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How channel partners can profit from security vendor consolidation

Vendor consolidation can be a difficult thing for a channel partner to experience. But if it's regarded as a golden opportunity rather than a time to panic, the channel partners as well as their customers stand to benefit.

Security vendor consolidation is a familiar scenario for many channel partners. It seems new mergers and acquisitions are announced every month, and it's now common for a solution provider's biggest vendor -- perhaps even its primary vendor -- to be gobbled up by an even larger firm.

What happens next? Such an acquisition often leaves a solution provider at a crossroads. Here are some key factors to consider and advice on how to tackle them when a key vendor partner is acquired.

Evaluate new vendor partners

Size up the acquiring company. One of the best ways to do this is by looking at its track record from previous acquisitions.

Learn how the acquiring company has behaved in previous acquisitions. Consider the following questions:

  • Has it demonstrated that it is channel friendly?
  • Has it done a good job integrating channel programs in previous acquisitions?
  • What benefits/services/training does it offer through the channel?
  • Is it likely to match or exceed previous margins?
  • How good is its registration program and how did it affect channel partners absorbed in previous deals?
  • Did it have a clear roadmap for product integration and has it executed on that roadmap?

"History tends to repeat itself," said Paul Myerson, senior channel analyst for Milford, Mass.-based consultancy Enterprise Strategy Group (ESG). "Look at what's happened in the past, specifically as related to channel. What you saw then, you're likely to see now."

Myerson recommended getting an independent evaluation of what to expect amid an acquisition, which should accounts for history and the acquiring company's recent behavior.

"When an acquisition goes down, my phone rings," he said. "All people in the channel want to know, 'What should I expect next?'"

He also suggested talking to another, friendly partner.

Get acquiring company's attention

While a new channel partner should know that the channel is important to making a merger succeed, it's important not to assume anything.

Getting on the phone with the acquiring company is a vital step as soon as news breaks about the acquisition. The channel company needs to be aggressively proactive. The vendor partner must understand the importance of the channel business and how it can add to theirs.

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Brian Jones, director of strategic alliances at Dulles, Va.-based Technica Corp., has been through his share of acquisitions, first in 2005 when Secure Computing Corp. bought CyberGuard Corp., and last year with McAfee Inc.'s acquisition of Secure Computing. The acquiring company may look to pare down its number of partners, he said, and in either case, Technica didn't want to be left behind.

"We jumped in with both feet and started introducing ourselves and letting them know what kind of partner we were," he said. "When CyberGuard was acquired, we told them [Secure Computing] our story and marketed our capabilities to them.

"We put ourselves in driver's seat; instead of waiting for program to materialize, why not help create the program?"

The vendor needs to understand:

  • The solution provider business was a top provider at the previous partner
  • Strategically, the channel business is important
  • The channel business is important to specific markets, i.e. health care, government or financial services, that the new vendor covets

"A company with a smart channel program will look for champions," said ESG's Myerson. "They will be looking for some key wins."

Continuity is critical. Chances are, channel partners had personal relationships with key contacts at the previous, smaller vendor -- perhaps even their top executives. When dealing with a multi-billion dollar corporation with lots of moving parts, it's important to establish relationships with the right people and learn how to get things done in the new environment.

"I probably knew every Altiris rep by name," said Chuck Hegarty, vice president of business development and alliances for ITS Solutions. Altiris Inc. was ITS's sole vendor partner; then it was acquired by Symantec Corp in 2007. "Now you're working with a $6 billion company and you have an account manager in each territory, district managers, midmarket reps, mid-enterprise market reps, large enterprise market reps, and you have all that duplicated on the inside."

Hegarty recommended that solution providers get the attention of the partner account manager's from day one and nurture that relationship. That way, the account manager will serve as the channel company's liaison to the new mega-partner, but also an advocate on the inside.

"It comes down to relationships at ground level with our sales folks and our vendors' sales people," said Doug Close, director of the security and mobility practice at Mount Prospect, Ill.-based Sayers Group LLC, formerly an Utimaco Safeware Inc. partner, now working with Sophos plc. "It means ensuring as their sales force combines and roles change, we ensure continuity with our sales folks, and continuity on the back end in engineering."

Expand the product portfolio

Chances are good the acquiring company will offer new types of security products . This is a chance for channel partners to expand the products and services they offer, adding value to customers and becoming more valuable to vendors.

Before leaping in with both feet, a service provider should first determine which products and services complement its current business. ITS Solutions' Hegarty said that his company was already looking to expand its offerings when Symantec acquired Altiris. Offering integrated endpoint security with its management tools was a natural extension. "One solution set, one company, one partner. It absolutely made sense."

Also figure out A solution provider should also figure out whether its company and personnel have the skills to deploy and implement the additional offerings. "We already had the skill sets," said Technica's Jones. "We were very proactive in letting it be known that we were very interested in expanding our capability and portfolio."

Some other areas to consider include:

  • The certifications and training required.
  • The infrastructure required and what kind of investment it will take to develop it
  • If these products and services are in demand
  • If the solution provider company is prepared to expand into new markets

Speed is essential, and it's vital to for solution providers to make an evaluation quickly and move on it.

"A new market is usually made or broken in first three to four months," said Myerson. "Successful organizations do that through a good lead generation program to get some successes and then build on them."

Talk to customers

A solution provider's customers and prospects may be nervous -- at the very least curious -- about what any potential or pending vendor consolidation means to them. Get out in front with a message right away.

If becoming a small fish in a big pond is an initial concern, customers will wonder about it as well. They may wonder if their solution provider partner is going to be important to the new organization, or if they should be looking for a new technology partner. If solution providers are going to sell a bunch of additional products and services, will they continue to execute well?

When selling new vendor products, it's important to assure customers that this new partnership will add value to their organization.The trusted VAR-to-customer relationship is what's really being sold.

"VAR customer is buying because of the VAR, not necessarily because of specific products," said ESG's Myerson. "They trust the VAR is going to do the right thing for them in terms of the overall solution. At end of day, that's why the channel is so important to the vendor -- because they know in many markets they are closer to the customer than they are."

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