Veritas' Channel: Management’s Misstep

Legato's low scores reflect a decision by previous management to go to a direct sales model with a de-emphasis on channel partners. It was exacerbated, resellers say, by a decision not to protect channel partners as the direct sales force moved in. Channel-support programs were eliminated and cut back. Not surprisingly, the moves created a massive amount of ill-will among the company's value-added partners, many of whom dropped Legato.

By late 2000, it was clear the new approach wasn't working. Legato was in trouble, and a new management team was brought in to turn things around. Their first initiatives included killing most of the direct sales programs, reinstating the emphasis on the channel and starting to aggressively woo channel partners. In May, the company said that by the end of the year it would go to "100 percent partner fulfillment-centric, except for a few named accounts," says Charles Fonner, Legato's new executive vice president for worldwide marketing and strategic alliances. The geographic sales force has been dedicated to supporting channel partners rather than direct sales, the company has increased the number of sales engineers, expanded partner programs and doubled funds available for cooperative advertising.

"I'm really encouraged by where I think they're going with [the new programs]," Cambridge's Berton says. "If they execute on what they've started, they'll be a terrific partner."

Legato may be an extreme example, but all the vendors are emphasizing channel relations. Even companies such as CA, which has sent mixed messages about its focus, say they are reforming and back the assertion with new programs and activities. "I can say unequivocally, we are absolutely committed to the channel for the storage-management market," CA's Milford says. "We have put together some consistent rules of engagement between direct and indirect channels to minimize conflict."

Milford also notes that CA launched a new channel-partner program at its recent CA World conference, including opening some new channels of distribution. Now, he says, CA's relationship with the channel is "good and definitely improving in terms of new programs, new products and commitment to the channel."

Part 2: Veritas' Well-Built Channel