On Rad's Radar? - channel Archives

Some Channel Changes

2013-05-22T14:33:46Z

Telecombrokers re-branded as Telecom Brokers and moved into a huge office.

Mark Sondergaard went to MessageBroadcast. Aric Applefield went to Intelysis.

Peter Keane sold his master agency business to focus on Salesforce apps that can create agencies and brokerages.

Still more to come because it looks like musical chairs out there.

Business is a Thinking Man's Sport

2013-05-09T17:11:53Z

When I heard Mark Sanborn call business a thinking man's spot, it made me smile and then think. Oddly, most of these news items have all fallen in my lap today. It made me re-think how the value added distributors (VADs), like Tech Data, were going to morph.

Tech Data is the 2nd largest VAD at $26 Billion after Ingram Micro (at $37.8 Billion in sales), but TD is located in Tampa Bay, where I reside.

Tech Data has a long standing sales agent agreement with XO. Next, it established a cellular master agency with TDMobility, which also offers MDM. Then last year, TD inked a deal with master agency, Microcorp. Tech Data has long dabbled in telecom, without actually embracing it.

CDW has a telecom division that is doing very well.

SYNNEX has a $180 million per year telecommunications division, according to an executive bio I read today.

Ingram Micro inked a deal with TWC and CenturyLink.

Adam Edwards at Telarus thinks this is great. I think it is the beginning of the shift for distributors to take over for most master agencies for network services. For straight telecom services, the distributors are in a better position to automate the process for the channel and for the carriers. In fact, for cablecos who lack the automation for channel sales, working with a VAD may actually enhance their channel opportunity.

When stuff becomes a commodity like T1, broadband, cellular, voice, hosted email, web hosting and hardware, margin comes from efficiencies. I see much of this, especially in the small business marketplace becoming something you buy at Amazon or Best Buy fairly soon. The more savvy VAR's will have a check box for each service to insure that the customer has it taken care of -- and to see if she can take it over under her billing or management. The total wallet share idea.

Where does that leave Master Agencies? They will have to morph like some of them are doing into either an extension of a carrier's channel sales division or a cloud service brokerage. Unfortunately, even in both those realms, they will be competing with VADs. SYNNEX, Tech Data, Ingram Micro and Arrow have cloud platforms. Sprint is making a play in this space as well, utilizing its Parallels system to sell cloud services to its wholesale and retail customers. APNI and VoIP innovations both rolled out private label Hosted PBX services as well. It seems we have come full circle in VoIP - white label, wholesale, retail, wholesale, white label.

I think cloud will be the sticker service. Once you start selling even Hosted Exchange or Sharepoint, are you going to want 2 vendors for this or just one?

Everyone seems to be scrambling to figure it out - masters, carriers, CSBs, VADs - and even the Agents and VARs, who are the ants marching in this scenario. It takes some real thinking to figure out the next move and then the next one after that.

Is The Market Ready for Hosted PBX?

2013-04-18T19:56:31Z

When the hardware PBX companies have hosted PBX divisions, it might be that the market is ready for Hosted PBX. However, like VDI, is the channel ready to sell it and support it?

Thoughts on the Channel in 2013

2013-04-16T15:56:56Z

There is this article with four opinions about the Channel in 2013. Reading them, I am almost certain that they are not only viewing the channel from differing sides but that they are discussing different channels.

I do like the statement from Ian Moyse, "We are seeing the same swathe of change as we have seen in other industries with providers who ignored the changes in customer buying choices (take Kodak, Blockbuster Video and the big record shop chains such as Tower Records and HMV). This change will be a contributor but not the only cause to the start of a new re-shaping and re-sizing of the channel with resellers facing new competition from Telco's, Xsp's and a new breed of reseller and potentially vendors themselves."

