Citrix Takes Subscription Advantage Renewal Business Direct5:20 PM EST Wed. Aug. 02, 2006
Citrix Systems is taking its Subscription Advantage renewal business direct, which has some of the software vendor's channel partners fuming.
According to a Citrix presentation obtained by CRN, Citrix has taken its Subscription Advantage Renewal program direct and is transitioning its advisers to an agency fee model. The program took effect Aug. 1.
As part of the revised program, Citrix laid out a new adviser compensation model. Under the new terms, partners can't offer discounts. Partners must cite renewal quotes at 100 percent list price for their "assigned" customers. Authorized advisers get a 15 percent commission for influencing the renewal.
Advisers must use the Solution Advisor Renewal Tool to "proactively" engage with customers on the quotes. Partners can provide customers with a one-click e-mail quote to renew, but those renewals are processed directly with Citrix, according to the presentation document.
"I don't see any benefits at all," said Tracy Butler, CEO of Acropolis Technology Group, a St. Louis-based solution provider that generates $100,000 per year on Citrix Subscription Advantage renewals. "Citrix is not in the channel and shouldn't be dealing direct with clients. This is a step in the wrong direction. We've always been the Citrix badge to the client, but now they're backtracking. It undermines us in our clients' eyes."
In its presentation to partners about the new compensation method, Citrix said the renewal change is designed to increase customer satisfaction and partner profitability and eliminate pricing confusion. But other Citrix partners railed against the new policy.
"Apparently, having resellers lose control over how customers renew their Subscription Advantage is Great News," said one annoyed partner, who requested anonymity. "I wouldn't term it that way. Not being able to give discounts to customers and having to wait on Citrix's internal customer support for payment is also not great news." The partner was referring to an e-mail that Citrix sent to partners about the renewal change, whose subject line announced it as "Great News from Citrix."
In the memo delivered to partners July 28, Citrix also enclosed within it the letter it sent out to customers Aug. 1, citing the new policy as a "new benefit" of being a valued Citrix customer. "Citrix will be your sole source for Subscription Advantage and hardware warranty renewals," the letter said. "With this change your Citrix Authorized Solution Advisor can provide you with renewal quotes . but payments will be made directly to Citrix."
One source close to Citrix said the company's channel is engaged in a price war, and the new renewal policy aims to level the playing field for VARs that provide value-added services first and handle renewals as they come up. He said those partners often compete against another group of Citrix partners that milk the renewal business and poach other partners' Citrix business by offering customers discounts on renewals.
One industry observer said the change could help elevate margins for all partners, yet some Citrix partners interpreted the move as a way for Citrix to increase revenue and gain more control over customer accounts.
Acropolis Technology's Butler, a longtime Citrix partner, said there's no price war going on that justifies Citrix's intervention. He said he has discussed the renewal policy change with several Platinum partners, and none of them sees how the move will benefit the Citrix channel or customers.
For example, Butler said, partners now earn 15 percent to 20 percent margins on renewals and have the flexibility of pricing the software for each customer. Under the new terms, authorized partners likely will be cut out of the transaction over time and could lose account control--in addition to their renewal margins--to Citrix, he noted.
"If a client needs to renew, will they think of us to handle the renewal? I hope so, but I think not. I have a good feeling where that margin will go, and I don't think it's client-focused," Butler said. "It's funny, because the way they're positioning it they're leveling the playing field. But before they left it to a free-market economy and let partners price it where it makes sense for the client. Now the client sets something up with Citrix and pays by credit card or financing. "
Citrix couldn't be reached for comment on the matter. But it looks like the Fort Lauderdale, Fla.-based company is getting more aggressive in the Subscription Advantage renewal business.
In the letter announcing the change to customers, Citrix pointed to a promotion that began July 10 in which customers that renew, reinstate or recover any Citrix Subscription Advantage membership are eligible to buy 25 users of Citrix Presentation Server 4.0 (any edition) for the cost of 20 users, representing a 20 percent discount off the suggested retail price.