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You're fortunate in that this is formerly three companies that had a strong history in the channel. We've seen a few instances in mergers like these where one or more of the companies have limited to no channel strength. Safe to call that a key driver of this merger?
I would say that's true. Covad's mainly been focused on wholesale but speaking from MegaPath and Speakeasy, both have had a philosophy of being channel neutral. That means, if you're a channel partner and call in to one of our direct sales people, they will help you close the deal. There's an incentive to help partners close business, and no conflict at all. We don't care which channel satisfies the customer, we want to make sure the customer is satisfied.
We want the channel strategy to fit where the customer wants to buy, when they want to buy and from whom they want to buy. It's not our place to define how the customer answers those questions. It's the customer's place. The other thing I would say is that as the economy struggles, customers are looking for advice from people they trust on how to be more productive and how to leverage technology to scale your business. It's not a big telecom company they look to for that, it's an IT consultant or a master agent or a technology provider they have a trusted relationship with, to construct a solution.
Are you looking to grow your channel business?
Absolutely. Again, it's about 30 percent of the combined entity. Speakeasy was 35 to 40 percent and now we wouldn't be averse to having it get to 45 to 50 percent. Customers clearly have told us that they're looking for advisors to help them purchase technology. We're not going to change our mind.
What kinds of partners are coming to you? From where we sit at CRN, we see quite a few traditional networking resellers starting to get on board with, say, hosted VoIP and really trying to align their practices for these models. Is it that base of potential partners you're after?
I would say yes, to all comers. I want to find out from the customer who they want to buy from and partner with those businesses. Both Speakeasy and MegaPath have developed a number of training programs, and in Speakeasy's case, we have a set of VoIP certification training programs, moving to a Webinar series. We're merging all of these programs into modular training that's easily accessible, to allow partners to get certified and get to a higher level of certification.
The other thing to work on is the business model, and we have 4,500 independent IT consultants, many of whom are the exact definition of your readers: historically computer and LAN resellers, networking gear resellers, struggling with how to move their business. They see what's happening, and that things are moving to the cloud. I tell you, I always looked at the phone guy and said, 'How do I get his business,' and the phone guy's always looked me and said 'how do I get your business.' And frankly, we've bet on the data guy. I don't mean that as a negative to the phone guy because we have a lot of relationships there, but between the two, when you come from an IP-centric background, you're going to have an easier time migrating to host applications. We're trying to help both though: the phone guy get into data by leveraging MPLS VPN and hosted VoIP, and the data guy get into phones by basically not requiring a phone system.
From a business standpoint, we've worked a lot on on compensation strategy. If you're an independent IT consultant, you're making money with termed customers to be their outsourced IT provider, you're not just selling hardware and software. We've tried to work with those guys to allow them an augmentation to their revenue stream. We've worked on a model to help them do the business case that says what's the difference between selling a phone system one time and selling the maintenance, versus selling a hosted phone system and getting a percentage of the recurring revenue stream? We think we have a compelling value proposition for all sides.
Another thing I'll say is that the phone system is really a proxy for the business process. You can't sell a phone system to a business without understanding the call flows, how the receptionist, in a simple example, interfaces with the president, how the call centers interface with each other, how the 800 numbers work and what's advertised and what isn't. You really have to be a consultant, understand holistically what business they're in, then understand the LAN design, then design a system appropriate for them.
Next: Service Provider Consolidation Takes Hold
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