RSA Execs See Partners As Key To Authentication Sales

It's one thing to hear a door unlock downstairs and know someone has entered with a key, but it's far more reassuring to know the person with the key is actually allowed inside. Such a scenario illustrates the value of authentication products such as SecurID from RSA Security, Bedford, Mass. With its new SecurWorld channel program, RSA looks to drive more sales of its authentication portfolio through partners. As SecurWorld was readied for its April 26 launch, RSA President and CEO Art Coviello and Vice President Of Worldwide Channels Richard Turner talked with Senior Editor Dan Neel about the program.

CRN: Where does RSA's direct-sales force fit into the new channel program?

COVIELLO: Because we have a complete set of identity and access management products, including Web access management, mainframe applications and federated identity, we have an overlay sales force that sells those products into major accounts. As those products become channel-ready, and as the channel steps up to be able to handle those products, we engage, and have begun to engage, channel partners to do that as well. But that's the extent of the direct selling that we do. The vast majority of our business, 70 percent plus, is SecurID and strong remote authentication, and that's pretty much all going through the channel.

CRN: Is that the break between direct and indirect sales, about 70/30?

TURNER: Yes. We conducted very extensive research into our partner base before redesigning the channel program. And one of the things that came in loud and clear from our partners is they get a tremendous value from the investments made in selling our products, because we have very high rates of renewal and because customers tend to turn back to the same partner time and time and time again. You know, a customer isn't a customer for the initial transaction, they tend to be a customer for the life of that company's use of their products. You then combine that with the fact that we have customers who literally have been doing business with us for almost 20 years now, and you start seeing a very compelling value proposition for channel partners investing and developing business in the RSA franchise.

CRN: How many partners does RSA have?

TURNER: We have about 2,000 worldwide. It's split roughly 50/50 between the Americas and the rest of the world. We have probably just under 10 percent of those in our premier tier today, so these are typically our largest partners from a revenue point of view, our longest standing relationships in many instances, who really profit very significantly through a high rate of renewals. There's probably about 500 what we call mid-tier partners, and the remainder worldwide are what we call advantage partners, and they vary geography by geography, depending on exactly what that partner looks like. They could be a direct marketer, for example, in some geographies, they can be a more services-oriented business in other geographies.

COVIELLO: But it's really not about renewals, it's really about the future market opportunity, and let me try to give you a little perspective on that. We have roughly 18,000 customers now, and in the middle of 2002, we had about 8,000. So we've added 10,000 customers, the vast majority of them through the channel, in the last three years. And the change that we're seeing is everybody has a firewall, everybody has a VPN, but now more and more people are understanding that that's not enough. There's a requirement for strong authentication as well. So we see this market opportunity expanding dramatically. Because there really is less and less of a true perimeter defense. You've got Web-facing applications, and people are accessing tools inside and outside the physical space and the virtual space of the company, and people don't know who's accessing from where, when and how. Second, you see more and more wireless networks, and that's an insecure environment if you're only logging on using a static password. Somebody outside the building could be on your network in a matter of minutes. All this increases the opportunity for our partners. And you will notice in the roll-out of this program, there's a tremendous emphasis on training because we're doing a lot of it.

CRN: What's the cost of training and certification under the new program?

TURNER: This is an area that we spent a lot of time looking at and evaluating. Clearly one of the big challenges for any partner is to maintain a broad range of certifications that are fit for the solutions they want to take to market. We spent a lot of time trying to create tools online to achieve the educational goal without burdening our partners with a significant amount of travel cost or lost productivity. There are two elements to the certification program. One is a sales authorization program, which we look at as an investment, and it's free of charge. And two is a technical certification, which has come down from a classroom-based cost of roughly $2,000, plus whatever T&E the department might have incurred per individual they put through the program, to about $500 per individual, plus a small amount of T&E associated with going to one of our approved testing centers to take the final certification exam.

CRN: Are existing certifications grandfathered into the new program?