I also find it interesting that after VZ re-boot sits channel, Verizon's Executive Director Cloud and IT Services Product Managment and Product Engineering (big title) is quoted on twitter at an expo: "Joe Crawford confirms that SMEs are not self provisioning. Sales channel critical #telcocloud"

In the Wall Street infused pressure cooker that is the C-Suite at many vendors, the channel is tolerated today because they have to increase sales any way that they can. The CEO's stock options depend on it. (I am only being a little witty there.) The debt load that many vendors carry is heavy. It is dependent on sales revenues since the debt is tied in some ways to the stock price. The stock price is tied to revenue and dividend. So the channel is looked at as a tool - a sales tool.

Unfortunately, right now, agents, VARs, inter-connects and even MSPs are worried about getting their own ship in order as the changes occurring around them are affecting their business models. So while they try to keep their own plates spinning in the air, the last thing they can handle is another desperate vendor who doesn't understand the channel nor truly wants to support the way it needs to in order to be successful.

Selling Direct is Different Than Channel Sales

2013-04-16T15:29:33Z

I make this statement often: Selling Direct is Different Than Selling via The Channel. You would think it was obvious, but it is not.

When a company sells direct, the messaging is aimed at the end user. The sales channel is pursuing customers. The company owns the customer - as much as a company can possibly own a customer. [Read this article about it!]

When you sell through a sales channel (like agents or VARs), your messaging is to the channel partner. The company is pursuing partners and making it stupid easy for the partners to sell and acquire customers for the both of you.

Obviously, there are companies with both direct and indirect sales forces.

I run into this all the time. Companies think a channel is the fastest and cheapest way to get feet on the street. It can be, but often, due to misconceptions, it isn't. And then the company has to re-boot its channel program.

The two primary differences between VARs and Agents are that Agents just sell, that's their business model. Get ink, get paid, move on. VARs have an existing business model, usually tied up around one or two hardware/software vendors. Everything else is ancillary -- including your awesome services that you think they should drop everything and sell. Most VARs are not a sales machine; Agents are, but Agents won't install or do support.

You kind of need both working together, which is the whole CompTIA Telecom group's plan.

It is very difficult to sell through the Channel if you have never sold the same products direct. You don't know the triggers, friction points, etc. You are letting the channel figure it out as you go. That's an expensive mistake.

Final point: there isn't a button to push to turbo charge the indirect channel. There are many factors involved in why channel partners sell one service or one vendor over another. Unless you have some exclusive service, the channel partner has many choices.

The best channel managers understand that when a partner quotes and sells your service, the partner is lending his reputation to you and he is depending on you for his paycheck. It's a risk. And it is amazing how many people don't get it.

Channel Shifts, Moves, Adds and Changes

2013-04-09T21:17:42Z

There is a lot of noise coming out of the channel. Personnel changes left and right and center. Who's leaving, who's joining, who just signed an agreement. Bzzzzzzzz It's just noise for the most part.

Funny that one master agent who fired their VP at Channel Partners and is famous for press releases didn't announce that. Or a hosted provider who pumps out PR like it was printing money didn't announce any of its personnel changes either.

VZ overhauled their channel program. Again. And people will still sign up for the temporary cash and the continued uncertainty.

AT&T launched a Partner Exchange.

Lots of cloud service providers announcing expanded channel resources. well, going from 1 to 2 is a huge expansion.

But seriously, I think most executives have under-estimated how much support the Channel would need to quote and sell cloud services, especially UC.

Solera got into the channel. I remember when they were pitching CALEA boxes.

One big problem for VARs is that not only is selling hardware easier and more comfortable for them, it allows them to cash flow. Sure a VAR may have $2M in revenue but $1.7M of that goes to Tech Data for goods. However, they need the upfront money to continue their business model. It isn't always feasible to shift to a recurring revenue model. The only way to change that is to finance the contract and pay all the commission up-front -- but there is a lot of risk there.

Another problem is channel conflict. NoJitter has a good read about it. Channel Conflict is just one more reason that VARs worry about telecom.

All the moves and changes in the channel means a couple of things - (1) It isn't as easy as anyone thought; (2) a lot of executives think that going channel is a way to get a free sales force (WRONG!); (3) reality hasn't sank in yet.

