Blue Coat Puts 27 Percent Of Partners On Notice


Blue Coat Systems just emerged from a year of big corporate changes and is now turning its attention to solution providers, confirming plans to overhaul its channel program and cut or demote more than one-quarter of its global partner base.

Blue Coat earlier this month notified about 27 percent of its 2,400 current partners that they would be demoted from higher tiers (Premiere and Elite) of its Channel Advantage Program or cut from the program entirely. According to Eric Cross, vice president of field operations for the Americas and Blue Coat's acting Americas channel chief, the cuts were made to partners that either weren't meeting their revenue requirements or didn't have up-to-date compliance for their partnering tiers.

"It was a very prescriptive process," Cross told CRN. "We looked at the number of technical and sales certifications and looked at the revenue thresholds they were achieving. Overall, we had 13 key criteria we looked at, so it wasn't solely, is the partner meeting the threshold or not."

[Related: Blue Coat Going 'Back to Channel Basics']

Blue Coat's priority is to build more strategic relationships with its loyal partners and, to that end, the Channel Advantage Program is seeing significant change as a whole. Cross used the term "incumbency policy enforcement," which he described as more investment by Blue Coat in helping partners win business against competitors, but stricter oversight by Blue Coat over partners maintaining their Channel Advantage Program requirements.

"We have a real clear picture on this," Cross said. "For the partners that we have, we'll be adding additional margin in some areas and doing [things] to reward partners for driving growth."

Among the newer incentives is the addition of more margin for support sales that accompany any new product sales -- up to a 20 percent back-end rebate, Cross said.

Blue Coat also will provide partners with better access to marketing resources and Blue Coat engineering and support resources, plus online tools such as an updated PRM system to help simplify how partners manage and execute their MDF activities. In addition, a content syndication platform called Blue Coat Showcase will make it easier to promote leads to partners.

Blue Coat, Sunnyvale, Calif., has made a multimillion-dollar investment in partner resources to enable all this, according to Cross.

On the governance side, Blue Coat will more frequently be auditing partners to ensure they're compliant. Blue Coat also plans to lower the services margins it offers partners.

"We did an exhaustive analysis of industry service margins, and we found that what we are offering was twice as high as the market," Cross said.

Asked if he'd received blowback from Blue Coat partners for the services cuts, Cross said: "For partners that have been focused on net-new business as well as renewal business, the feedback has been more positive. As we recognize partners who aren't meeting the technical and sales requirements or revenue thresholds, yes, it's been received less warmly. It depends."

Cross said Blue Coat is deep into interviews for a new Americas channel chief and expects to announce that executive later this fall. Laurie Usewicz, former vice president of Americas channel sales, left Blue Coat in May. Blue Coat eliminated the global channel chief role last year in a bid to decentralize channel management in favor of regional leaders.

Cross acknowledged that Blue Coat partners are craving stability after a year of big changes, including Blue Coat's CEO switch and its subsequent acquisition by private equity big wheel Thoma Bravo. He said Blue Coat will maintain its 100 percent focus on channel partners and continue to add incentives to the Channel Advantage Program.

Earlier this year, Blue Coat tweaked the program to more clearly delineate partners selling its WAN optimization vs. its Web security product lines. That said, Blue Coat is also seeing more solution providers interested in selling both WAN op and security as part of overall data center optimization deals, Cross explained.

"As the industry shifts, we are seeing a blending between the two as partners work to attack these disruptive forces," Cross said. "If they focus on optimization, there also is a business need to pull security into that. I think partners recognize that if they expand their footprint with us they become more engaged across the entire portfolio."

PUBLISHED SEPT. 18, 2012