Newsletter Home > April, 2007

• On The Other Hand: Tis The Season; The Other Season?
• Cisco Raises Stakes In SMB
• Nokia Anticipates Changes To Mobility Sales Models
• Industry News (Short Takes)

Spring is in the air. I know this must be true because of all the channel conferences on the schedule. This time of the year brings a fine opportunity to hob-nob with executives from your favorite vendors, pick up some roadmap information on product lines and programs, and maybe kick in with a little feedback yourself.

Just like Johnny Carson used to have his “Carnak” character who could predict what was written in sealed envelopes, here are the main talking points for just about any of the partner conferences you might be planning to attend:

#1 Services
In a world of open standards and interconnectedness, it gets harder and harder to differentiate based on technology alone. So the push continues toward moving the channel toward making their money on a variety of professional services, managed services, or basically anything else that makes you the partner less reliant on pure product margins. As a basic pitch, this is not especially new. But many vendors are raising the stakes by offering incentives for a stronger services practice, and allowing those who don’t to more-or-less languish in their own inertia. As an inherent part of the value-over-volume trend, this is more than an issue of profit margins, it’s about Number Two in our list.

#2 Getting in Tune with Customer Business Problems
Sometimes channel partners feel a little bit dissed by this piece of advice, which is arguably the biggest no-brainer of the technology industry. “Do you really think we could have stayed in business if we were not in tune with the customer’s business needs?,” they ask. Well, sort of. But herein lies the difference. Back in the bubble days, technology uptake and the enabling budgets were so strong that the mere promise of good results would often lead to P.O.s. Sometimes those promises did lead to good results; other times, maybe not. But the strong economy and emerging connectedness of companies and business processes kept things humming right along. Salespeople could sell based on the latest and greatest, and on much more of a product-by-product basis than they can now. Today’s IT purchaser is much more skeptical. They’re more likely to dig more deeply into the economics behind the purchase and, whatever they buy, the certainly want it to integrate well with whatever’s already on the network. So the channel partner is becoming far more consultative, and needs to understand more about the problems the customer’s management is really focused on solving. This is another big emphasis in partner conferences nowadays, and it leads us to…

#3 Applications
Yes, you’re used to hearing about applications from all the applications vendors out there. But more recently, the infrastructure players have jumped on this bandwagon, as well. Issues #1 and #2 basically boil down to solution-selling, and that makes the application the star of the show. So effective integration and network optimization emerge as popular themes.

#4: Ease of Doing Business
As vendors work to make their channel programs more comprehensive, the complexity of those programs tends to get jacked-up by several orders of magnitude. This has not been a popular outcome within the channel, and the vendors have clearly gotten the message. So streamlining and efficiency are now viewed as equal in importance to building comprehensive programs.

#5 Closing/Widening the Gap
This one depends on market space and exactly who the vendor is. But I can almost guarantee you’ll hear about closing the gap on Brand X, who will probably be identified with some safely vague descriptor that can’t be misidentified. Unless, of course, you’re at the Brand X conference, at which you’ll hear the promise to stay one to three years ahead of the rest of the market.

So watch this year become the great exception to all these predictions. I doubt it will happen, but let me add one more prediction about what you’ll find, just in case. Free beer and wine.

Cisco Raises Stakes In SMB

By: Ken Presti

Cisco Systems has announced two key enhancements to its SMB strategy – one in the form of a new product bundle, and the other in the form of a channel program expansion. In Cisco parlance, the combined announcement is aimed at the “Commercial” space, which is in essence a combination of SMB and mid-market, ranging from five to 1,000 seats.

For the past three years, this market segment has been specifically targeted by Cisco which, despite its success at the enterprise level, had encountered limited uptake in the small-to-mid-market, partly due to substantial price sensitivity that tended to flush-out end customers and channel partners alike.

Through various recruitment efforts since 2004, the vendor now claims a small-to-mid market base of approximately 5,000 channel partners, although roughly half of the small-to-mid-market revenue still comes through large global integrators and carriers.

