CRN Interview: Christine Durham, Nortel

Although Nortel Networks has been struggling financially, the company has made some concerted efforts to woo the channel, especially in the enterprise. In an interview with CRN Editor in Chief Michael Vizard, Christine Durham, Nortel's vice president for Enterprise Channel Management Marketing, highlights what specific actions Nortel is doing to strengthen its channel partnerships.

CRN: Nortel has what it calls the Partner Advantage Program. What's unique about Nortel's channel program?

DURHAM: One of the things we did that is brand new for us is we have designations now ... that are Advantage Elite, Advantage Premium and Advantage partners. Those designations are based on things that have value to end users. There are 36 service criteria and competency requirements. They shift slightly for Premium, and again, they're a bit different for an Advantage partner. Those partners that are Elite have really dramatically invested in Nortel infrastructure to become competent and that investment translates to meaning to the end user; therefore, we're seeing customers requiring an Elite partner or Premium Advantage partner in a proposal. That's happened rather quickly.

Underneath the designations are a few other things that we've implemented. We have an innovator program to drive early adoption of our products through the channels. We've also got an expert program that rewards channel partners who stepped up to gain expertise in a specific area.

CRN: How many partners does Nortel have today?

DURHAM: We have thousands of partners,somewhere in the 3,000 range. Now, through the Advantage program, we have approximately 100 designated partners.

We're working with another 100 or so to move them into the process to become designated. We want a core group of very highly trained expert partners through the designated partners. But we will have the Nortel networks resellers that are nondesignated but still are valuable partners. We're delighted with what we're seeing, and the partners have really enthusiastically embraced Advantage.

CRN: Are you specifically targeting partners of rival manufacturers?

DURHAM: We do see a lot of disenfranchised partners from other manufacturers who are definitely talking to us quite a bit about moving over to Nortel. I think that channel conflict is definitely a source of contention right now and one that we're trying to capitalize on. One of the things that we've always scored very highly on in the past is profitability. We've always maintained partner profitability to a very large degree and innovation in product. So we have reliable products, we innovate in technology and we're profitable to do business with. It's a compelling message to a partner. And customers are looking for choices in the marketplace. They don't necessarily want to be tied to one particular vendor because they may be missing out on new solutions, new technologies as they come about as well as price,they're then tied into particular price points. We're definitely seeing customers who want to look at what are the other opportunities out there.

CRN: Is Nortel doing anything to help drive services revenue?

DURHAM: We have a plan called Service Assist. For new technologies that the channel may not be ready to invest in yet, they can actually leverage Nortel services as a resale, so they can resell our services.

One of the things we don't do is compete with our channels for service contracts.

I think that's a big differentiator in the marketplace. That's why we get rated very highly in terms of channel profitability because we may work with them to sell it but then they still retain the ongoing service revenue. That's a huge part of the reseller business model. So if we went in and undercut them on service, we'd really find ourselves in a dramatically different situation. Where you have gaps, we allow you to sell the full end to end but we come in and supplement you as necessary to ensure that you can really sell the customer the whole solution.

CRN: How do you reward partners for making these investments?

DURHAM: As Advantage partners step through meeting criteria, there are training credits associated. That's one of the incentives and the rewards to those partners. As they invest in training and certification, we invest back in those partners to help them move further down that path. Certifications are an absolutely critical component of each of the designations. And it covers the entire spectrum of the partner dealing with the end user.

CRN: Some time back, there was some confusion in the market about Nortel going direct vs. establishing a direct touch with customers. Can you explain what Nortel is trying to do?

DURHAM: Our approach has always been to address the market in three channels. However, what we were realizing with convergence and more complex technologies is that we needed to be closer to the customer. So what we implemented was a direct-touch model whereby our own sales force,and it's a fairly small sales force,actually works directly with some of our major customers. They in turn work with our channel partners on fulfillment and network engineering design. That part never changed. What we've done is made our sales force more market-facing.

CRN: How many salespeople are there and how are they assigned to customers?

DURHAM: They mostly are working named accounts. Some of them are vertically oriented. There are about 350 direct-touch sales reps across North America. And they're there to drive Nortel and create demand for our channel partners.

CRN: What market areas are you after most these days?

DURHAM: SMB is a huge opportunity. We've got products and solutions that really fit that market space well. We are really excited about several of the vertical markets. We've made a big investment in federal government. Hospitality, health care, education [and] finance are verticals where we've always been extremely strong. In terms of technologies, wireless LANs, voice over IP and convergence will always be No. 1 for us. Obviously, that is our unique differentiator in the marketplace. We have voice expertise that's unparalleled combined with our data history. I think we are uniquely qualified to deliver on convergence and deliver working solutions today and the whole spectrum of choice associated with it.

CRN: When it comes to convergence, what do VARs need to remember most?

DURHAM: The one thing that customers understand as they merge is that voice isn't just an application you slap on the network. If you're looking at some of the vertical segments like hospitality, where you've got to worry about property management system and wake up calls, there's a whole history of features and functionality that you do have to have the background and understanding of. I think some of the other vendors are finding that out a little late in the game and really scrambling. I think we've always been able to deliver that to the marketplace and combine that with the data expertise.

CRN: Do you worry that Nortel is too focused on the carrier market?

DURHAM: I have certainly worried about that in the past. And, frankly, I've seen it in the past. A few things have changed. About two years ago there was a recognition that to be successful in the service provider or carrier space, we need to understand what the end user, the business customer wanted. And there's a recognition that those guys in enterprise are talking to those same customers every day and those customers are really the ones pushing the envelope. So if we can understand the technologies that are happening in the enterprise and build those into service provider or carrier solutions, we'll be ahead of the game. The other thing is we're an extremely valued profitable piece of the business. It's 25 percent of the revenues. So the enterprise is definitely a critical component of the strategy going forward.

CRN: Despite all the financial uncertainty around Nortel, there have been numerous new product launches. What drives that?

DURHAM: We have the most robust portfolio in the industry today and we have a broader solution for the enterprise customer than we've ever had. We're truly excited about it. The last couple of years have been an interesting few years for all of us. We continue to invest heavily in R&D and even as we reshaped the company there was a continued focus on R&D, particularly in the enterprise space, which is why you're seeing all these new products hit the marketplace now. We're actually leveraging our research and development investments on both sides of the house. We're leveraging enterprise, service provider and carrier technology developments and investments to cross that chasm. One of our core tenets is Business Without Boundaries. We can cross all of those different market segments without any boundaries and with offerings that have unique differentiators.