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Newsletter Home > July, 2007
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Nortel Updates Channel Program with “Value” Model
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Nortel Networks has announced a timeline for converting the company’s channel program to a value-based rewards format.
When vendors talk about “value-based rewards” they are generally referring to higher compensation for channel partners who train on advanced technologies, pursue key verticals, sell multi-product “solutions”, or engage in some other recommended behavior.
After last March’s launch of a deal registration program plus uncapped rebates for percentage volume growth, Nortel is kicking off the summer with a much more tightly defined definition of what the company intends to reward.
“The majority of the benefits had been built around a small handful of partners which, in a volume based program, meant high-volume partners” said David Wilkinson, vice president of North American channels and distribution. “There was not enough incentive to attract the kind of partners who support the changes Nortel needs to make.”
Wilkinson explained that partners had been forced to carry the full Nortel product line without regard for their particular specialties or business models. “We didn’t have a mechanism for those partners to gain [program] status and get rewarded for their investments in deep technology or deep solution specializations.”
The new program, now in the process of incremental roll-out, is designed to reverse that situation. On July 31st, Nortel is scheduled to unveil its first two specializations – in unified communications and services. Another six to 10 are then scheduled to be rolled out between the fourth quarter of 2007 and the middle of 2008.
In addition, the number of volume discount tiers has been reduced, and Nortel’s market development fund program is now uncapped. Plus the company’s approach to marketing campaigns has been adjusted for greater flexibility, according to Wilkinson.
More growth incentives are also set to be unveiled around March of next year, followed by additional components until the full-fledged value-based program becomes operational in 2009.
In a related matter, Nortel has also upgraded its IPT 1-2-3 bundling strategy to address a broader unified communications strategy.
Rolled out during the spring of 2006, IPT 1-2-3 is essentially an integrated marketing campaign built upon preconfigured, pre-engineered, pre-priced IP telephony bundles, coupled with lead generation, marketing programs, and a quote tool.
Nortel claims 34% growth in the second half of last year and 31% in the first quarter of 2007, and they believe IPT 1-2-3 was one of the main reasons for the movement. The program reportedly generated about 4,000 leads in its one-year existence.
UC 1-2-3 is, as the name implies, the unified communications extension of the original program. The package includes a 25-license Converged Office starter kit that will ship with every CS 1000 moving forward, MCS 5100 Call Pilot, and Contact Center. Supporting elements include enhanced tools for issuing quotes and orders, upgrade promotions, training, demand generation activities, a deal support desk, and service options.
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Google Signs Distribution Pact With Ingram Micro
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Ingram Micro and Google have announced a new agreement for the international distribution of the Google Mini and the Google Search Appliance; two devices that provide end user companies with internal search capabilities across their own networks and web sites.
The Google Mini is designed for small to medium-sized businesses. The Google Search Appliance is aimed at mid-market enterprise and specific vertical markets with heavy file capacities such as legal firms, finance companies and medical offices. Both products can retrieve real-time information from a variety of business applications, including employee directories and calendars plus CRM, ERP, and BI systems.
“The appliances index what is on their internal network so that people can find things more quickly,” explained Diane Lees, senior category manager at Ingram Micro. “But they can only search among the things that they are entitled to see on the network.”
Lees added that the offering can provide channel partners with a nice add-on to a larger solution that they may be offering given customers. Classroom-based and online training are both available, but not required as a prerequisite for selling the devices.
Ingram Micro has assigned a dedicated licensing desk to manage all orders for the devices and related licenses through purchase orders delivered through resellers. The deal also includes the usual distribution assistance with sales, reseller credit, marketing, technical support and logistics, as well as partner recruitment and training. The distributor is also helping Google to develop a strategic plan for leveraging the channel, and the two companies are expected to unveil joint marketing projects in the coming year.
Both Google appliances are available immediately to qualified Ingram Micro solution providers in the United States with plans for a phased rollout in other regions at a later date.
