When Mike Fouts began his tenure, about a year and a half ago, as vice president of the Americas channels and field operations at Citrix Systems Inc., he laid out a vision for the future of the company's channel program and set several top priorities.
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SearchITChannel.com recently sat down with the channel executive to talk about changes that Citrix partners have seen during Fouts' tenure. In this interview, he discusses the company's controversial move last year that effectively cut most channel partners out of large-enterprise accounts and redirected them to the SMB market, initiatives the company launched to support Citrix partners in the SMB space, and channel-related plans for 2013.
In November 2011 you laid out three specific areas of focus for 2012: to continue to equip partners with innovative resources to sell more product and be more profitable; to continue to facilitate collaboration between partners and the Citrix sales organization; and increased effort in the SMB space, including working with partners to target companies with VDI solutions. Did you meet your goals?
Mike Fouts: Coming out of 2012, I believe we accomplished much of what we set out to accomplish but not all. Regarding the profitability of our partners -- we have about 2,400 Citrix partners in the U.S. and Canada -- profits increased 8% year over year, 2011 to 2012.
One of the biggest challenges we dealt with was segmentation, or making sure that our partners are directed to the right market segment, because being in the right market segment adds more value to the partner. So, we created two segments: the SMB segment and the high-touch segment, which is the high end and focuses on a very small group of enterprise customers -- famous brand names such as Walmart or American Express, for example.
Part of the problem was that we had partners who weren't selling into the SMB or midtier but only focused on the enterprise space, where we already had sales reps and sales engineering resources. As a result, we weren't leveraging the partners' resources. We needed to get partners into the spots where we didn't have skills coverage, such as the SMB space (500 or fewer employees) and in the broad midtier market (501 to 10,000 employees).
I believe the numbers show that we pointed partners to the right spot -- we helped them move into those segments by helping them with business planning, assessing their business strengths and incentivizing them, as well as showing them the total addressable market numbers. The SMB segment grew 38% from 2011 to 2012, and we expect the same level of growth for the next few years. The midtier segment grew over 20% from 2011 to 2012, and a 20% growth target is what we expect for 2013.
While the changes we made resulted in improvements, it was a challenging endeavor because you're asking partners to change behaviors and to change what people have been doing for some time.
How are the SMB initiatives panning out, including the tie-in to several SMB-focused announcements the company made on March 26?
Fouts: There are a couple of things here: First, our internal revenue growth goal for the SMB market at year-end 2012 was 30%. We ended up at 38% and felt good about that. We also wanted to have 500 partners sign up and complete the SMB-focused certification we announced at our Citrix Summit in Barcelona in 2011. Over 1,000 signed up and got the certification, so overall we felt that we had good uptake; and it converted to revenue and selling activity for our partners, so we're pleased.
In February 2012 we announced the creation of the SMB program and the creation of an SMB-focused team at Citrix. At that time we also changed the way we compensate our internal sales teams with respect to the SMB. In 2012 no Citrix field resources [were] compensated for SMB sales; instead, this dedicated inside sales team works with our channel partners, who became our sole field-based sales team for all SMB business.
On March 26, 2013, after listening to our customers and our partners, we introduced two new bundles of a SMB Edition. These bundles are more aligned with how the SMB customer purchases. The solution bundles XenDesktop, NetScaler, ShareFile and support for companies with 50 or more users. For companies with 25 [to 50 users], XenDesktop is replaced by the simpler-to-manage VDI-in-a-Box.
Mike Foutsvice president of the Americas channels and field operations, Citrix Systems Inc.
We also made the process of selling the bundles more fluid for partners by making it a SKU, versus having to piece together a solution. And we made it more profitable for our partners -- the SMB Edition carries an additional 5% margin. We listened to our partners, who told us that selling these products wasn't profitable enough. They were right.
We also lowered the Citrix Advisor Rewards thresholds from a minimum of $10,000 to $2,500 because there was a program mismatch, meaning that it was unrealistic to expect SMB market sales of $10,000 or more. Advisor Rewards pays partners a cash reward for doing value-added selling.
We also announced the appointment of John Hurley as director of SMB sales and strategy, which is a new position at Citrix. John is a 15-year veteran at Citrix, who most recently worked with the inside sales team that focused on enterprise customers.
I want our partners to know that Citrix is invested in its team in the SMB space, and that we appointed someone to this position who is a sales leader.
What are the 2012 goals that you didn't meet?
Fouts: We want to provide greater rewards for partners who invest in us, i.e., training, certification and joint selling, for example. We didn't get to focus on this in 2012, but it's a focus for 2013.