I am always available for consulting on channel strategy, just give me a call at 813-963-5884.

Is the Channel Too Lazy to Sell Cloud?

2013-03-29T12:31:56Z

Talking with channel managers lately in the Hosted UC space, well, has been depressing to be honest. No one is having fun - or knocking it out of the park. Yes, there are pockets of success - mostly from verticals or niches (surprise!).

So one CM made the comment that channel partners are too lazy to sell cloud. "It is much easier to sell network or a box than it is to sell cloud." There is some truth to that.

VAR's and Inter-connects have a similar business model that is centered around selling a box, installation and support. So cash flow comes from selling the box. They receive a chunk of money upfront. I am not certain that any of them survive off can recurring revenue yet.

To remedy this, some master agencies and vendors are looking to pay some of the commissions upfront, but this requires risk and financing, which devalues their own companies (and makes an exit harder).

From what I have seen and heard, most channel partners - agents, VAR's, Inter-connects - sell Hosted PBX as a third option after all else fails -- and typically sell it as cheap VoIP.

To me, this means that the service providers and the CM's have done a poor job of training and communicating who the target customer is, why they should buy UC/HPBX/Cloud, and what the value proposition is. Am I surprised by this? Not in the least. Why?

For one, many cloud companies have too many executives from the CLEC world where it has always been about Arbitrage - "Let me save you money!" And, let's face it, CLECs know nothing about marketing or positioning or branding - and neither do most cloud providers.

The other big problem is that most of these companies are enamored with their technology - as if the market gives a crap about their technology. People have iPhones and tablets and a bazillion apps. You think your tech is cooler than that??

This was a problem that ISP's had too. All techies that just like to be techies. The reason that 8x8 has grown is because some where along the way they switched from being a tech company to being a sales and marketing company. Most cloud providers are not there yet.

It is also very challenging to sell cloud services, especially UC, with its myriad pieces and components. What channel partner is going to remember all the stuff about your UC product and about the other 10-12 services that he also offers???? Um, not very many.

The flip side to this is that most cloud providers don't really sell direct. They dapple in it because it is expensive. However, if you haven't sold it, you don't know how to train or coach others to sell it either. You don't have the sales process and questions in place as tools for the channel partners.

There is another challenge right now: sales sizes are too small to cash flow for the provider or for the channel partner - so that will grind things to a halt sooner rather than later.

My CM pal also mentioned that partners don't want to explain all the features of HPBX/UC, do an ROI or TCO, check the WAN and LAN, etc. It is far quicker to just sell network or a box - and move on.

The reason that UC is stuck is because it is not exactly like what people have now. So there is training and education needed to the customer and her employees (as well as to the channel partners). This could be fixed IF the channel would actually eat the dog food. Not many channel partners actually use cloud services. If you drink the kool-aid how do you sell it to someone else? (Sales is about the transfer of emotion - if the partner isn't excited about your product, why would the customer be?)

There are a number of reasons that UC isn't selling. (Another is too many providers that all look the same.) As my brother tells me, "But, bro, Lync is selling!" Sure as part of Office 365 or to Fortune 100. And mid-sized businesses with more than 250 employees are buying UC, but are they buying it from the channel or from one of the top carriers?

Another trend is that smaller, unknown cloud providers are losing deals to better known companies - like Comcast, EarthLink, etc. WHy? Trust factor. Brand is a trust factor. So it comes back to marketing.

So is the channel too lazy to sell cloud? Or have the cloud providers just done a really poor job of picking partners and/or marketing?

BTW, there are certainly channel partners selling cloud, but they are dedicated to doing so. They drink teh cloud kool-aid.

Are You Channel Ready?

2013-02-27T17:04:41Z

I am at Channel Partners Expo in Vegas (speaking tomorrow at 9 AM). It is all about cloud and the channel here. It makes me ask: Are you Channel Ready?

Do you have a service offering that is channel ready?

