New Relic President Bill Staples will succeed founder Lew Cirne as CEO, effective July 1, 2021, the IT monitoring, cloud performance management and observability software provider disclosed. At that time, Cirne will shift to executive chairman of the board.
New Relic's overall business appears to be strong, and Cirne is widely credited for building a next-generation "observability" software business. Still, the company needs to improve its partner program efforts, particularly on the MSP front, Staples conceded during New Relic's earnings call on May 13, 2021.
Indeed, New Relic's MSP engagements have been "lagging" compared to direct sales efforts in recent months, Staples conceded. Among the key priorities: New Relic plans to improve self-service tools for MSPs, Staples said.
In theory, those tools will make it easier for MSPs and channel partners to consume and/or sell application performance monitoring (APM), infrastructure, cloud, mobile and other types of monitoring tools that improve customer experiences.
Also, CFO Mark Sachleben sees opportunities to improve channel performance -- particularly in EMEA (Europe, Middle East and Africa) and APJ (Asia Pacific and Japan).
New Relic Business Focus, Performance
New Relic typically competes vs. Cisco AppDynamics, Datadog, Dynatrace and SolarWinds, among other rivals. Cisco and Datadog aggressively embrace MSPs. And SolarWinds operates a pure MSP software division, called N-able, which is set to spin off as a standalone company in the first half of 2021.
The New Relic CEO transition arrives after the software company overhauled its sales and pricing models. That business model transition is beginning to pay dividends. For New Relic's Q4 of fiscal 2021:
- Revenue was $173 million, up 8 percent from $160 million in Q4 of fiscal 2020.
- The net loss was $58.9 million, far larger than a $28.5 million net loss in Q4 of fiscal 2020.
Despite the large net loss, the financial results, announced May 13, 2021, generally beat Wall Street's expectations.
New Relic Partner Strategy: Silence, Until Wall Street Asks Questions
New Relic's direct sales team has aggressively adopted the company's relatively new sales and business initiatives. However, the company's partner engagements with MSPs and systems integrators need more work.
Alas, New Relic didn't appear to mention the partner strategy in lengthy prepared statements on the earnings call. The subject emerged only after Wall Street analysts raised questions about New Relic's channel partner and MSP engagement efforts.
In response, Staples said New Relic's MSP engagements have been "lagging" compared to the direct sales team's progress. Moreover, New Relic's self-service tools for MSPs "have not been fully available," Staples also conceded.
Still, New Relic's commitment to MSPs remains intact. "It's an important area of investment for us that we’re prioritizing for this fiscal year. We expect to help us to accelerate growth in the quarters ahead," Staples said.
Asked about New Relic's channel partner strategy for the new consumption-based sales model, CFO Mark Sachleben said:
"When we think about channel partners, obviously, the opportunity in it for them has to be equally compelling as it is for our customers. And so, we’ve been working through the arrangement in how they are able to both price and sell the consumption model as well as benefit from it. We're also working on a product road map that can support that from a self-service experience perspective, so that they can onboard customers and support the customer as well. I think the opportunity is there, especially in EMEA and APJ. Demand for the partner channel is increasingly clear. And as I’ve mentioned earlier, we’re going to be investing there in FY22 to expand that channel and support those partners."
New Relic MSP Strategy: Earlier Perspectives
Founder Lew Cirne, meanwhile, is highly regarded as an entrepreneur and software industry disrupter and strategist. He's certainly aware of the MSP market and the opportunities within.
In a 2016 video interview with ChannelE2E, Cirne described New Relic's MSP partner strategy:
Fast forward to present day, and it's clear there's more work to be done, particularly in terms of aligning New Relic's newer business model with MSP consumption models.
