News Stay informed about the latest enterprise technology news and product updates.

Novell steers partners toward SMB market -- not all are thrilled

In a market already carpeted by Microsoft operating systems, Novell still feels it has a chance to win SMB customers and is depending on its channel to bring home the bacon.

After years of inconsistent performance, lost market share to Microsoft, and cycles of reinvention, Novell Inc. is trying to reinvigorate sales by spending more on its channel program and shifting a fifth of its revenue away from its direct sales force and into the channel.

"The small to medium business is the market we are going after through our channel partners," according to Ladd Timpson, Novell's global director of partner and channel marketing.

Speaking by phone from the BrainShare 2007 conference in Salt Lake City, Utah, Timpson said the company spent much of the last year in an exhaustive analysis of its go-to-market strategies and decided the best way to capture SMB market share is through its channel.

"We discovered that we needed to invest more in the indirect route," Timpson said. "We have about a 50% channel and 50% direct-sales model right now, but we are shooting for a 70% channel, 30% direct-sales model."

The real start to the channel revamp was last November, when the company changed its programs to try to push its approximately 5,000 registered channel partners to certify in at least one of four specialized areas. They include security and identity management, systems and resource management, Linux and workgroup.

The thinking behind partner specialization, Timpson said, is to help partners differentiate themselves from one another, even when they operate in the same geographic area.

"Partners recognize that we can provide them with more qualified leads in the markets they serve," Timpson said. "They can build repeatable business practices that we will help them build and their demand generation can be based on highly focused promotions that Novell is running around those areas of specialization," Timpson said.

Additionally, Timpson said partners who are highly specialized are listed in Novell's partner locator, which has an online compilation of partners that customers can find quickly. Specialized partners also have the opportunity to receive market development funds in support of their initiatives.

Steve Chase, executive vice president of Novell platinum partner Alphanumeric Systems Inc. of Raleigh, N.C., said vendors who create new programs tailored for the SMB market have the best chance of succeeding. Still, Chase, whose company resells identity and security as well as resource and workgroup systems, is not sure that every Novell product will be a winner.

"Identity is not typically an SMB play; password management (Secure Login) is a good fit though. Bundled solutions for SMBs in the workgroup space can work well. Resource and asset management is a medium-to-large-company play," Chase said. "I think more SMBs will look to Linux as they have to make infrastructure decisions to support other OS platforms," Chase said.

IDC analyst Al Gillen said Novell had a very strong branch-office oriented product with the small business edition of NetWare, but its task now is to develop a turnkey system that is easy to install and tailored for SMBs.

"As they moved to Linux they have lagged in terms of bringing forward a similar SMB product of Linux," Gillen said. "At this point they are deemphasizing NetWare on a standalone basis, they are emphasizing the Open Enterprise Server (OES) technology, but there's no OES product per se that is currently configured specifically for smaller branch offices," Gillen said.

Novell execs have hinted that configuration might be available sometime during the next 12 months, but haven't confirmed anything, Gillen said.

Francis Poeta, president of Novell gold partner P & M Computers Inc. of Cliffside Park, N.J., said since the channel changes in November, Novell's has not followed-up with his company to help plan a Linux go-to-market strategy. According to Poeta, Novell has a chance to win SMB customers, but the company has to make a more concerted effort to coordinate with its partners if it wants to drive sales in the field.

"I have Linux specialization for Novell and since November, which is when Novell's channel changes were made, I had not received a single Linux specific communication until this week," Poeta said.

"There's definitely a market there. I have not been to a customer who has not listened to my Linux marketing pitch, the problem is how you address that market space. The level of partner interaction in the Linux channel with Novell has been nonexistent," Poeta said.

Britt Courtney, partner at TriVir LLC of Fairfax, Va., said his company is hesitant to jump into the SMB market.

"That's not really our market. We are more in the low end of the enterprise market with a typical customer having 1,500 to 10,000 employees," Courtney said. "Enterprise contracts last several months; smaller accounts are one or two weeks. It's a completely different business to manage and it's easier to have longer contracts that are easier on your employees, easier to schedule and the money is steady," Courtney said.

Novell may also find it difficult to stir dormant partners into active sales agents. Timpson said currently the company has 8,000 to 10,000 members of its reseller community that are signed up in name only.

"In essence there's no commitment other than to profile themselves as a partner of Novell," Timpson said.

In the face of these obstacles, Novell is pushing ahead with the agenda outlined in November, Timpson said. The changes call for the company to double the number of technical specialists in the field by the end of its financial year, which ends in October. Timpson declined to say how many specialist will be enlisted, but in an email a company spokesperson said:

"The focus is to work more with partners. That includes large strategic partners, like Microsoft and IBM, as well as our solution provider partners. So the increase in field specialists who work to drive channel partner business is part of the broader improvement in routes to market," the spokesperson said.

The company has also expanded its Demand Agent program -- a set of incentives Novell launched in 2005 that increase margins as a reward for partners who find and sign new customers -- to cover all qualifying partners, not just those at the Platinum level.

"If a partner is selling existing product to existing customers and only increasing the number of licenses within an existing customer, it's a 5% rebate," Timpson said. "If it's a net new product into a net new customer that's 15%," Timpson said.

So far Courtney said he likes the changes.

"The changes that they've made we like," Courtney said. "We're getting good sales support, good technical support, leads and assistance with closing deals. I can't complain," Courtney added.

Let us know what you think about this story; email: Nicole Lewis, Senior News Writer.

Dig Deeper on Desktop management, sales and installation

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.