Avaya today announced a new global channel program aimed at reducing the complexity that channel partners have...
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long faced when doing business with Avaya.
The program, dubbed Avaya Connect, collapses nearly every aspect of Avaya's channel operation into much simpler terms. Where Avaya used to have four channel programs based on global geography, now there will be just one. Avaya once had 450 different product pricing groups, now it will have five. Once there were four regional price lists, now there is one single global price list.
Partners' investment in training and certification will also become much simpler. Avaya is collapsing its certification levels from six to four and consolidating the 100 different training courses it offers to partners down to just 15.
"We're going to reduce the amount of time it takes them to get through training by about 50% and the cost to get through that training will be reduced by 50%," said Barat Dickman, director of channel programs at Avaya.
This move comes a year after Avaya recommitted itself to a channel-centric approach to sales. Consolidating and simplifying a global channel program is no small feat for a vendor of this size, according to Ken Presti, principal of Presti Research & Consulting Inc.
"Just going to a global price list is a hugely complicated thing," he said. "There are so many moving pieces that have to be lined up. And to get the level of consistency on a worldwide basis from the global price list is very difficult."
Presti said reducing complexity is a top concern for channel chiefs at nearly every large vendor these days. He said simplification is something of a mantra because vendors have let their channel programs get out of control in some respects.
"So much has been going on in terms of additional programs being added onto other additional programs," he said. "And it was intended to increase greater profitability, so it's all been done with the best of intentions. A lot of it has even worked well, but the downside of all that is you end up with some very complex programs out there. You're going to see a lot of companies start to re-look at this and try to figure out what they really need in their program and what they don't."
Dickman said Avaya Connect is his company's response to complaints his company has received from its partners about complexity.
"Partners have complained about the complexity around our multiple programs and pricing structures," he said. "We have taken that all into consideration in putting this together. But it's more of an opportunistic move around our new high-touch channel-centric model. I think that Avaya, in embracing that strategy, has quickly seen that to be able to execute on it we need a streamlined and simplified program that has a set of compelling benefits and is easily administrable and predictable."
For Avaya channel partners, the headaches of a complex channel program are compounded by Avaya's legacy as a direct sales-focused company.
"They're going to need to get greater channel confidence in their overall go-to-market strategy," Presti said. "They've always had a little bit of a conflict between the indirect side of the house and the direct sales side. It has kind of gone back and forth depending on who is in charge at any given time. They seem to be moving in more of a channel-focused direction now, which I think makes a lot of sense for them. If they don't do this, and they try to maintain such a strong direct sales perspective, it's going to drive their cost of sales through the roof. So this is something they're finally coming to terms with as something they really need to do. I think it's a positive step."
In addition to its launch of Avaya Connect, Avaya is also rebooting its managed services business in order to enhance opportunities for its channel partners.
Avaya has launched Avaya Partner-Enabled Managed Services, consisting newly revamped offerings, according to George Humphries, a director in Avaya's operations services organization.
"One is a set of programs to enable service providers and system integrators to really build their own robust operations around managed services support of Avaya technology, including integrating that into their own management tools and platforms and with existing offerings from other technology like Cisco, Siemens and Nortel," he said
The second aspect of the new managed service business is aimed at VARs. Humphries said Avaya has traditionally offered very little in the way of managed services opportunities to its VARs. Now Avaya is offering a private label option which allows VARs to sell their own branded managed services based on technology and services from Avaya. VARs can build their own network operations center (NOC) to deliver whatever core capabilities they have to customers, and that NOC expertise will be transparently supplemented by Avaya's broader array of services, which will still be sold as VAR-branded managed services managed through the VAR's NOC.
"Avaya has several thousand VARs out there that would like to get into the managed services market," Humphries said. "It's a very fast-growing and profitable market. Today they focus on product distribution, but they're looking for more meaningful relationships with their customers. They're also looking for ways to grow annuitized revenue streams and to get into markets that are more profitable than just selling product as the product continues to commoditize. The average MSP [managed services provider] dictates 85% to 90% of future communications technology purchases. A managed service contract leads to an upsell about 60% of the time. This gives them the opportunity to have more sticky relationships with their customer base.
All these changes in the channel might lead some VARs to worry that pre-existing investments they have made in training and certification while building up their Avaya practice might be null and void now.
"[Avaya] has to have a stable channel program that partners can build on," Presti said. "Partners have to have a reasonable expectation that any forthcoming programs will be compatible with what they've already done. Channel programs always evolve, but you have to do that in such a way that you don't end up eliminating the benefits of what the channel partners have already done in terms of adopting your program."
Dickman said Avaya will ensure that partners can transition seamlessly into the new channel structure. No certifications will be null and void as a result of this launch.
"The benefits model of the new program will go live in the spring, the new requirements of the program won't go into effect until next October," he said. "So that gives partners a year to transition into the new program, and all of their previous certifications will be usable in fiscal 2010, until they expire just like they would expire regularly. The pricing and the financial programmatics should be relatively neutral at the outset, but we have put in place things that will allow [partners] to increase profitability in the areas of business that we want them to focus on."
Avaya Connect will launch globally on Feb. 1, 2010, which should be well-timed for the closure of Avaya's acquisition of Nortel Networks' enterprise division, expected to occur around the end of the year. Many industry observers have pointed out that Nortel's channel partners were one of the biggest prizes in the acquisition.
Let us know what you think about the story; email: Shamus McGillicuddy, News Editor