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EMC struggles with fragmented channel, bitter VARs

Revamp is designed to overcome history of channel conflict and unify sales effort split by acquisitions, new technologies.

Having burned rubber on the acquisition highway, EMC Corp. is looking to integrate its ever-expanding array of technologies and resellers into a cohesive channel program for its diverse group of partners.

There have, of course, been roadblocks and detours. But many observers believe the company is on the right track with the direction of its technology and its invigorated focus on the indirect channel -- which currently accounts for about 50% of revenue, according to the Hopkinton, Mass.-based vendor.

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"I would say, for EMC, going outside the direct distribution model got off to a rocky start. They didn't know how to co-compete for business," said Tom Trainer, an EMC alumnus who is now senior analyst at the Evaluator Group, a Greenwood Village, Colo.-based provider of analysis about online storage systems and storage-related issues.

"Management changes at the top enabled them more effectively to roll out and develop channel programs. They learned quickly to develop a partner program that was easy to manage, and worked from a margin and revenue perspective. What they learned was, 'If we develop a channel partner program where we don't have channel conflict, we're better off.' I think they have smartly approached the partner program."

Change of Heart

In fact, 2006 could be called EMC's Year of the Channel, according to company executives. Just over a year ago, EMC unveiled the EMC Velocity SMB Partner Program, which was designed to enable, support and reward those partners selling EMC's Insignia line of software and hardware.

"There was a lot of time spent in 2006 getting input from our partners -- what's working, what's not working, what we can improve," said Pete Koliopoulos, vice president, global channel marketing at EMC. "We wanted to try to make it as frictionless as possible, to make it flow with the normal flow of business."

This was no small task given the number and diversity of the companies EMC had acquired -- such as Documentum, Dantz and System Management Arts Inc., Rainfinity Inc., Captiva Software Corp., RSA Security, Kashya, Interlink Group Inc., ProActivity Software Solutions Ltd. and Avamar Technologies Inc. While acquired companies' partners were a huge asset, unifying all these different programs was a monumental task, executives said.

In addition, the company experienced management changes from the top down. President and CEO Joseph Tucci was named chairman in January 2006, and immediately began hiring channel-savvy executives, said Trainer. "This enabled them to most effectively roll out and develop channel programs," he said.

Gaining Traction

Management changes are important, but even more critical was EMC's decision to remove SMB service-based financial incentives for its direct sales force unless a channel partner was involved, said Koliopoulos. The company also increased its investment in Web-based training, reduced the cost and time associated with certification, and began offering more free training for sales engineer training. These moves were designed to encourage more solution providers to become Authorized Services Network (ASN) certified, he added.

ASN members deliver a range of information infrastructure services, including consulting, implementation, integration and support, according to EMC. Programs include ASN Professional Services, ASN Customer Services and ASN Solution Alliances Partners. ASN Customer Service Partners are divided into: Service-Enabled VARs, Service-Managed VARs and Non-Servicing VARs.

"We give extra bonuses in terms of rates if you become an ASN Professional Services VAR," Koliopoulos said. "One of the biggest areas for solution providers is in professional services. They've asked us make it easier for us to open professional services opportunities for the partners. If they're an ASN partner they're going to be able to make more per deal. We've streamlined the training so it takes less time to become certified and accredited, and we've lowered the cost."

In fact, EMC cut fees by about 30% and made more training available at no cost, he said.

"The training our ASN folks go through is exactly the same as what our internal folks go through," said Koliopoulos. "We'd like to see 20, 30, 40% of our partners become part of this program. We're going to have a pretty good idea in the next two to three months about how this will shape out. The early feedback has been very positive."

Rolling Along

For the past seven years or so, EMC has outsourced many of its professional services to International Computerware Inc.(ICI), a 25-year-old professional services and systems integration firm in Marlboro, Mass. With its focus on a limited number of products and vendors' wares, ICI -- an EMC ASN partner -- has become expert in EMC's solutions, said Jamie Shepard, ICI's vice president of technology solutions.

"A lot of my competitors sell 40 to 80 products. I don't want to be a CDW or a Dell," he said. "About three years ago our business model evolved. We wanted not only to implement these solutions. but to design these solutions for our customers. The people creating and designing the solution are actually the ones implementing it. Our customers have loved that. We've been [EMC] resellers now for about three years."

While ICI has long enjoyed a profitable partnership with EMC, the solution provider is even more pleased with the vendor's channel program since it revamped its offering.

"What I've seen in 12 months is almost miraculous. It's remarkable," Shepard said. "EMC salespeople had had a reputation and they liked to do a lot direct. I did see a lot of conflict. The big push in the last six months has come from Mitch Breen and others. He's now gone very aggressive within EMC to say, 'Guys, this is the channel model. This is the way we do it.'"

In fact, ICI saw its EMC business increase immediately after Thanksgiving -- an improvement tied directly to the vendor's new compensation model for its direct sales force, said Shepard. "It has been very swift and very focused," he said. "They've completely redone the channel. The reality is we're living it right now: They're changing a culture."

Click here to read the rest of this profile of EMC's channel partner program.

Company Name: EMC Corp.
Headquarters: Hopkinton, Mass.
Founded: 1979
Phone: 508-435-1000
Technologies Developed: Storage Hardware & Information Management Software
Tiered Program Name: EMC Velocity² Partner Program
Tiers: Associate, Advantage, Premier, Signature & Velocity SMB Partner Program for SMB
Number of Partners: 3,200 worldwide
Percent sold through channel: More than 50% "touched by the Channel"
Number of Distributors: 6 in North America
Senior channel exec's Name: Mitch Breen
Title: Senior Vice President, Global Channel Sales
No. of Years at EMC: 20

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