Certeon Guarantees 20 Percent Margins For WAN Optimization Partners

As an emerging vendor in a market crowded with established players -- that would be WAN optimization -- Certeon needs a good hook to attract channel partners to its all-software WAN optimization and acceleration platform. To Certeon, that means getting at partners where it counts most: their margins and profitability potential.

The Burlington, Mass.-based vendor on Tuesday went live with a new version of its partner program, through which it will guarantee at least a 20 percent margin on qualified sales of its aCelera WAN optimization and acceleration technology. Many partners will in fact be able to earn up to 40 percent margins on their aCelera sales, and all will be able to work closely with Certeon during the discounting process, according to the company.

"There's a major disconnect in IT between manufacturers and resellers," said Karl Soderlund, Certeon's senior vice president, worldwide sales and business development, in an interview with CRN. "Manufacturers are focused on top-line bookings, and resellers are focused on bottom-line profitability. Traditionally, you can go out there and promise high margins, but due to competitive pressures and that disconnect, they're dragged down into single digits. Most resellers would say you can't run a healthy business on single-digit margins."

Certeon's aCelera line is a 100 percent software-based WAN optimization and WAN acceleration technology: not only virtualized, but also hardware- and hypervisor-agnostic. Its executives are positioning Certeon as an alternative to better-known WAN optimization market leaders like Riverbed, Cisco and Blue Coat, but as a more flexible software and virtualization-ready solution with much lower total cost of ownership. Certeon's argument is that it already has an advantage because, from list price to list price comparison on comparable feature sets, Certeon is 25 to 50 percent lower than the WAN optimization leaders.

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Soderlund joined Certeon a year ago following two years as vice president and general manager for sales and marketing at HP ProCurve, now known as HP Networking. After more than 15 years in IT -- including stints at Extreme, Cisco and Fortinet before moving to HP in 2008 -- Soderlund said he's learned a few things about what makes the channel tick, and that's what he and his team are trying to bring to Certeon.

"Let's be aligned," Soderlund said, discussing how he wants VARs to view Certeon. "I met with the heads of all of our partners in the past year, and what we talked about was, 'Give me a partner portal that gives me everything I need' and 'How do I become easier to work with.'"

There is no longer a standard discount on aCelera sales, Soderlund said. Instead, when a partner properly registers an aCelera deal via Certeon's new partner portal, the partner is guaranteed at least a 20 percent margin, and also the opportunity to work with Certeon via a web-based partner margin calculator to go through with Certeon representatives and understand how the final discount will be established, based on what services the partner plans to bundle and the scope of the deal.

"They see the hard dollars and the profitability they're going to make," Soderlund said.

Certeon is also offering a measure of deal protection. If a Certeon VAR registers a deal with Certeon, but ends up losing that deal to another Certeon VAR, Certeon will still provide a 10 percent margin to compensate the partner.

The interaction is managed through the partner portal: Certeon partners can create and review deal registrations, Certeon can distribute leads to partners, and partners can also access marketing materials and on-demand training, and request approval for marketing activities and MDF.

Certeon has 35 registered partners in the U.S., 18 of whom Soderlund would consider allied solution providers. He'd like to see the number of overall Certeon partners double in the next year, and one goal of the aggressive margin program is undoubtedly new partner recruitment. Soderlund said the bulk of Certeon's partners are networking- or storage-focused solution providers strong on virtualization and with an in-depth understanding of WAN optimization.

"I've done a lot of channel," he said. "You have to show a level of commitment with the partners. I want to draw a wider net and attract a lot of partners. We need to be a disruptive player in the mindshare."

Soderlund added that Certeon isn't planning to work with direct market resellers or broadline distributors -- not yet anyway -- to help protect and keep undiluted the margins for Certeon's select partners.

NEXT: Virtualization, Cloud Drive WAN Op Forward

John Barker, CEO of Versatile Communications, a Marlborough, Mass.-based solution provider, said that Certeon's guarantees are a rare thing in the channel.

"To have a 20 percent margin guarantee on a sale is simply unheard of in this industry," said Barker in a statement e-mailed to CRN. "We know the aCelera technology is world-class, but this is just another incentive to sell the solution."

The company has worked to expand its reach -- earlier this month, it announced an agreement with CloudOne to provide software infrastructure for integrated development environments using IBM Rational -- and also continued to expand its team. Specific to the channel, Soderlund said, Certeon has added a number of internal channel account managers (ICAM) to give partners someone they can contact whenever they need.

The growth of virtualization and the rise of cloud computing are both making WAN optimization a focus technology, Soderlund agreed. That presents a great opportunity for Certeon to market against hardware appliance-based WAN optimization vendors.

"I can go back two years to the traction and explosive growth of virtualization, and the fact that [customers] not only save from a cost standpoint because they need less bandwidth, but they also have a competitive differentiator," Soderlund said. "I think we're going through another trend or transition now. If it's the year of the cloud, it means cloud services, and that means a lot more over the WAN. Not having to put hardware in every site drives down user cap-ex and op-ex, and means from a price point, I can be very aggressive."