Is that service easy to quote, explain, define and order?

Do you have a clear, concise value proposition? Because let's face it, everyone sells the same stuff.

Do you have sales engineers and channel managers?

What does Customer Care look like?

On the other side, what does the ideal partner look like?

Most VAR's are not good at sales, so your service will have to compliment their current services. It will be an add-on sale.

Read that again, because they won't be chasing new business. They will be trying to figure out if any of their current customers can use your service offering, how much can they make from it, and how will it affect their current vendor relationships (and quota).

If you are chasing Agents, they are good at new customer acquisition, but what about channel conflict, rules of engagement, and protected accounts?

How easy is it to sell? How will you support the customer without VAR involvement if it is an Agent?

Food for thought for the show.

Pieces of the Partner Puzzle, Part 1

2013-02-22T16:44:03Z

To have a successful partner program, you have to have great channel managers.

Channel Managers are the whole conduit to the partner channel - and vice versa. Channel Managers are the conduit to the company for the partner.

Channel Managers have quota (boy, do they have quota). However, they can only indirectly meet that quotas through their partners (unless they are going to sell FOR their partners, which isn't best practices*.)

Goal Setting is one topic that I think not enough people take seriously. But to attain anything beyond a mediocre life, you need to set goals.

The steps after the Goal is set is just as important. As Keith Rosen has taught me, "Exactly how they are going to attain their goals; that is, the strategy as well as the message that needs to be executed..... The structure they need to put in place regarding how they will manage their daily activity that will move them towards attaining their goals."

People forget that it is daily activity that gets them to their goals. Little steps each day. Daily activity becomes habits. Habits produce results.

What does your calendar look like?

*Teach them to fish; don't fish for them.

Sales is Tough!

2013-02-20T05:14:25Z

Have you ever been in a meeting where all departments think that sales department is letting them down? That they are all doing their fair share but sales isn't selling enough?

People, I have news for you: Sales is Tough! And keeps getting tougher.

Social media, online ordering, pricing comparison sites, UGC (user generated comments like user reviews), etc. makes the job of sales tougher and tougher. Why?

The customer is more educated today. It skews the sales process.

Seth Godin wrote in 2006, "I know you'd like to get rid of me and just take orders on the web. But that's always going to be the low-hanging fruit. The game-changing sales, at least for now, come from real people interacting with real people."

Keep that in mind. If selling is so easy, go do it! "Selling is hard. Harder than you may ever realize."

Nothing happens until a sale is made. Sales revenues pay for everything (unless you have VC dollars).

More and more companies are looking to the channel to drive sales. Why? Because a lot of cloud services rely on relationship selling - and they don't have the cash to pay sales people.

But the channel isn't a faucet which you can just turn on for sales. A lot of factors enter in to a channel partner relationship. The channel manager, ease of business, reliability, features, pricing, packaging, marketing, customer support, margin, compensation -- these are just a few of them. And most channel partners are looking to add services that compliment their current sales plan and customer base.

"Sell only by solving problems and creating profitable opportunities" is good advice from Tom Peters.

Monday Morning Quarterback

2013-02-04T15:56:33Z

The 49ers got robbed by the refs twice in the last 3 minutes of the game. And the viewers got robbed because most of those commercials sucked. Just my opinion of course.

But we start Monday with Oracle buying Acme Packet for $2B! Sonus must be mad. They have a market cap (NASDAQ: SONS) of half that.

TNCI is still in bankruptcy and has a stalking horse bidder in Blue Casa Telephone. That may prove troubling for TNCI agents (and the Agent Alliance, who really bet the farm on the TNCI Equity Plan).

Telefonica is looking for Channel Partners. I am looking for one of Telefonica USA's channel people to reach out to me for an interview.

Interesting article from The Atlantic: Why Americans Hate the Media?

A Spotlight on Women in the Channel

2013-01-28T15:53:06Z

Nancy Ridge is the VP of Telecom Brokers, a master agency in California. She joins me on this podcast to discuss Women in the Channel, a grass-roots organization that she co-founded to promote women in telecom.