Microsoft Rolls Out Channel Enhancements to Partner Program
Microsoft Corp. executives announced several program upgrades around partner support, development tools, finance programs, and sales and marketing resources. Elements include an ISV portal on Microsoft.com, a simplified ISV royalty licensing program, a search engine optimization service, ISV marketing services.
Other new enhancements for the broad partner ecosystem include improvements to the finance infrastructure, assistance with events planning, and new tools for small business server partners.
Alcatel-Lucent Announces NCR Agreement
Alcatel-Lucent announced it has entered into an agreement with NCR Corporation to provide on-site installation and maintenance services for Alcatel-Lucent enterprise communications customers in North America. Through this relationship, Alcatel-Lucent will expand its local service delivery capability, and also better position itself for large, multi-site customers.
Under the agreement with NCR, Alcatel-Lucent distributors and service providers will continue to offer support packages directly to customers, and will be able to draw from the combined resources of Alcatel-Lucent and NCR.
An expanded services program under the agreement with NCR will be available by the fourth quarter of 2007.
Presti Research Enters the Blogosphere 
And now a moment of blatant self-promotion. This month, Presti Research and Consulting and Network World kicked off “ChannelSurfing" with Ken Presti, a new blog available on NWW’s Cisco Subnet. The blog will feature news and analysis of Cisco’s go-to-market/channel strategy delivered by some guy with a goatee and funny glasses. No, not John Gallant. Me.
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On The Other Hand: The Three Rs: Recruitment, Retention, and Rationality
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By: Ken Presti
Good help is hard to find. And even when you find good help, keeping it is no picnic either.
The stories are recounted in many places. It’s getting harder to find and keep quality personnel. So much so that vendors are starting to look for ways to help their channel partners navigate this shortage of talent. And there are solid business reasons for doing it.
At the most obvious level, there’s a direct relationship between a vendor’s customer satisfaction and the skill level of the people at these independent companies who are selling, deploying, and supporting the vendor’s offerings. If those channel partners are having trouble holding on to skilled practitioners, it won’t be long before that problem comes home to roost. While most customers have no objection to working with vendor-certified channel partners going through the channel does not take the vendor off the hook, if things go wrong. So if the capabilities of the partner erodes, customer satisfaction with the vendor erodes with it.
In addition, newer, more tightly integrated technologies plus a growing emphasis on larger solutions are driving vendors to raise the bar for partner investments in training. More often, higher discounts and added benefits are being offered not solely through sales volume, but through the partner’s ability to assemble a highly skilled team. Partners are expected to spend more on getting their people trained. And that investment happens at three levels: the cost of the training itself; the cost of having the trainees out of the field while the training is taking place; and the fact that those individuals are soon going to have higher skills and be worth more money. Not surprisingly, managers at channel organizations aren’t too enthusiastic about paying for education that might go down the street. So clearly, people at all points in the value chain have a stake in finding the right balance.
At this point, there is no clear-cut solution, but the list of options is not very long. Shying away from training because of the expense is obviously short-sighted and ultimately detrimental to the future of your business, if not its immediate profitability.
I suppose you could have your employees bear the full investment for their training. But that’s out of synch with general employee expectations, and will almost surely encourage them to find the door sooner rather than later.
A third option is to require an agreement that the employee will stay for a specified length of time after they have received their training. And if they want to leave early, they have to pay back a certain percentage; a sliding scale based on how long they actually stayed. This type of arrangement can be fair, as long as the numbers aren’t too one-sided.
The fourth option is simple recognition of the basic market dynamics. An increase in training corresponds to an increase in value, which, in turn, corresponds to an increase in payroll. In other words, costs go up as the trained person gets their pay increase, but so does their capability and, arguably, the sales opportunity. And that’s something that management needs to know how to leverage.
One other point on employee development: The people who work for you are managing careers, and want to be someplace with good opportunity. So if an employer is helping people raise their skills, and those people are still looking to go elsewhere immediately afterwards, then maybe there are larger problems lurking behind the scenes.
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