As part of an effort to double the size of its SMB-focused partner community, further develop the channel’s capabilities, and triple the volume of the average SMB-focused reseller within three to five years, Cisco introduced its new “Select” certification, focused on SMB solutions, at its Partner Summit 2007 in Las Vegas. A separate SMB specialization, which is a requirement for the Select certification, was also added.

Not to be confused with a marketing program of similar title, the Select certification would fit in the Cisco channel hierarchy beneath the Premium level and above the registered level. Cisco now offers four Certification levels – Select, Premier, Silver, and Gold.

Technical training involves two days of e-learning around Cisco’s routing, switching, security and wireless portfolios. Sales training is focused on positioning the value of the investment, and covers the same four portfolios. A fifth portfolio, unified communications, is scheduled to be added in June. Unlike the more advanced Cisco Specializations, sales and technical badges required to qualify can be held by either 2 separate individuals or the same individual.

Benefits include free e-learning, accrual-based market development funds, an assigned channel account manager, and access to Cisco incentive programs, services packages, and also leasing and financing programs through Cisco Capital. These partners will continue to purchase through distribution and there is no change to their current discount level.

On the product side of the Partner Summit news, the company rolled out its Cisco Smart Business Communications System; a combination of Cisco offerings designed to meet the overall networking requirements of small to mid-market customers.

The core of this offering is the UC500, which is a purpose-built device that integrates switching, routing, and unified communications, voice messaging capabilities, and a wireless access point. The appliance-sized box supports CallManager Express, Unified Communications Manager Express, and Unity Express, and includes firewall and wireless capabilities. The system is designed primarily for eight users, but is scalable to 16 when used in conjunction with the Catalyst Express 520. Multiple access points can also be supported, as well as the full range of desktop phones and Cisco’s soft phone. VPN capabilities are also available for teleworkers.

A GUI-based configuration wizard is available to accommodate the more advanced features, but the basic-level functionality is essentially plug-and-play and remote manageable for channel partners. Cisco also announced an ERP and CRM developer kit, using an open API through which partners can build applications with XML OR VXML.

This product is expected to ship in June.

Ken Presti is President of Presti Research & Consulting, Inc., which specializes in go-to-market solutions for technology companies. He can be reached at ken@prestiresearch.com.

Nokia Anticipates Changes To Mobility Sales Models

By: Ken Presti

As the cell phone market morphs into a market for “smart” phones that access email and other corporate resources, expect significant changes to the ways those devices are sold. What once was an ad hoc model in which users bought what they liked (even if it meant paying for it themselves) is now becoming much more focused on centralized purchases and approvals in order to protect the access security of the enterprise network. In short, mobile devices will move steadily under the wing of IT purchasers as a defensive move as much as a cost cutting one.

Nokia Corporation is one of the industry players recognizing this trend.

“We see more IT shops stepping up to play a role in the mobility purchase,” said Jeff Jackson, director of Nokia’s global channel program office. “It’s still predominantly owned today by the operators and their channels, and we certainly think that will continue to grow at a good clip. But enterprise IT organizations play a larger role in the purchase and management of mobility assets ranging from handheld devices to middleware. We’re trying to get ahead of the curve with our ability to address that shift which we see coming over the net two to three years.”

Under Nokia’s updated program, most product families sold through the channel are separated into three product silos; mobility, security and voice. Channel partners can build practices in any or all of those silos at a basic level (“Authorized”) and at an advanced level, (“Expert”). Program benefits obviously scale upward with investment in training, with the highest level of benefits provided to partners who have achieved Expert status in all three silos. Meanwhile, some of the more commoditized offerings will continue to be sold through open distribution.

Authorized level training is primarily web-based and free-of-charge. Partners already familiar with the product lines can “test-out” of the training, if they so choose. The individual certifications have multiple levels: Associate, Professional, and Master.

At the authorized level, they need three sales people certified at the associate level and one technical person certified at the professional level. Expert-level training generally requires fee-based classroom attendance, although the cost can be offset through MDF, which is available only to Expert-level partners; approximately 25% of the partner base. Maintaining an Expert badge requires three system engineers and three sales people at the Master level.