We have already seen a couple of women get promoted this year to top positions at master agencies - Carol Beering at Intelisys and Lauren Shapiro to President of PlanetOne.

Hope you enjoy the 17 minutes with Nancy.

Everything is Changing, No One is Happy

2013-01-25T15:08:19Z

Belkin is buying Linksys from Cisco, who is exiting the consumer business. What are they doing with the Scientific Atlantic set-top boxes?

Logitech is dumping some of its product lines as it re-vamps.

Andy says that Yahoo Voice is shutting down.

Microsoft sales of Office365 are decreasing.

Intermedia is acquiring Telanetix, which does business as AccessLine, for about $55M.

EarthLink is laying off as they realign.

So much is changing - and so fast.

You know what else is changing? The role of Master Agents and VADs (like Tech Data and Ingram).

Dell knows that hardware sales will continue to decline, which is one reason it is looking to go private. Microsoft knows that its best days are behind it. WinTel used to dominate the computing space. Then Apple iOS starting winning laptops and smartphones - and definitely the tablet sector. Android is the O/S for smartphones and tablets, but Chrome laptops are also in the market.

When everything is wireless do you need switches and cables?

Level3 just revamped its Channel, but the masters are wary of signing it. XO has a new contract out that masters also are balking at signing. Why?

Qwest/Savvis/C-Link stopped teaming agents with directs, but Level3 instituted something like teaming. There is a commission hit for teaming. Here's the dilemma:

One, prices keep dropping, so commissions are lower. Agents have to work harder to make the same money.

Two: Current customers want to lower the bill with every contract renewal, which means that commissions dip (or disappear) unless the Agent switches its customer base to a new provider.

Carrier Quotas keep going up, despite No. 1 and 2. So Masters can't hit the quota, lose commissions and can't pay the agents.

Everything is cloud, but revenues are much smaller, the sales cycle is longer, and the sale is more work for the agent. For less money.

Telecom - you know, the network - transport and transit - are still selling, and agents still want to sell it, but the carriers don't (or can't maybe) pay commissions on straight network sales. So Agents look for carriers that will pay them to sell transport and transit. Masters don't get this business. Carrier Channels sales dip. The cycle spins.

Most Cloud services providers don't work with Masters, so those sales don't go into the Masters revenue. Lost revenue.

VADs like Tech Data and Ingram are selling cloud, cellular, network and hardware.

VADs already have a relationship with VARs. VARs are comfortable with their relationship with the VADs. Why would they switch to the Masters?

Gartner's Bova likes to talk about the transformation of Agents but she misses two key points: Agents are on a hamster wheel and can't just jump to a new one because they need to keep the cash coming in to satisfy quota, bills, churn, etc.

Point 2 is that there isn't an easy transformation path for an Agent to become a cloud services broker. A billing system, integration with the vendors, cash flow, liability, and other factors all get in the way of an agent becoming a CSB.

Despite what the Carriers want - more sales, more VARs selling their stuff - and what the Masters want - pretty much the same thing - the cogs in this wheel - the Agents and VARs - are not yet ready or in any position to make sweeping changes to their business to satisfy Carriers or Masters. The VARs and Agents have a business model that they are running with every day. They have customers that they are trying to satisfy every day. The added pressure from carriers and masters to transform, while also sacking their current revenue stream is a catalyst for disaster.

Look around - Intel, Microsoft, Dell, Cisco, EarthLink, Cbeyond, Logitech - these are just the companies TODAY that I see in turmoil. All of these sell via a channel distribution model, so if they see revenue hits what do you think is happening to their channel partners????

DUH

VoIP in 2013

2013-01-17T17:26:10Z

It's January and people are still making predictions about 2013. Dave Michels wrote a nice piece about the history of Level3's 3Tone service, which I was pretty familiar with due to four of my clients rushing into the void to sign up - just as Level3 was aborted the service. I view this move by Level3 as one reason that I don't see Jim Crowe as the visionary others do.

