Novell Channel Chief: Let Customers Buy The Way They Want

During a meeting with CRN at BrainShare 2006 in Salt Lake City, Steve Erdman, recently appointed vice president of channels and alliances at Novell, said the company will have a mixed direct-indirect model for its products and services offerings that is led by customers.

"The customer ought to buy the way they want to buy," Erdman said. "They ought to be able to do this if they want or buy through some channel entity. We're channel-led but it's a customer-driven business."

At Dell, Erdman served as a vice president. Prior to his three-year tenure at Dell, the Atlanta-based executive worked at 3Com for three years and at IBM's PC and server group for 13 years. He joined Novell in February.

During BrainShare, Novell CEO Jack Messman estimated the current mix of direct and indirect sales at 50 percent though the company direct and 50 percent through partners.

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Several partners, however, estimated the mix at 70 percent company and 30 percent channel, based on Novell's named accounts model, enterprise focus and assuming control of volume licensing.

Erdman said the software market has changed and Novell needs its partners to focus on value-added, high margin opportunities such as identity management (IDM), software management and deployment, and Linux conversions.

"Procurement is easy," Erdman said. "The reality is in the application space, the partners are invaluable."

Erdman said most sales of Linux, for example, will go through OEMs but partners will be needed for higher margin application and infrastructure opportunities. "IBM, HP and Dell are the key drivers of SUSE Linux but we need more customization in the data center," he added.

While software reselling has largely given way to a service-based model over the past five years, some Novell partners are still making money on product and licensing sales.

Some partners say Novell has taken more of the enterprise licensing business away from partners and cut off fees for renewals. And it hurts.

"They're taking a lot of reseller business direct," said David Balcar, network architect and owner of Network Design and Integration (NDI), a Novell Platinum partner based in Houston. "We can do services but we did a renewal last October for $70,000 and we got nothing for it. It's not a lot, but if we get three to five points, it's an extra $3,000 to $4,000 and it helps. It pays the rent for a month. They yanked it."

Novell is not trying to cut partners out of the sales equation but is devising strategies for steering existing partners to provide value-added services for vertical markets based on its Identity Manager and Zenworks products and growing the number of new Linux partners, executives said.

Novell has worked though through IBM and HP to find Linux partners, and has tapped into the HP Linux Elite program, but it has not been an easy task, Erdman said.

Novell is going after specialists and vertically oriented consultants and partners that have not been Novell partners in the past. For this, Novell has tapped into Avnet, said Ladd Timpson, director of channel marketing at Novell.

Both channel executives said Novell is taking a page from Microsoft's playbook, and encouraging specialization.

The Waltham, Mass. company plans to offer certifications in various specializations and enable partners to earn a competency without having to go through the typical partner program requirements of becoming a certified or gold Novell partner first, he added.

"Many traditional Netware partners tend to be generalists in nature so we've got to have more specialized partners with a value proposition," Timpson said."Microsoft has done a great job with the competency stuff, and with the idea that the generalist role is going away."

Erdman agreed.

"I'd like to see us grow new kinds of partners because the traditional Netware partner may not be the perfect partner for an IDM solution so we're going to find more specialty partners," Erdman said. "And in the Linux space, we have net new partners and building a Linux-ready channel who are SUSE-enabled partners and recruiting new partners. It's really challenging. "

But Erdman made no bones about which Novell constituency will be in charge.

"The greatest key to Dell's success is its focus on the customer experience, and letting customers buy the way they want," he said. "Dell goes and executes. I'll let the customer decide how they want to buy. Some customers are an end-to-end data center shop and what they need is the most efficient way to buy."

Keep It Simple (KIS) is a Fremont, Calif-based Novell solutions and consulting firm that currently makes 50 percent of its money through reselling Novell products.

John Marciano, director of sales and COO of KIS, agreed that engineering services will drive most revenue for his firm in the future but he is concerned about Erdman's direct focus.

"Everything we heard about him is he's channel centric so being from Dell was not a black mark," Marciano said. "But saying that? It's scary. I wish he didn't say that."