During Splunk's Q1 2017 earnings call yesterday, CEO Doug Merritt said the software company will increasingly lean on channel partners and big integrators like Accenture and Booz Allen Hamilton to drive momentum.
Overall, Splunk's business is growing fast. That company positions itself as a software company that delivers real-time operational excellence. But in basic terms, customers and partners adopt Splunk for log analysis and analytics, among other use cases. For the company's Q1 2017 (which ended on April 30, 2016):
- Total revenues were $186.0 million, up 48% year-over-year.
- License revenues were $101.0 million, up 41% year-over-year.
Splunk also forecast continued momentum. But Wall Street investors can be a fickle bunch; shares actually are down about 2.4 percent as of 10:45 a.m. ET today. Why? Because investors want even faster growth. That's where channel partners and strategic alliances may help.
Partners Explore Splunk Integrations
On the strategic alliance front, Splunk spent considerable time a Cisco Partner Summit earlier this year, describing how the two companies are working together. Partners are also integrating Splunk's offerings with Palo Alto Networks and ServiceNow, Merritt said during yesterday's earnings call.
"There are more and more go-to-market initiatives -- especially within our channel and partner group -- where for them to add the value, they think through how do I combine Splunk with Palo Alto," said Merritt. "Others are wondering how they can combine Splunk with ServiceNow, or with other offerings to make sure that they can drive a value added package into the consumer base."
Splunk signed up about 450 new customers during the quarter. When a Wall Street analyst asked how Splunk plans to grow that figure, the company again pointed back to the channel.
"We have great success with our installed customers," said CFO David Conte. "But having the appropriate amount of resources both in our direct field coverage model as well as that channel ecosystem -- those are really important investments that we need to continue to focus on. Then you will see that next tier in the step ladder in terms of total customer acquisition."
Splunk Engages Systems Integrators: Accenture, Booz
Toward that end, Splunk is starting to work with integrators like Accenture, and Booz Allen Hamilton. Those relationships have been "key initiatives at partner group," Merritt said. "There is a real practice they can develop around Splunk. We might be easier to install initially configure than some of the more complex ERP packages but it’s a very strategic offering and they could actually build a lot of their critical initiatives around Splunk that are the high value, high margin initiatives."
The recent Accenture relationship is "a good positive boost." Merritt added. A case in point: Accenture leveraged Splunk's technology in a Hawaiian Telecom, he noted.
As the Internet of Things market continues to accelerate, Splunk will "lean heavily" towards partnering with companies that have domain expertise in specific vertical markets and geographies.
Still, Splunk faces plenty of competition from alternatives like Elastic, Graylog2, Tableau and Scalyr, among other options.
