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Steranka on Avaya partners: Revenue less, 'value' more important

Avaya's Richard Steranka explains how the company's partner strategy is shifting toward certification and full product line alignment.

Richard Steranka joined Avaya Inc. about a year and half ago to help with corporate strategy. In August 2013, he was tapped to lead the company's worldwide channel organization in a newly created position.

Steranka's position as vice president of worldwide channels was created as Avaya undergoes significant sales transformation in an effort to become more customer-focused -- with market segmentation being a key part of that. He also wants to ensure that it has the right capacity in the channel to cover all opportunities in four key account areas: public, global, enterprise, and midmarket and SMB.

He is responsible for the Avaya Connect program, which has 10,000 partners worldwide that account for 79% of the company's business, and for the channel sales teams, which report up to him.

SearchITChannel sat down with Steranka to learn about the channel strategy for Avaya partners.

Talk a bit about your areas of focus.

Richard Steranka: I have four key areas and one of them is the market segmentation and the ability to direct our channel resources and partners to capture segment opportunities -- that's a big one. Avaya has four segments: public, global, enterprise and midmarket. Midmarket is our fastest-growing segment due to what I believe is having a leading industry product and offering the richest margins: 25% to 30%.

The biggest [challenge for 2014] is to ensure that we have proper channel coverage to capture the market. … I want to keep gross margins for our partners at industry-leading levels, but there is a lot of white space out there.

Richard Steranka,
VP, worldwide channels, Avaya

We tend to keep a very focused channel, adding the right amount of partners for coverage but not being overly covered where they eat into each other's margins.

Another area I manage is our channel program -- Avaya Connect, which is going through a transition. Historically we've been more about volume, or partners achieving medal status based on revenue figures, and we're shifting that more to value. So more of the profits in our channel are being captured by companies who are aligning with our value discussion.

These partners are achieving the right accreditations and certifications and are expanding their portfolios to the full Avaya line -- not just unified communications (UC) but bringing in the contact center products and most of all strategic products in the areas of networking, video and security.

Two other areas I cover are services and enablement.

There's a lot of Capex to Opex shift happening in business and our Opex business is one of the fastest growing with our Avaya [Operations] Services. We want Avaya partners to capture that opportunity. I have a dedicated leader on my team working with the services organization to ensure that our partners enjoy the benefits of the business model transition that's occurring in the industry today. That entails bringing out new cloud offers with our partners and through them.

On the enablement side, we continue to maintain one the highest-caliber development programs in the industry relative to keeping partners onboard with technology -- a lot is self-serve so they can learn online.

We've gone down the path in the midmarket to be more aggressive, launching a program called iConnect. It fast tracks a partner to sell our IP Office 9.0 product in a short amount of time. Our goal is to be able to take two of their salespeople and in five hours of online classes and passing an exam get them wrapped up, certified and authorized to sell IP Office.

It [has] a very low entry cost and very high margins on the back end; that's the formula we're using.

What are your goals for 2014?

Steranka: My goals are to create a mutual growth opportunity for Avaya and our business partner community, to reward partners who are aligning with our growth strategy, to take their profit margins above 25% to 30% when they're accelerating at exceptional rates and to make it easier for partners to do business with us.

Aligning against the growth opportunity is a function of two things: market segmentation (each segment requires a different set of technologies but also a different support model) and, tied to that, the volume-to-value transformation. That means rewarding partners that are aligning with our growth strategies and strategic products at the rates that we need to as a company.

The services alignment [is] helping partners make the economic transformation from Capex to Opex. We're creating programs that allow partners to participate in Avaya-delivered services. So if the partner today doesn't have the skill set to build out, from a traditional on-premises infrastructure, a hybrid or partially on-premises and partially in the cloud, we can do that for them and they can receive a resell commission as if it were a product.

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We can also help some of them to build those services themselves. As part of our channel program we launched a set of cloud designations [including a] cloud builder capability to help our channel partners participate in this cloud opportunity.

Regarding making it easier to do business with us … there's always new technology and ways to improve and simplify interaction with our partners. So, I want our profits to go to capital reinvestment back in the opportunity and not into funding heads as human glue around very challenging business processes.

We've made big improvements: Our services organization has created online capabilities allowing Avaya partners to self-serve to get quicker and more accurate resolution, typically, than waiting on the phone. We've also launched our commerce engine, One Source, that combines multiple quoting and configuration tools into a single platform, in all markets outside of the U.S. and North America, where we'll be deploying in mid-January 2014. And, we'll continue to enhance the platform as time goes on.

What challenges for your organization do you see ahead in 2014?

Steranka: I'd say the biggest one is to ensure that we have proper channel coverage to capture the market. I'm cognizant of the fact that I want to keep gross margins for our partners at industry-leading levels, but there is a lot of white space out there. Avaya is, I believe, under-covered in the midmarket. Given the solution that we have, I believe that we can be growing sales at a faster rate, and our partners are key to achieving that.

Also, there's opportunity on the services side. Cloud is a disruptor, but it can also be a growth engine, and I want to ensure that our partners are experiencing the benefits of cloud.

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