Alcatel-Lucent: Building That Enterprise Channel Buzz12:20 PM EST Mon. Jun. 25, 2012
It's been a long time since the buzz around Alcatel-Lucent's North America enterprise channel was this good.
A recent overhaul of the region's channel strategy and some big moves by its key executives are starting to impress a partner community that, if not totally ignored, could be fairly described as undernurtured.
"The channel in the past had an awareness problem, particularly in U.S. and Canada compared to the rest of the world," said Sandy Spencer, area vice president, channels, North America Enterprise Business, Alcatel-Lucent. "My focus is to come in and change that perception, and a lot of it goes back to some basic, fundamental practices, like treating the partners like partners."
The North America enterprise getting lost in the broader context of Alcatel-Lucent is understandable in the corporate sense. Alcatel-Lucent's global enterprise business represents only about 10 percent to 12 percent of the Paris-based telecom giant's roughly 15.69 Euro ($19.8 billion) in annual revenue and, even then, its enterprise presence is better known in Europe and other geographies. No question it's the company's massive telecom businesses -- and announcements such as the May launch of Alcatel-Lucent's new monster 7950 XRS core router -- that get most of the headlines.
But solution providers and distributors interviewed by CRN said it wasn't just that North American enterprise solution providers were an afterthought. Reports of Alcatel-Lucent channel conflict have persisted for years and, even where there wasn't conflict, solution providers didn't feel as though they were aligned to the company's field sales teams, and, on the other hand, field reps weren't incentivized to work with the channel.
It appears a lot of that has changed, and in a recent discussion with CRN, Spencer highlighted two targeted moves that have started to make a difference.
Alcatel-Lucent's North America enterprise channel now numbers 270 partners, and Spencer -- with the backing of key executives such as Gus Vasilakis, vice president, North America -- have started the long process of realigning the North America channel program under Alcatel-Lucent's global channel program.
"For whatever reason, North America was doing some of its own things," Spencer said. "So we're migrating the channel back under the worldwide channel program, which is run by Jan Zuurbier [Alcatel-Lucent head of global sales]. That way, we can leverage all of those resources, those marketing programs, those MDF programs, those co-op programs, those pricing programs."
It's a slow process, Spencer emphasized, because Alcatel-Lucent's global presence means everything from different customs, tax and financial models throughout the world to leveraging distributors that are multiregional and multinational. But Spencer described the move as utterly necessary and one that Alcatel-Lucent expects to have finished by 2013.
"Any great channel has to be unified, at least if you're going to see the volume done by the Ciscos and Avayas and Junipers of the world," he said.
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The other major move Alcatel-Lucent's Spencer described was getting the enterprise business unit's direct and indirect channel sales teams not only on the same page, but actively collaborating.
"The direct side would go sell directly, and the channel side would go out and sell through partners, and there was no cohesiveness -- no team approach to any of that," Spencer said. "Quite honestly, one of the first things we did was make the significant announcement that we are one enterprise unit. The channel and direct side need to work in concert, through the channel partners, to bring in opportunities."
Improvements are showing up in the enterprise business unit's balance sheet. Revenue is up 17 percent year to date, with a 31 percent increase in bookings, Vasilakis told CRN, and many customers are now buying two or three times a year. Vasilakis is confident the unit, which is at about $200 million in revenue now, can hit $500 million within two years.
"When you're selling hardware, it's a commodity, so what you're selling is really the services around it. People buy based on how convenient it was to do business and what their total cost of ownership is," Vasilakis said. "We have the results we have now because we've been able to attract talent both internally and externally, and attract partners, and get them trained and enabled."
A few other things have happened to improve the focus on enterprise. One was Alcatel-Lucent's recent divestiture of Genesys, the contact center business that's once again a separate company, acquired by Permira and Technology Crossover Ventures for about $1.5 billion in a deal that closed Feb. 1.
The sale of Genesys ended distraction on several levels, not the least of which was the speculation that it was Alcatel-Lucent's enterprise unit that would be sold.
"The product focus now is really on the mobile user and on the fixed user, and the efficiencies of those two working together," Vasilakis explained. "We don't have the confusion around needing to talk up a flagship call center product because not everyone was interested in that."
Some of the major Alcatel-Lucent enterprise faces also have changed. Spencer joined the company in October 2011 following a year as vice president of North America channels at Mercury Payment Systems, but he's best known, particularly in the telecom channel, for the 11 years he spent at Qwest Communications, six of them as channel chief. He's since added other talent such as Nicole Copeland, who has worked in Alcatel-Lucent's carrier businesses since April 2005 but in March of this year came over to the enterprise channel team as director of marketing.
