Cabletron Systems' relaunch into the channel has seen the networking vendor sign its first four network integrators to its Synergy-Plus partner program.
Cabletron's managing director Steve Dixon says the signing is the first in what he hopes will be around 10 to 12 Synergy-Plus partners signed within the next three to six months. The four companies to sign so far are Anite Networks, Honeywell, ITS and Siemens Nixdorf.
Dixon said that since its formation Cabletron has always pursued a direct sales model, but today's mature marketplace has forced changes. "Most of the big organisations have all their users on the LAN," said Dixon, "and therefore the traditional marketplace is kind of petering out. What we're seeing as the big growth areas are things like remote access, enterprise management and backbone switching. Users have the LAN infrastructure in place - what they now want to do is start improving performance of those LANs."
Dixon says the products that fulfil these new needs are far more complex in the functionality they bring to the network than those of the past, and therefore lend themselves to a more complex sales process.
"These are things that require far more dedicated support, so what's actually happening with Cabletron is we realise we have gone through what we call the growth wall. In other words, with the range of products that are coming out, you can only attain so much revenue and so much growth before you find that your entire organisation is supporting your existing customers, and you're not able, therefore, to take those people and get out and find new business."
Hence the partner program. Dixon says the realisation of the new marketplace, detailed above, prompted Cabletron at the start of the year to start building an indirect channel, based on a program already rolled out in Europe. "The focus is that we employ a very, very strong indirect channel strategy, and we get a bunch of VARs and train them up and make sure they understand our products. And that then allows us to start going out in the market and look after a lot of existing customers and chase new business."
When it comes to chasing that new business, Dixon says all sales will be pushed through the resellers rather than Cabletron's own sales people. Cabletron will still maintain a presence in many sites, but from a consulting and support position rather than as order takers.
Dixon says it is Cabletron's aim to migrate all direct customers to resellers. "That is the strategy - whether or not we ever achieve it is completely driven by the customer, because we're not going to tell our customer: 'you will now be looked after by a reseller.' That would be inappropriate.
"Some organisations have had a long and happy history with Cabletron and like dealing with the manufacturer, and they won't want to change. That's fine, we're going to continue to sell to them." Dixon says Cabletron will inform all resellers whom it is dealing with directly.
Dixon says there are a number of incentives for resellers to join the two-tier program. While all resellers will be able to continue reselling Cabletron hardware, Synergy-Plus partners receive access to discounted pricing. Dixon says developing a new reseller pricing model was one of the first steps in setting up the program. "The pricing strategy is giving some very attractive pricing to our Synergy-Plus resellers. That means they can sell to our existing customer base at prices that Cabletron used to sell it at, and still make a very good margin." Synergy-Plus resellers will also receive access to the same information and training as Cabletron's internal support staff. In return they have to make support commitments, such as numbers of accredited engineers and spares holdings.
Dixon doesn't believe the new model will lead to a great degree of channel conflict between vendor and reseller. "We've probably come from a period of even greater conflict, because we were a direct organisation, but we did have resellers. And in the early days our best prices to our customers were also our best process to our resellers. Because there was no channel strategy we didn't favour our resellers in any particular way." Under this regime Dixon says customers would often bypass resellers to get a better price from the vendor. "So we have come from a past where relationships at times have been stretched."
Dixon is also realistic in his expectations as to when Cabletron will get back through the channel. "If any one of those organisations is doing right by their customer, then they will put in the right solution. What we give to our VARs and what we ask for back is honesty. And that is when the deal comes up and they decide to bid somebody else's equipment then they tell us upfront, and that allows us then to make a decision on what we are going to do about the situation."