Why the new Red Hat APP program is not in Canada, yet

LAS VEGAS – Yesterday CDN published a news story on the new Red Hat Application Platform Partner (APP) Initiative – code named “Franchise”. This new program is as innovative as it gets in terms of channel programs. So, you might be wondering why it’s not available today in Canada.

There are a lot of good reasons why it’s not available in Canada right now and I will get into those later on in this blog.

What made this story strange in a way is that there is no definitive date set for when the Ret Hat APP program will enter the Canadian market. This is an unusual occurrence because most if not all channel programs developed in the U.S. are either released the same day in Canada or in the next quarter. And, most within a calendar year. There might be some tweaks or augmentation for the Canadian market but it always arrives quickly.

Red Hat Canada president Luc Villeneuve told CDN the APP program will not be in Canada mainly because the business in Canada is too small and to encourage channel partners to bring in more resources for the APP wouldn’t be the right thing to do. These resources would cost a Canadian channel partner millions of dollars and the program requires they also commit to net new customer goals.

Villeneuve told me the market in Canada is not yet mature enough for APP. I would tend to agree with Villeneuve’s assessment here. Now, I will admit my bias here. I believe Canadian solution providers can handle anything that comes there way.

But after talking to Red Hat channel chiefs Mark Enzweiler (Global) and D. Robert Martin (North America) I’m now convinced the path they are taking with APP is solid because the focus is on large scale digital transformation. So, who can really handle these types of deployments in that full end-to-product lifecycle approach, Red Hat wants? The two that come to my mind are Worldwide Technology Group of St. Louis and Presidio of New York. Are there Canadian solution providers in their class? Yes, but not to their scale.

(Make sure to read my one quick hit below because it relates to Worldwide Technology Group.)

Which goes back to Villeneuve’s point. Villeneuve went on to say in two or three years Red Hat partners in Canada would be ready to take on APP.

And, both Enzweiler and Martin added that APP will eventually arrive in Canada. So, this is a question of “when” and not “if”.

What Enzweiler and Martin are conceiving here with APP is quite interesting. Now both Enzweiler and Martin have more than 60 years of combined channel experience and are not making decisions in a vacuum.

The APP program is focused on a core set of partners; approximately 12. I’ve also heard 15. This is not necessarily a pilot program even though it’s with a limited number of channel partners. These partners have been invited to participate. Enzweiler said these partners have been screened and are the most capable from a technology point of view and from a scale out perspective.

He also pointed out that this is just Phase 1 of many Phases for APP.

“This is going to be a different way in how we work with partners. We want the best of the best. You can call it a pilot, but we are calling it an initiative and the intent is to roll this out to more partners and to more geos,” Enzweiler said.

Another way to look at APP is if it were an incubator. Enzweiler firmly believes there are some businesses that are worth incubating first before it goes out to hundreds of partners. There are some risks such as the first 12 will gain first mover advantage over others who join the program later on.

“We are going for partners who can go deep and wide with digital transformation. We can go end-to-end and we’ll make the investment in this because we are growing a lot of these categories faster than the competition. Now is the time to capture this opportunity and we are doing it (initially) with a very select group of partners,” he added.

Martin supported Enzweiler comments by saying these select partners can address the market and have made their own investment toward digital transformation and open source. “This is good because they believe in you and your strategy. We have seen how successful these partners are and we are hitching a ride to their bandwagon,” he said.

There are other elements playing a role here too such as the lucrative Internet of Things market and Enzweiler believes middleware from Red Hat can be the main driver of IoT. But there is also a philosophical point he wants to make with APP. The global partner network for Red Hat has not grown significantly for the past six years and the reason for that is he would rather help make loyal Red Hat partners more profitable then spread the wealth out to other solution providers by increasing the number of partners worldwide.

Another aspect of the APP program is with direct market resellers such as CDW, Insight, SHI, Softchoice, Zones and others. They too will eventually play a role in APP. Both Enzweiler and Martin understand that digital transformation may be a big leap for this group but they can participate as an agent to other solution providers and be paid for passing along the new opportunity.

Also, don’t look for a lot of incentive margin in APP. Enzweiler was quite clear on this saying while the investment by Red Hat is meaningful it’s not exactly meant to be used to supplement margin for a partner.

“The margins are already quite good to start with. Its services based and can become a true multiplier. It is not our intent to make this program ridiculously profitable. We do want loyalty and we will help them build their business. But we want them to invest a little bit beyond the demand. We are not using money to augment margins. You can’t pay enough rebates on a bad business model,” he said.

One quick hit before I go. Corey Tkachuk will be the first ever Canadian executive for super solution provider Worldwide Technology Group of St. Louis. Tkachuk was previously with Cisco Canada.

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Jim Love, Chief Content Officer, IT World Canada

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