‘Red Hat is really doubling down on our commitment to the ecosystem,’ Red Hat VP Kevin Kennedy tells CRN.

Amid a boost in business opportunities in artificial intelligence and migration from legacy virtualization vendors, Red Hat is transforming its partner program to standardization worldwide, streamlined incentives and a better digital experience.

Kevin Kennedy, vice president of the Raleigh, N.C.-based open source tools vendor’s North America ecosystem, told CRN in an interview that the vendor has been investing in the program for years now, but the latest wave of updates are “really sticking a stake in the ground.”

“Red Hat is really doubling down on our commitment to the ecosystem,” Kennedy said. “This is step one in an iterative process and laying the building blocks for how we’re going to even further develop the ecosystem and our relationship with them going forward.”

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Red Hat Partner Program Updates

About 80 percent of Red Hat’s overall sales come through indirect channel and alliance relationships, according to CRN’s 2024 Channel Chiefs.

This wave of partner program changes includes a modular design that gives partners points for specific activities aligned with their business goals. The points lead to additional benefits, support and enhanced opportunities aligned with level of engagement.

The first three modules are resell, distribution and “sell with.” Red Hat has also sought to simplify the market development fund (MDF) tools process based on module activities.

Partners can pick one or multiple modules, according to Red Hat. The vendor expects to open more modules this year and beyond based on partner activities in building, selling and servicing – not to mention deepening incentives and benefits throughout 2024.

Kennedy said Red Hat has been investing in incentive packages based on partner type, including one that makes sense for system integrators (SIs) and a separate one for resellers.

As part of the changes, Red Hat is standardizing deal registration for partners worldwide. The goal is for partners with international business to have the same experience with the program in North America, Asia Pacific and elsewhere, Kennedy said. The programs will still accommodate geography-specific regulations and currencies.

For the new digital experience, Red Hat has updated Partner Connect with a new interface to guide partners through module activities. The enhanced portal should give partners more visibility to deal registration and business opportunities, according to the vendor.

Kennedy said the goal is more autonomous selling for partners, allowing for more room for special bids, configurations and quotes – “let’s get out of the way and let them do their thing and we’re going to win that scenario anyway.”

Opportunities In AI, Cloud

Kennedy said that the investment in partners by Red Hat has been spurred by a technology landscape getting more and more complex.

“No one entity can help provide everything that a customer needs,” he said.

Red Hat and its partners see plenty of growth opportunities as enterprises adopt AI, but partners are needed to help customers plan out how to adopt AI and develop the roadmap.

Red Hat has also been among the vendors to see opportunities rise in customer frustration with VMware’s new pricing strategy. During Red Hat Summit earlier this year, Red Hat CEO Matt Hicks told CRN that he has fielded customer conversations around VMware vSphere migrations, though he stressed that Red Hat will continue to run products on vSphere.

Red Hat has seen customer interest in virtualization growing due to an extra security layer, and then adding the benefits of distributed computing and containers to virtual machines (VMs) on Red Hat OpenShift has been a compelling selling point for customers, Hicks said at the time.

During IBM’s most recent quarterly earnings call earlier this month, CEO Arvind Krishna said that the vendor is looking into more AI capabilities in Red Hat and other parts of its portfolio, including transaction processing and hardware.

IBM executives reported that during the quarter, Red Hat grew 8 percent year over year, annual bookings growth accelerated to more than 20 percent, OpenShift annual bookings were up 40-plus percent and Red Hat Enterprise Linux (RHEL) and Ansible saw double-digit growth.

During the call, IBM executives called out inflation and global geopolitics as factors weighing in on weaker results in its consulting arm. But Kennedy said that customer spending conservatism has been an opportunity for Red Hat “because we can show them ways to to gain efficiencies by leveraging our technology in their environment.”

“We continue to see good growth quarter over quarter, year over year, because we’re not asking somebody to build it and they will come,” he said. “We’re saying, ‘We’re going to help you be better at what you’re already doing and prepare you for where you’re going.’”

Red Hat has been investing more in partner training and enablement across the portfolio and grown closer with distributor partners to help with partner enablement, said Kennedy, who came to Red Hat in 2022 after about five years with distribution giant TD Synnex and its predecessor Tech Data.

Distributors should help Red Hat grow its presence with partners who sell to small and midsize customers, he said. “They are exposing us to partners that we haven’t even traditionally done business with and customers where – maybe we look at them as a commercial customer, but yet they’re a fortune 500 customer that partners have sold into for decades,” he said.

Another growth area is modernized virtualization, leaving legacy data centers for more edge-friendly environments and automation with Red Hat subsidiary Ansible, Kennedy said.

“We’ve got the technology that supports all that,” Kennedy said. “But we don’t always have the mindshare of the customer, which is again where it comes back to the ecosystem.”

When it comes to verticals, Red Hat has always had a strong presence in telecommunications and has been growing in financial services, Kennedy said.

Kennedy said Red Hat’s recently launched practice accelerator has also been a resource for partners, rewarding them for demonstrated proficiencies and removing conflicts from the commercial business “so that we’re not going to go step on your toes with Red Hat Consulting, we’re going to let you go do what you do best and what matters the most to your company’s growth.”

And although Kennedy said it’s still early days on the recently closed IBM acquisitions of Apptio, webMethods and StreamSets plus the pending purchase of HashiCorp, Red Hat partners might see opportunities from those companies.

On the most recent IBM earnings call, CEO Krishna said that Red Hat Ansible working with HashiCorp Terraform “will simplify provisioning and configuration of applications across hybrid cloud environments.”

Red Hat and IBM have been working more closely with each other and that opportunities exist for Red Hat partners to sell IBM’s Watsonx AI portfolio.

“There’s a whole lot more communication and collaboration taking place between our Red Hat sellers and IBM sellers than ever before,” he said. “And that benefits the partners because, clearly, we have partners that have been long standing IBM partners especially in the resale and distribution environment where maybe they’re a little newer to us. And we can leverage that extensive relationship they’ve been doing with IBM and plug into that and go.”