There's fresh blood in the mothership, too. In late January, Alcatel-Lucent named Michel Emelianoff its new vice president, enterprise, replacing former enterprise chief Tom Burns. Emelianoff had been vice president and general manager of Alcatel-Lucent's data and security solutions business, and has been with the company, and its predecessor, since 1998. Emelianoff knows channel, Spencer and Vasilakis said -- he ran Alcatel's enterprise voice business unit from 2003 to 2007.
"The leadership in Paris is incredibly helpful and supportive," Spencer said. "I have seen nothing but excitement to support us in North America."
Spencer and his team will focus on making Alcatel-Lucent consistently easier to do business with. Training, for example, was something Spencer said was too complex and it took too much to get solution providers -- particularly partners ingrained in dominant North America channel ecosystems like Cisco's -- to consider it.
But the Alcatel-Lucent story gets remarkably compelling when those partners get to the table, he insisted. Alcatel-Lucent is now expanding all its major enterprise product lines, from unified communications to its emerging data center fabric strategy.
"Once we on-board a partner, I hear every time: 'I can't believe I didn't know about this,' " Spencer said. "There is incredibly strong value here."
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John Borusheski, vice president of telecom and network products at Arrow Enterprise Computing Solutions, said a lot has changed now that Alcatel-Lucent's direct and channel sales forces are working more closely together.
"No question there are fewer issues that need to be resolved," Borusheski told CRN. "That helps us enable [partners] to come out and hit the street with knowledgeable salespeople. That and the wins and the better press they've been having -- that gets people's attention."
Arrow ECS, Englewood, Colo., first started working with Alcatel-Lucent in North America through its 2010 acquisition of Nu Horizons, and the portfolio represented the first major voice product on Arrow's line card, Borusheski said. Arrow solution providers have gotten particularly interested in Alcatel-Lucent's data center products and its OpenTouch collaboration suite, with which Alcatel-Lucent competes with Cisco and Avaya.
"Like a lot of engineering companies, they haven't focused as much on brand recognition," he said. "They are well known, especially on the carrier side, but they're not the type to go out and get the buzz going. We all need to look at more types of social media, in particular, to do that."
Alcatel-Lucent's immediate advantage is that its products work for varied enterprise needs and are available, Borusheski said. But not being overdistributed also will work in its favor, especially if Alcatel-Lucent can continue to offer competitive margins for the channel.
"The financial question for customers always depends on what they're trying to get done," he said. "But CIOs aren't as quick to chase shiny objects as they used to be. You have to be able to show ROI. Markets aren't as much there for overdistributed products, and here the channel has the opportunity to come in with a fresh approach. It's a big, well known company, but many find they can walk away with more money in their pocket than they thought possible."
Other partners are finding definite greenfield opportunity with Alcatel-Lucent's products. One such partner is ICON Voice Networks, an Irving, Texas-based solution provider and master distributor.
When ICON first started working with Alcatel-Lucent 14 months ago, it had an interesting problem to solve. ICON COO David Carissimi and ICON CEO Kevin Kelleher, who had worked together at the former Iwatsu America for decades, had just bought the assets of Iwatsu Voice Networks, becoming the exclusive distributor and maintenance provider of Iwatsu products in North America.
Most of ICON's 230-plus dealer channel, however, was focused on SMB, and targeting customers with bigger port needs and more sophisticated requirements. With Iwatsu products not fitting the bill in those cases, Carissimi said ICON starting evaluating other networking companies with U.S. presences and picked Alcatel-Lucent after an in-depth technology review.
"I was dumbfounded by what Alcatel had," Carissimi told CRN. "It is the most comprehensive umbrella portfolio of products in the industry today, bar none. They didn't have a name in SMB, and that was our forte. When we talked with them, our position was very simple: 'We have a channel in need of product, you have product in need of a channel.' "
Alcatel-Lucent quickly established that it wanted to build relationships at a street level, Carissimi said.
"What stood out is that they're a massively large company, but they operate at a business-to-business level like a small company," he said. "We have a mature dealer channel used to selling SMB. So they had to have that."
One thing that helped along the way, Carissimi said, was Alcatel-Lucent providing ICON a part-time employee based out of ICON's headquarters. ICON also held meetings with an independent consulting firm hired by Alcatel-Lucent to make its distribution relationships stronger and more efficient.
"The 10,000-foot view was how do we strengthen the relationships, business processes, marketing -- how do we acclimate with a better business plan," he said. "For a company of our size, that meant getting something tailored to us. Sandy [Spencer] and his team have really made a good effort in taking all the different components and building an ecosystem of partners. They've really developed an organization."
PUBLISHED JUNE 25, 2012