Veeam Channel Chief: Shift from Perpetual Licenses to Subscriptions Going Strong

Veeam channel chief Kevin Rooney isn’t surprised that customers increasingly are shifting from perpetual software licenses to subscriptions. But the transition is happening at a more rapid pace than he anticipated.

With its entire backup and disaster recovery solutions sold through the channel, Veeam has approximately 9,000 active partners in North America, according to Rooney. About half – 4,000 – are Veeam cloud service providers (VCSPs), added Matt Kalmenson, Veeam’s sales VP. During this week’s VeeamON virtual conference, Rooney and Kalmenson discussed with Channel Futures how partners are adapting to latest trends.

Annual recurring revenue grew 25% year-over-year in the first quarter, closely held Veeam said this month in its quarterly update. A key catalyst of the company’s growth is Veeam Backup for Office 365, which grew 156% for the quarter year-over year. Veeam now counts 6 million subscriptions among 175,000 customers, making it the company’s fastest growing offering.

We sat down with Rooney and Kalmenson for a close look at subscription services and more.

Channel Futures: At what pace are you seeing your traditional resellers move to subscription services?

Veeam’s Kevin Rooney

Kevin Rooney: We’re seeing more and more true hybrid partners. It was very distinct in the beginning. Either you were a full-blown service provider, or you were a traditional reseller that partnered with one of these guys. That is still happening more often than not. But now we are seeing partners doing both.

Matt Kalmenson: We are now able to go out to market however the customer wants to consume; that’s their option. And that goes not only with our partner program, but also with our Veeam universal licensing [VUL] mechanism, which gives mobility to where you want to use your license, whether it’s on premises or in the cloud, it allows you to move workloads back and forth and such.

CF: Is the universal licensing option driving more customers to opt for subscriptions versus perpetual licenses?

Veeam’s Matt Kalmenson

MK: We have our traditional sales organization, where customers can use our backup or DR capabilities along with our other technologies. But they don’t want to own that license; they just want a full one-stop shop. They typically go to one of our service providers. While they don’t pay for the license, they pay for their networking fees, their consumption, their storage fees, bundled into one price coming from the service provider.

CF: What kind of shift are you seeing among customers moving from perpetual licenses to subscriptions?

KR: We’ve seen a huge shift in the last two years, going away from our perpetual licenses and moving to our subscription licenses. That’s probably not a big surprise in general. But the speed at which it’s happened has been a bit of a surprise.

CF: How fast is it shifting now?

KR: North of 50% of the business transacted in North America is via subscription. One of the things that we had to make sure of is that we had the right support for our partners, helping to transition that business to subscription since that’s where the customers were taking us. We had a heavy focus when we launched our new program in 2021 to make sure that it was …