Nokia has no official volume requirement at either level, but distributors can set their own parameters, if they so choose.

The program has been well received, according to Nokia executives, who report more than 800 people have signed up for certification since the program was re-launched in January.

“I think the most exciting aspect is to drive faster implementation in the enterprise for mobility solutions ranging from email to voiceover IP clients and cellular handsets,” Jackson added. “We think we’ve built the program correctly, and we’re seeing some of our legacy security partners get certified in the mobility track, and looking to branch out into other markets around email and the mobile suite. Then, as they move into expert, they can move into file synch and data synch capabilities.”

In February 2006, Nokia acquired IntelliSync, which brought to the product family a variety of software products, including mobile middleware, synchronization, and device management. According to the vendor, these offerings enable Nokia products to better interface with Cisco CallManager, Alcatel PBXs, and similar offerings from Avaya.

“Cellular and IP are getting a lot closer together so there’s a lit more concern about security, access control, management, etc.,” said John Mason, Nokia vice president, Global Channels and Operations. “As that shift in the customer buying behavior continues, we intend to start turning towards the systems integrators and VARs that work with for the networking infrastructure, computing and applications.”

To enhance partners’ ability to function within the program, Nokia has rolled out a new PRM site, known as “Nokia for Business Partner Center;” a web-based partner “dashboard” that supports certification tracking, leads distribution (for Expert-level partners), vertical solution mapping, MDF management, and also serves as a portal through which partners can file quarterly business plans. The intent is to provide 2-way information that helps to the relationships between channel partners and account managers.

After passing the 90-day threshold, Jackson believes the new program is very much on the right track. “The IT shops are going to need to control the amount of data that’s flying off their networks and onto mobile devices. Today, they have a pretty good idea of what’s on anybody’s laptop, but they usually have no idea of what’s on a smart phone. IT VARs need to be ready to solve complex mobility issues. And be able to access mobility devices remotely, whether they are lost, or needing to be upgraded.”

Industry News

Avaya Awards First Platinum Badge in China
Avaya Inc. has awarded Teamsun Sci-Tech Co. Ltd. with Platinum Partner status under the company’s certification program. This is the first time a China-based partner has been awarded Avaya’s highest certification level. Teamsun has inked a number of significant deals in IP telephony and Contact Center in 2006, in verticals like insurance, banking, and manufacturing.

Avaya's strategy in China is to develop relationships with local companies and jointly offer customers the combined value proposition plus full life-cycle services. Avaya provides comprehensive support to channel partners including knowledge transfer, training, certification and marketing.

Teamsun has formed close partnerships with major Chinese telecom service providers, telecom equipment providers, as well as many customers in the finance sector. The company has set up 11 branch offices, one training center in Beijing, and a subsidiary that focuses on technical service. Teamsun has an extensive sales and service network that covers China, as well as part of South East Asia.

3Com Closes H3C Acquisition
3Com Corporation reported that its acquisition of Huawei Technologies' 49 percent stake in H3C for $882 million officially closed and 3Com now owns 100 percent of the China-based company. To fund the transaction and related fees and expenses, 3Com used approximately $470 million of cash from its balance sheet and approximately $430 million from a senior secured bank loan at its H3C segment.

In addition, members of H3C's management team have signed two-year employment contracts. Included in the agreement are bonuses tied to aggressive targets based on H3C's future financial performance.

Extreme Networks Names New Senior VP. Worldwide Sales
Extreme Networks, Inc. has appointed Helmut Wilke to senior vice president of worldwide sales, replacing Frank Carlucci, who is leaving the Company to pursue separate career opportunities.

During his 25 year career, Wilke has served as senior vice president of operations and support at Sun Microsystems and also vice president of sales and president of Sun Microsystems, Germany, where he led a group with 1,500 employees. Prior to Sun, Wilke was the CEO and president of Software AG, a manufacturer of software and systems for large corporations.

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