TURNER: Any existing technical certification is considered valid. But we are launching a grace period around the program announcement in order to allow existing partners who previously didn't have sales authorization certifications, because in the old program it was an optional extra. However, we are mandating it as part of the new SecurWorld program. So we're giving them ninety days to complete their obligations around sales authorizations. And anybody who is currently certified remains valid under the new program until such time as we up-issue the software version of our application server or other products within the portfolio.

COVIELLO: But it's less about being a policeman around this stuff. Clearly you have to have discipline around the program and make sure that people are qualified, but I think it's more about the efficiency and the ability to add more and more training. We want our buyers to understand the tremendous value that can be added around authentication, not only to secure access to applications and access to resources, but also to improve the efficiency with which employees, partners and customers get access to applications. Because if you can create a secure environment and then make it easier by reducing the number of passwords, and reducing all of the complexity around it, and giving people choice such that if a USB is convenient, they use USB, if a token's convenient, they use that, if a cell phone is convenient, they use that, then there you have it. There's a fair amount of comprehensiveness to the solution, and we want our buyers to be able to avail themselves of training that will put them in a position to advise their customers accordingly.

CRN: Will reseller margins improve under the new program?

TURNER: Under the new program, we expect to see margins increase from about 20 percent to a range somewhere between the high twenties and potentially as high as mid-thirties. And partners will be able to achieve that through gaining and maintaining their certification and through registering opportunities with us. We're launching a deal registration element of the new program which is seen as key, both for us and our partners. Not only does it help us reward those who invest in the cost of the sales by generating new opportunities for us, but it allows us to create better incentives to acquire certain types of customers. If we want to have an SMB push going forward, we can leverage registration for SMB customers. If we want to drive focus around particular elements of the solutions, we can also do that effectively through the registration programs. So that's seen as the key instrument of the new program, both by us and our partners. And the last thing is, we're a high-performance organization. We recognize our high achievers, we want to recognize our high achieving channels as well. We're building acceleration into the channel plan that enables those partners who drive the most new business for us, the most license expansion with our existing customers, or sales of the most new products, to enjoy additional margin benefits for doing so.

CRN: How much sales support from RSA can partners who register deals expect under the new program?

TURNER: What we think deal registration will do is give partners a broad incentive to inform us of opportunities they're developing and enable us to offer our assistance. Whether its pinpointing training that they might want to take, sending relevant white papers or documents that we've produced, or even offering direct access to RSA resources, like product managers, sales people or executives to help them close that business. If nothing else, this program is about us investing for the success of our company and our partner's business.

CRN: How long do deals remain registered?

TURNER: The new registration program asks partners to advise us of opportunities 45 days ahead of the closing. Then it's registered to them for 120 days. So they get an opportunity to work on that transaction with our knowledge and assistance if necessary for 120 days. Obviously that doesn't stop any other partner from working on the opportunity, but it gives us incredibly valuable insight into the transaction and can enable us to help whichever partner ultimately the customer chooses to serve their needs to do an effective job of closing the deal.

CRN: So partners are allowed to compete with each other for a registered deal?

TURNER: Ultimately, if an end user would choose to procure the product from another company for some reason or another, then they would remain free to be able to do that.

CRN: Does the partner who registers the deal get some form of credit if the deal is closed by a competing RSA partner?

TURNER: In the first incarnation of the program, we will pay the benefit only to the partner if they register and close the transaction. To be honest, systematic challenges stopped us from doing it more boldly then that. Very soon, however, I hope to be able to announce that we will pay the deal registration benefit to the partner that registers, so long as the transaction closes, and they don't need to be the partner closing the transaction in that scenario. So I hope very quickly we go to a very broad deal registration program that would see partners really driving the demand, regardless of whether they finally close a transaction or not, and receiving the benefits from RSA to recognize their investment in cost of sales effort.

CRN: What's the big take away for RSA in fashioning the new program?

COVIELLO: I think what we learned is there's a far more effective way of going about engaging the channel and making it easier for our channel to see the opportunity and then take maximum advantage of it. So this is really about getting alignment between the market opportunity and the people that want to invest in it, because those are the ones that will reap the richest rewards.