Today, we see VoIP Innovations rolling out a complete wholesale private label VoIP service. It might be too late for another entrant in the space, but I think the wholesale Origination/Termination space is flat with low margins, so it's a pivot towards higher margin and new prospects.

Most predictions about VoIP center on two things - mobile and video - just like they have for the last few years. If you really want business VoIP to take off, you need more inter-connection, in order for HD Voice and Fax over IP to work across NNI's. Remember the VoIP Peering Fabric?

According to Frost, "Approximately 42 percent of non-cloud unified communications users intend to deploy hosted phone systems in the future." Well, seeing as how the Hosted PBX market is still smaller than Centrex that didn't require much of a crystal ball. As the RBOCs delete copper, Centrex will die too. (Seems strange that they would be so quick to get rid of POTS and Centrex service since the margins on those are big.) Most of that Centrex business should convert to Hosted UC systems. The only thing stopping this conversion is the sales teams of the cloud comm companies. If ever you were going to invest in your sales teams, NOW IS THE TIME!

Why? People are not buying the same way as they did 4 years ago. The services being sold are not the same as 4 years ago. However, the sales people ARE the same as 4 years ago!!! Get the disconnect???

Will the mobility piece be a hurdle for some Cloud Comm companies? Maybe. I think that the SP (service provider) that can sufficiently integrate their MVNO with Hosted Exchange and their Hosted PBX offering will have an advantage. I would say be a big winner but to win, that SP would need a great sales team and other elements of the organization at the peak of its game (billing, customer service, deployment, on-boarding).

Congrats to Vidtel for scooping up Alex Doyle as VP of Marketing. Doyle had a long run at Broadsoft before a short stint at Polycom. Expect big things at Vidtel, a video conferencing company that doesn't rely on hardware as a crutch.

On that note, ACT Conferencing, one of the leading conferencing service providers in the US, is announcing a partnership with Vidtel to deliver cloud-based video conferencing. ACT will be a channel partner of Vidtel selling the Vidtel MeetMe service. Just an example of the ongoing shift in video conferencing towards cloud applications (from hardware).

One last trend I am seeing is that a lot of SP's are leaning heavy on the channel for sales in 2013 - FreedomIQ, Vidtel, Panterra and EarthLink among them. [Note: ELNK just laid off 15% of its workforce.] How effective that will be depends on a number of factors that not all these companies have figured out yet. The glaring hole in that strategy is that if you have issues - with the service, the channel program, tech support - the channel will abandon you. Even if you fix the problems, you have to regain the trust you lost. It's a tough road.

I think 2013 is a year of opportunity for any cloud services. I just don't know who the winners will be.

Nutty News Monday

2013-01-07T17:55:23Z

The list of the worst CEO's of 2012 is out. How is it possible that there are no telecom CEO's on that list?

FiberLight is planting another 4,500 miles of dark fiber in Texas. Look out Alpheus.

Women in the Channel Forms Its First Board of Directors! CONGRATS! I will be interviewing them later this month. Stay tuned.

Good point: "The data centers of the future may look more like NASA ground control - governance inside, resources out." [F5]

,p>There are over 600 courses online for free from various colleges. There is no reason to be ignorant any more. Or pay $$$$ for a degree that may not help.

Cbeyond finds that small business will be buying more cloud, which is a good thing for them since they recently launched TotalCloud (phone system).

Brandywine sues over 40 ISP's over DSL and it is unclear if they mean modem use, DSLAM or actaul DSL service.

There is another company suing SP's over efax. Yeah. They own the patent on some form of scanning to an efax doc and are chasing companies for revenue. Can you say WE NEED PATENT REFORM?

"America has plenty of wireless spectrum -- we just need a new way to allocate it." No kidding!

FCC has hired a new chief economist who just finished writing a "National Cable & Telecommunications Association paper supporting the industry's use of punitive caps and costly per-byte overages." That's great!

Common Sense - it's a super power.