Novell's Agent Move

Effective Nov. 1, Novell is changing its Master License Agreement (MLA) Fulfillment program to a Software Services Agent (SSA) program, according to a document signed by Nancy Reynolds, vice president of North America channel sales at Novell, and examined by CRN.

The change will mean a sharp reduction in the number of resellers authorized to sell MLAs to about a dozen from about 200. To offset the loss of business for those affected, Novell will introduce a new agent fee of roughly 5 percent for all partners that influence a Novell buying decision. More significantly, the company will formally begin handing over many of its direct accounts to Platinum partners and others next month, sources said.

The program will also substantially cut the commission for Novell's fulfillment resellers, which currently can hit upward of 10 percent, sources familiar with the program also said.

"Yes, this does mean a reduction in commissions for fulfilling the product and probably fewer, but better qualified, partners," said Reynolds. "However, we are currently testing a program by which our top partners can earn rebates for creating demand and influencing Novell solutions within the midtier market," she said.

However, the fulfillment houses,which will now be called software services agents,will see a greater volume of MLA business due to the reduced number of partners authorized to sell MLAs. In addition, Novell is expected to turn the vast majority of its internal MLA licensing service and support contracts to those software service agents, sources said.

Similar to Microsoft's Enterprise Agreements, Novell's MLAs are site licenses that cover all Novell software for an enterprise and can cost about $300,000 to $500,000.

"Everything we hear is positive, but we're only worried about the fee structure and commission for agents," one reseller said. "Novell will hand over all of its licensing and licensing-services business to SSAs. They used to call us fulfillment agents, but now we're going to do more asset management and licensing expertise services," the reseller said. "Many partners will be eliminated and can't play in this agency model, but they can be technology agents."

One MLA partner that handles more than $1 million in MLA contracts said he is worried about the revenue he could potentially lose. While noting he supports Novell's plan to turn over direct accounts to partners, increase subcontracting deals and services leads to make up for it, the partner said he is worried the channel vision won't trickle down to the local level.

"The thinking is Novell will reduce the number of fulfillment partners drastically and others will be compensated for influencing an account, rather than software sales," he said. "From the executive level, the strategy is excellent. But from the district level down to the lower ranks, it's not the same thinking."

Novell, for example, plans to turn over many Corporate License Agreement (CLA) and Volume License Agreement (VLA) direct accounts to Platinum partners, sources said. The vendor is also considering merging the two programs into one, sources said. CLAs are for specific product licensing deals that range from $20,000 to $200,000, and VLAs that customers can buy into for as low as $1,000, sources said.

Carlos Paz-Soldan, vice president at Tenet Computer Group, a Toronto-based solution provider, said he is not concerned about the lower licensing commissions and as "long as we do the services, I'm OK."

One Platinum partner said the intent to turn most of Novell's services business to channel partners is not a hollow gesture. "We're not a big software house, so the effect on us won't be as drastic as for the big fulfillment agents," said the partner. "Novell is not taking business direct. The MLA will still be there for the agents, and they are turning over their CLA and VLA accounts that were direct to the Platinum partners. That's all coming to partners except for the targeted accounts Novell will handle," he said.

Novell plans to initiate a nomination process in mid-November to turn over those accounts to Platinum dealers.

The company also plans to debut a new program called LeadMaster, now in the pilot phase, that will automate the process of lead generation to partners.

Channel partners are concerned about the lowered commissions, as well as the paring down of the number of fulfillment houses and named partners. However, many channel sources say Novell has become more channel-friendly.

Novell's services arm has pledged not to play in the SMB space at all.

In the past two weeks, Rochester, N.Y.-based NetSetGo received "four warm leads" from Novell, said Darrin Nelson, vice president of e-development at the solution provider.

AMY ROGERS contributed to this story.