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Novell adds deal registration, beefs up rebates for top partners

Novell Inc., which created the great granddaddy of partner programs, adds formal deal registration to the mix as well as new rebate possibilities for its top partners.

Novell Inc., which created the great granddaddy of partner programs, now adds formal deal registration to the mix as well as new rebate possibilities for its top partners.

First and foremost among Novell partner program changes is a new back-end rebate program for its Gold and Platinum partners. VARs that bring new or add-on business into existing Novell accounts get 10% rebates, while those bringing net new accounts into the Novell fold receive 20% back-end rebates, Javier Colado, Novell's vice president and general manager of partners told Novell has about 6,000 active partners worldwide.

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The rebates alone made some partners happy. "If you can get some new business to Novell and get 20%, that's real exciting. That's 10% on the front end and 20% on the backend, so that can be 30% on the software sale," said Mike Zepernick, president of Computer Integrated Services Co., a New York-based Novell Platinum infrastructure integration specialist.

Adam Gray, CTO of Novacoast Inc., a Santa Barbara, Calif., Novell Platinum partner, said that the combination of the new deal registration and rebate program will protect good partners' margins from erosion.

"The biggest thing is that Novell, like everyone else, likes to measure partners on product fulfillment, improved sales and all of those things. But for a long time now, protecting that back-end margin has been difficult because LARs [large account resellers] would get in the mix," Gray said. When that happens, the VARs lose some of their margin to the LAR.

The new "Demand Agent" deal registration is a "call your shot program," Gray said. If a VAR registers the deal and it's not already in the system, it's reserved.

While both partners love the new 20% margin on net new account sales, Gray said the other 10% on sales of additional product into existing customers is also very important. For many VARs, the ability to up-sell and cross-sell into current customers is a huge opportunity to build on their existing relationship.

VAR money pool under pressure

The whole notion of making margin on product sales has been a hot topic of late. As more software business goes through vendors' multi-year software maintenance and support deals, which often cut VARs out, the pool of potential rebate money is under pressure.

So, software vendors like Microsoft and Oracle push their VARs to move up the food chain from product sales to higher-margin services. While most VARs see the value in services and pursue those deals, they also still rely on product sales margins to fund their businesses. Novell is implicitly recognizing that product sales margin is still the meat-and-potatoes business of many partners.

Also new for Novell's partners is a formalized Market Development Fund (MDF) program. Before now, Novell offered MDF but on an ad-hoc basis, partners said. Now, the VARs submit their proposal and, if accepted, Novell will fund up to 75% of the marketing event or whatever is most appropriate.

To ease VAR-vendor interaction, Novell is collapsing its four current price lists into one that will include all volume discount information, Colado said.

Novell and other tech vendors struggle to help their loyal partners wring more profit out of sales of products. Meanwhile, the company -- like all tech vendors -- is feeling the impact of the recession. Company execs confirmed that the company laid off "less than 100" of its 4,000 employees two weeks ago. Novell would not specify what groups or locations were affected.

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