Citrix Direct Move Ruffles VARs' Feathers

Some partners are upset that Citrix Systems is taking its license renewal fulfillment business direct, even though the software vendor claims its new policies will benefit its channel.

In a memo to partners dated July 28 which was obtained by CRN, Citrix announced it will be processing Subscription Advantage license renewals directly with customers and is transitioning its partners to an agency fee model. Subscription Advantage is Citrix's licensing program. The changes and new online renewal process took effect Aug. 1.

As part of the revised program, Citrix laid out a new adviser compensation model. Under the new terms, partners are eligible for a 15 percent commission for influencing renewals, but they must cite renewal quotes at 100 percent list price for their "assigned" customers.

Citrix claims eliminating discounts will reduce customer confusion over pricing and increase partner profitability.

In an interview with CRN, a Citrix executive said the company is trying to level the playing field for partners that truly influence renewals and product sales.

"We want to make sure the right influencing partner is rewarded for subscription revenue," said Thomas Eacobacci, vice president of services, North America at Citrix.

He said the company had a similar model four years ago. He insisted that Citrix is not going direct and that the new policies going into effect this month will drive more renewal business through the channel.

For example, Eacobacci said, Citrix also enacted a new compensation neutral policy Aug. 1 that no longer rewards Citrix sales reps with a higher percentage for getting renewals direct from customers, a change that favors partners.

Still, some Citrix partners maintain the new policy ultimately will reduce their margins, which can run as high as 20 percent, and erode customer account control, since customers likely will order directly from Citrix over time.

"I don't see any benefits at all," said Tracy Butler, CEO of Acropolis Technology Group, a St Louis VAR that generates $100,000 per year on Citrix Subscription Advantage renewals. "Citrix is not [a VAR] and shouldn't be dealing direct with clients. This is a step in the wrong direction. We've always been the Citrix badge to the client, but now they're backtracking. It undermines us in our clients' eyes."

Eacobacci said there is confusion in the channel over the new policy and that Citrix has dramatically increased the percentage of Subscription Advantage renewal business going though the channel—to 65 percent from an average of 25 percent two years ago—and the goal is to get that to 75 percent in 2007.

Citrix posted $99.8 million in second-quarter 2006 revenue and $331.1 million in fiscal year 2005 from license updates globally.