partners align their objectives in order to meet shared goals. Predictable and reliable data, as well as good planning, is the fuel that organizations need to make the leap from living in the details to creating KPIs that measure the overall health of the organization.