SonicWall President and CEO Matt Medeiros, who took the helm at the company in March, recently spoke with CRN Editor/News Steven Burke about his plan to drive up software subscription revenue and revitalize the company.
CRN: How quickly do you think you can get your solution providers to move to a recurring revenue model?
MEDEIROS: I think we have some of the resellers that have already figured this out long before we did. They are mining gold right now. One gentleman [we know of], 45 percent of his overhead is taken care of on day one of every month. When I heard that, even I am envious. Does he want 100 new customers? Of course he does. But he wants to get those 100 new customers in the same way he got the first 100 customers, working each one of them, making sure each one of them has equal mind share, making sure that every day is a day about every one of those customers, not just the new ones that he is trying to go after. That is such an important part of our philosophy. And if people can't appreciate that, maybe they are better off selling someone else's box. That is part of this whole thing of raising the bar.
CRN: What percentage of the current revenue right now is subscription-based, and what is the goal?
MEDEIROS: I want to see at least 20 percent of our revenue over the next five years converted to our service, subscription and support model.
CRN: What is that base now?
MEDEIROS: It is in the single digits. But we have a great opportunity here. And it is all about how you look at your products. That is the goal. Everyone agrees to it. ...
CRN: Talk about what you have been doing since you came on board.
MEDEIROS: This is a revitalization campaign. We are revitalizing every employee at SonicWall and every partner at SonicWall. So that means I am actually physi-cally going out and re-recruiting [every employee],do you want to work here? Can you help me get to these new sets of goals? Very much like we did in Phoenix [at the recent SonicWall partner conference]: We've got choices, you've got choices, do we have alignment and do we have agreement that we want to work harder together? Everyone has been talked to relative to that statement at SonicWall. And things are changing. ... And we are going to have some new faces. That should be expected. We have some new leadership. And we have got a bit of a new direction that we are taking the company in. Once we get past the people, it is all around products. The second half of this year, we are refreshing 50 percent of our entire product offering. Fifty percent of our products will be brand-new products. That is a huge undertaking.
The third part of revitalization is process. So it is people, products and process. And one of the processes that we are mandating now at SonicWall is customer-led innovation and commercialization. What is that? That is doing exactly what we just did in Phoenix. By sitting down with our customers when we've got things at alpha, and talking with them, and understanding the features, what the products will do, how you market and position this product. We are able to turn that dial and get those products much more in line with customer expectations earlier than if we wait for a beta and volume production. So we really are trying to involve our value-added resellers in our product definitions very early in the process. That forces you to have a very trusted relationship. If I am sitting down with my VARs and saying, 'Here is my product road map for the next 18 to 24 months,' if they start promoting our proposition it is going to incent our competition in a much faster way. Now it also forces a level of trust between ourselves that is necessary to keep the relationship healthy. And we think that customer-led innovation and commercialization is going to be one of the critical processes at revitalizing SonicWall.
CRN: Talk about how you are planning to raise the bar for solution providers and create a new tiered model.
MEDEIROS: Well, we haven't fully developed it and deployed it. But I think it is safe to say what we want to do is no longer look at our Gold VARs solely from the sense of volume sales. Yes, that is important, but it is not the only metric. We want people that want to service their customers. We want people and VARs that know how to service the customer.
CRN: It sounds like you are going to have a tiered program that is going to require a certain number of technicians.
MEDEIROS: Absolutely. So it is going to be around what your service proposition is post the sale. And I think that we can get there quickly because most of our Gold VARs already have a program that we have established. Now whether they have got the resources behind it, that is a different discussion. So the certification is how many of them have been trained, and how many of them are really going off and keeping a 24x7 service line open for their customers. We met with one VAR, a great company,they are installing our systems into 2,900 Ace hardware stores. Well, I have got news for you. If you are going to do that, you better have 24x7 support and a sales engineering group literally across the country.