We also want to improve our competitiveness of our partner programs. I think we did a good job, but we didn't get to the finish line. So, that's another priority for this year. I think our programs are competitive, but I want partners to look at mobility or networking or other market segments that we're in and say, 'That's the only vendor I want [to] go to market with because it's the right solution and I can make a lot of money.'
Are there any new partner initiatives on your agenda for 2013?
Fouts: In addition to the two [mentioned above], we're going to focus on partner enablement. We need to do a better job of enabling our partners to sell, support and implement our solutions. We also call it 'competency.' We have an enablement calendar with 150 events for 2013. [Citrix rolled out a calendar in 2012 with 120-plus events.]
The events are free. Partners have to invest in getting to the event and spending the day. The workshops cover a wide variety of sales, demand generation and technical topics.
Let's talk about Citrix' midtier channel partners and what Citrix is doing to work with this group.
Fouts: About half to two-thirds of our partner base of 2,400 are focused in the midtier. The rest of the partners are SMB-focused, with some opportunistic selling in the midmarket.
Our strategy for midtier partners is centered on mobility and mobile device management [MDM]. In Q1 we prepared a lot of our partners on how to talk to the customer, identify the customer's problems and bring Citrix solutions to the table. So, I'd say enablement is well under way. We started early in the quarter and already had 50 enablement events specifically on mobility and MDM.
[With the changes that were made around customer segmentation], does Citrix have enterprise partners?
Fouts: Yes we do have enterprise channel partners. They fit one of two profiles: They're national partners such as ePlus or World Wide Technology, or they're big systems integrators such as IBM, Dimension Data or CSC.
Let's talk about the idea of an evolving channel as Citrix evolves its cloud strategy. How much of a challenge is this, and what strategies does Citrix have in place to create momentum in the channel?
Fouts: We believe that mobility is the entry point for discussion, and we're working to equip our partners to have the mobility and endpoint discussions. We're doing that via formal and informal education: helping partners learn what to ask, understand what customers are looking for, how to qualify an opportunity, and why Citrix is the right solution.
Formally, partners can attend our sales and technical trainings. Less formally, we're pairing our sales teams with our partners. This is a pilot, a mentoring of sorts, which we started in August 2012. I'm a firm believer that if I can hear someone's pitch a couple of times, I'll better understand it. So, what we're doing is having partners go out on calls with a Citrix sales rep to learn how we talk to the customer, ask questions and position the product.
Is this mentoring pilot still going on, and how do partners get involved?
Fouts: We initially started the pilot in the southeast U.S., and we're now moving it across the country. We identify partners and ask if they'd like to participate -- it's rare a partner turns us down.
How does a partner qualify for selection?
Fouts: Partners have to be willing to make a commitment to go out once a week on a number of sales calls. We also look for partners who have invested back in Citrix in some way, such as investing in certification or engaging with us proactively.
The mentoring usually lasts for about a month and includes eight to 10 appointments. We've worked with almost 20 partner organizations to date. There's no cost to the partner, and we'll continue the program as long as it promotes results.
What kind of results have you seen so far?
Fouts: We feel it has been successful for our partners, because they tell us that they're better equipped to ask questions, to make a sale and to expose new opportunities. We've seen a direct correlation between those partners who have gone through the pilot and an increase in sales.
We've had partners of all shapes and sizes participate. We're trying to build up aptitude around Citrix NetScaler, our cloud network platform.
Does Citrix have any other programs in the works?
Fouts: There is a work in progress. In late 2013 or early 2014, we will roll out a competency in NetScaler and [the] cloud.
We'll also be making some partner program changes very soon. [According to Citrix, the announcement will be the week of April 1.]
In your midyear report in July 2012, you introduced the Cisco and Citrix Partner Accelerator, a new channel initiative that benefits joint channel partners addressing customer requirements for mobile work styles and desktop transformation. The joint go-to-market strategy is centered on the Cisco Virtualization eXperience Infrastructure and Citrix XenDesktop. How is that working out for Citrix channel partners?
Fouts: We announced the Citrix and Cisco Partner Accelerator in April 2012, and began to see some action in Q3 and Q4. There's an art to aligning with another vendor and recognizing where it's meaningful. The Cisco partnership is strong because it's a joint selling motion, and we have a lot of … [channel] partners [in common]. Partners understand the Citrix solution, they understand the Cisco solution and they understand how they fit together.
We have seen a small subset of partners take advantage of the partner accelerator and be successful.
We also have similar partner overlap and selling motion with several vendors -- Dell, HP, IBM and NetApp. These relationships drive each other. A partner can talk to a customer about another vendor's product and have that lead to a Citrix conversation, or we can go in discussing Citrix and pull in one of our ecosystem partners.