Mitel CEO: 'We're Going To Clean Up Our Act' On Channel


When Richard McBee became the new CEO of Mitel in January, he kicked off many months of discussion with shareholders, customers, employees and Mitel channel partners, trying to get a sense of why Mitel's financial position had faltered and why the once-proud networking and UC company was leaving so many partners cold.

In the channel, at least, he found out the answer pretty quickly.

"I heard, 'Don't compete with me!" McBee said, when asked about the feedback he received from Mitel partners. "When I can't differentiate myself from the manufacturer, and the manufacturer competes with me, I can't win. [Channel] guys differentiate themselves around what they can provide. We were eating margin away from channel partners."

At Mitel's Business Partner Conference in Hollywood, Fla., this week, where many Mitel partners will be meeting him for the first time, his goal is to make several things clear to Mitel channel partners.

Top of the list?

"We're going to clean up our act," said McBee. "We haven't been as good a partner as we could have been. This is a rip-off-the-Band-Aid [event]."

McBee is a 20-year IT and telecommunications veteran, and as of Jan. 17 assumed stewardship of Mitel from outgoing CEO Don Smith. Previously, he was president of the Communications & Enterprise Group at Washington D.C.-based Danaher Corp., responsible for more than $700 million in direct and indirect sales for carrier, enterprise and SMB markets.

At Mitel, McBee has his work cut out for him. Mitel recently passed its one-year anniversary as a public company, but has been strained under the disappointment of its April 2010 IPO, in which shares of the company were priced below expectations and fell 12 percent after their debut.

From a market perspective, things didn't improve much throughout the year, and in late March 2011, Mitel's stock hit a low point of $4.01 per share. Analysts have questioned Mitel's traction, especially with much bigger and better-known unified communications competitors like Avaya, Cisco and Microsoft, not to mention scrappier upstarts like ShoreTel, making gains.

Mitel cut about 20 percent of its workforce last year, and closed out its fiscal 2010 with $647.9 million in revenue. Its fiscal 2011 ended on April 30, and it is scheduled to report fourth quarter 2011 and fiscal 2011 results on June 30.

McBee knows all this. Speaking with CRN earlier this week before the partner conference kicked-off, he sounded an optimistic, yet realistic tone.

"Mitel is a really good company," he said. "But our channels haven't been working for us. We've created channel conflict beyond anything that should have been there, and our growth has been hampered by it."

Dogged by years of conflict with Mitel's direct sales force, Mitel channel partners became consistently frustrated with their Mitel engagements, McBee said. And the conflict was no illusion.

At one point in his travels, he said, he visited a Mitel field office that was divided into two sides: direct sales representatives on one, and indirect, channel-facing representatives on the other. What he was told, McBee said, was the two sides were kept entirely separate because if the indirect reps brought potential customers in to the office, the direct sales representatives would try to steal the business.

"We're really working in that kind of environment? You've got to be kidding me!" McBee said.

Now, nearly six months into his new job, McBee has taken up the task of rebuilding Mitel's channel strength within his responsibility to grow the company.

 

Next: McBee's Plans For Mitel Channel Growth