Red Hat Partner Program Updates Include Incentives and New Digital Experience

“Red Hat is really doubling down on its commitment to the ecosystem,” Red Hat Vice President Kevin Kennedy told CRN.

As business opportunities in AI grow and virtualization solutions migrate away from legacy vendors, Red Hat is transforming its partner program to provide global standardization, simplify incentives, and deliver better digital experiences.

Kevin Kennedy, vice president of the North American ecosystem for the Raleigh, North Carolina-based open source tools vendor, told CRN that the vendor has been investing in the program for years, but the latest wave of updates “really drives a stake into the ground.”

“Red Hat is really doubling down on our commitment to the ecosystem,” Kennedy said. “This is the first step in an iterative process and laying the groundwork for how we continue to evolve the ecosystem and our relationship with it in the future.”

(RELATED: Red Hat CEO Hicks: Open Source ‘at the Center’ of AI Innovation)

Red Hat Partner Program Updates

According to CRN’s Channel Chiefs 2024 report, approximately 80 percent of Red Hat’s total sales come from indirect channels and partner relationships.

This wave of changes to the Partner Program includes a modular design that rewards partners with points for specific actions aligned with their business goals. Points lead to additional benefits, support, and enhanced capabilities aligned with their level of engagement.

The first three modules are Resell, Distribute, and “Sell From.” Red Hat also sought to simplify the Market Development Fund (MDF) tooling process based on module activities.

Partners can choose one or multiple modules, according to Red Hat. The vendor expects to open more modules this year and beyond, based on partner build, sales, and service efforts—not to mention deepening incentives and benefits throughout 2024.

Kennedy said Red Hat is investing in incentive packages based on partner type, including packages that benefit systems integrators (SIs) and separate packages for resellers.

As part of the changes, Red Hat is standardizing deal registration for partners worldwide. The goal is for partners doing business internationally to have the same experience with the program in North America, Asia Pacific and elsewhere, Kennedy said. The programs will continue to take into account region-specific regulations and currencies.

To deliver a new digital experience, Red Hat has updated Partner Connect with a new interface that will guide partners through the module’s activities. The improved portal should give partners greater visibility into deal registration and business opportunities, according to the vendor.

Kennedy said the goal is for partners to sell more autonomously, with more room for special offers, configurations and pricing – “let’s just step back and let them do their thing and we’ll still win that scenario.”

Opportunities in AI, Cloud

Kennedy said Red Hat’s investment in partners comes as the technology environment becomes increasingly complex.

“No company can provide a customer with everything they need,” he said.

Red Hat and its partners see many opportunities as AI is adopted across enterprises, but they need partners to help customers plan how to implement AI and develop a roadmap.

Red Hat was also among the vendors that saw an increase in opportunity as customers became frustrated with VMware’s new pricing strategy. At Red Hat Summit earlier this year, Red Hat CEO Matt Hicks told CRN that he was in talks with customers about migrating VMware vSphere, though he emphasized that Red Hat would continue to run products on vSphere.

“Red Hat recognized that customer interest in virtualization was growing due to the added layer of security, and adding the benefits of distributed computing and containers to virtual machines (VMs) on the Red Hat OpenShift platform proved to be a compelling selling point for customers,” Hicks said at the time.

During IBM’s latest quarterly earnings conference call earlier this month, CEO Arvind Krishna said the vendor is considering bringing more AI capabilities to Red Hat and other parts of its portfolio, including transaction processing and hardware.

IBM executives said that during the quarter, Red Hat saw 8 percent year-over-year growth, year-over-year booking growth accelerated to more than 20 percent, year-over-year growth in OpenShift bookings increased by more than 40 percent, and Red Hat Enterprise Linux (RHEL) and Ansible saw double-digit growth.

On the call, IBM executives cited inflation and global geopolitics as factors contributing to the consulting arm’s weaker performance. But Kennedy said the conservatism in client spending was an opportunity for Red Hat “because we can show them ways to be more efficient by using our technology in their environment.”

“We continue to see good growth quarter after quarter, year after year, because we’re not asking someone to build it and they’re coming,” he said. “We’re saying, ‘We’re going to help you get better at what you’re doing and prepare you for where you’re going.’”

Red Hat is investing more in training and supporting partners across its portfolio and forging closer relationships with distributors to help them in this process, said Kennedy, who joined Red Hat in 2022 after about five years at distribution giant TD Synnex and its predecessor Tech Data.

Distributors should help Red Hat grow its presence with partners that sell to small and midsize customers, he said. “They expose us to partners we haven’t traditionally done business with, and customers where—we might think of them as commercial customers, but they’re still Fortune 500 customers that partners have sold to for decades,” he said.

Another growth area is modernized virtualization, the shift away from traditional data centers toward more edge-friendly environments, and automation using Ansible, a Red Hat subsidiary, Kennedy said.

“We have the technology to support all of that,” Kennedy said. “But we don’t always have a stake in the customer’s mind, and that comes back to the ecosystem.”

In terms of verticals, Red Hat has always had a strong presence in telecommunications and has grown in financial services, Kennedy said.

Kennedy said Red Hat’s recently launched internship accelerator has also become a resource for partners, rewarding them for demonstrated competencies and eliminating commercial conflicts, “so we’re not going to step on your toes with Red Hat Consulting, we’re going to let you do what you do best and what makes the most difference to growing your business.”

And while Kennedy said it’s still too early to look at IBM’s recently completed acquisitions of Apptio, webMethods, and StreamSets, as well as its expected purchase of HashiCorp, Red Hat partners could see growth opportunities in those companies.

During IBM’s recent earnings conference call, CEO Krishna said Red Hat Ansible, in partnership with HashiCorp Terraform, will “simplify application delivery and configuration across hybrid cloud environments.”

Red Hat and IBM are working increasingly closely together, with Red Hat partners having the opportunity to resell IBM’s Watsonx AI portfolio.

“There’s a lot more communication and collaboration between our Red Hat resellers and our IBM resellers than ever before,” he said. “And that benefits the partners because, of course, we have partners who are long-time IBM partners, especially in the resale and distribution environment, where they may be a little new to us. And we can leverage that deep relationship that they’ve built with IBM and plug into it and operate.”