While attending Computer Associates' (CAI) recent annual users and partners convention in New Orleans, Gerard Norsa caught up with the enterprise management software giant's Mark Marron, senior vice president, channel sales.
ARN: Just six years ago CAI had absolutely no presence in the channel but your chairman, Charles Wang, said this week that as much as a third of your business is now being sold indirectly and that he wants to grow that to 50 per cent by the year 2001. What factors are driving that growth and what products are being sold through the channel?
Marron: There are a couple of things driving the growth of channel sales. We are a very successful direct sales organisation, but we realised that the way that the market is going means that everybody deals with the channel in one respect or another. To sustain growth we had to embrace the channel.
At the time we were a $US2 billion company and Charles recognised that in order to get to five, six or seven billion the best and quickest way was to work with the channel. We wanted to leverage the relationships, the expertise, the territory platform, industry coverage and knowledge the channel had in order to keep growing. That is pretty much what you are seeing right now.
In terms of what products are driving that, it is multiple products. Our workgroup and advanced edition products are only sold through the channel. This year we have also introduced channel-only accounts. So we have taken a portion of our direct sales force and arranged our business in a way that they can only sell through partners.
What sort of resellers are best suited to selling CAI products?
That all depends on the products. If you look at the VIP partner program we just created and launched here at CA World 99, there are two levels and that is so we have programs in place that are suited to everyone from the smaller all the way up to the larger systems integrators (SIs).
Because all of our products are scalable, it is difficult to say what kind of reseller is best suited. You have the smaller guys maybe selling a particular functional area product, whether that be event management, workload, security or whatever, in a particular small-to-medium market and we go all the way up to the larger SI that can play in the high-end market and sell full blown TNG or the scaled down versions of TNG.
The important thing that we are trying to stress about the VIP program is that from a small systems integrator, all the way up to a large one, we have opportunities for you. It is specifically designed so that the smaller organisations can move up in the program as the business grows. As you move up the levels, you can increase the bottom line and enhance your margins. So we give them the ability and opportunity to take up more technology and make more money with CAI.
Earlier this year there was an announcement about a $US50 million investment by CAI in the distributor CHS which has just moved into Australia. What was that all about?
That $50 million was an evolution of the relationship over time. In terms of the CHS relationship, you have to understand the history. We had a very successful history in Europe and Latin America with CHS as a distribution partner and we have done a lot of positive things together.
CHS was very aggressively pursuing CAI in asking how they could grow existing revenue streams and get into new ones that would drive growth for both organisations and there are a lot of things that happened aside from the $50 million investment. We introduced a Live Trial bundle, which was the start of the relationship announced in April.
What the relationship is doing is creating a lot of mindshare for our products, whether it be in storage, antivirus or desktop management, which in turn creates market share for not only CHS, but all our other distributors. The $50 million is helping to facilitate that mindshare. As the mindshare grows within the end-user community, it is going to create added market share. It is a show of good faith of what we think the relationship will be in the future and how successful it is going to be moving forward.
What sort of margins do resellers get out of CAI products?
It all depends on the products, but what I can tell you is that the partners we have are very happy in terms of the margins they are making, whether it be through software, services margins they make on top of that or just maintenance and support revenues.
Also, we are one of the only vendors in the industry, as far as I know, that provides an ongoing annuity for a partner trained and certified to provide level-one support on our technology. That means that a portion of the ongoing maintenance revenue we receive goes off to the partner who is providing the level-one support. So if you get multiple CAI products out to multiple clients, there are multiple revenue streams on an ongoing basis to the partner.
Partners are very happy with their software margins and as they move up through the program, they have the ability to make greater margins and get more marketing development funds, more leads and things along those lines.
What are some of the value adds and resources CAI is applying to the channel and what is the dedicated indirect sales force doing for the channel?
A lot of things. One obvious example is the lead generation. In Europe we have a group that is entirely focused on lead generation. After they've gone out and installed a TNG framework for an end user, not only will they show the end user the value of the TNG framework, they will talk about different areas that will be relevant for that end user.
We are investigating the type of things that may help them get competitive advantage in their markets or areas of operations where they may be having problems.
We will then create a report that will go back to the reseller partner who will then be able to take that and identify opportunities they can cater to.
In addition to the VIP program, we have the VIP Resource Centre. This is basically an extranet where resellers can dial in and get access to everything our direct sales force has access to.
This includes ready-to-roll presentations, demonstrations, competitive information, the latest press releases as well as information on how to price the product, the types of services that can be hung off them and how to price that as well.
Are all the sales and channel programs that have been announced here going to be available in Australia and if so when?
All the programs are for the whole world and we have targeted September as the realistic time frame for global availability.
What happened to VARcity, the old channel program, and what has changed for the VIP program?
VARcity was very successful and is basically what encouraged us to start these new and improved programs. Based on input from our advisory council, we came up with new enhancements which have developed into the VIP program. All the existing VARcity Club members will be mapped over to VIP.
We needed a program that addressed a small SI and their needs as well as the large SI and their different needs. The VIP program is adding some scale as well as addressing all the different and new products we have in the channel.
If you looked at VARcity when it was started, we didn't have the Workgroup and Advanced Edition products. The product set has changed and the market has changed, so we are trying to address those issues for all the different systems integrators in the market.