CRN Exclusive: CenturyLink Execs Detail New Channel Focus, Plans To Bring Top IT Vendors To Its Telecom Partners

Betting Big On The Channel

CenturyLink last month introduced its first multitiered channel program, Ascend, which replaced a seven-year-old program that treated all partners the same. CenturyLink also introduced four new paths that partners can take with the company: the System Integration Alliance for system integration partners, the Software Alliance for software industry-focused developers, the Strategic Alliance for third-party vendor partners, and the Channel Alliance for solution providers.

The company also unveiled plans to offer data center IT products from its Strategic Alliance partners, such as NetApp and Cisco Systems, through its Channel Alliance partners. Those partners, who have traditionally focused more on the cloud and communications market, can use the offerings to add value to their telecom clients.

CenturyLink's Bill Corbin, senior vice president of strategic partnerships and channel operations, and William Hurley, chief marketing officer, recently sat down with CRN to explain the significance of the changes in the channel program. Corbin and Hurley also discussed how CenturyLink's planned $34 billion acquisition of Level 3 Communications will impact its channels. Here's what they had to say.

What's new with CenturyLink's Ascend channel program?

William Hurley: The headline is, CenturyLink invests heavily in their partners and launches its new incentive. ... One of the big opportunities we see for CenturyLink is more business through the channel is better for our customers as well as the channel partners as well as for CenturyLink and the shareholders.

Everyone benefits, and so Ascend is really us saying we are putting our money down on the partners and the channel.

[It's] the launching pad for the programs and the tool sets and everything that we're doing here. It goes beyond just the channel. It goes to the Software Alliance. It goes to System Integrator and the Strategic Partners as well.

Bill Corbin: There are four new routes market: System Integrator Alliance, Software Alliance, Strategic Partner Alliance and CenturyLink Channel Alliance.

How do those four routes to market work together?

Corbin: I have a great example. We have an account that is managed by our channel partners up in Northern California that needs some specific help with software development. So we're now integrating them with our Software Alliance. Now together they will manage the account. We'll probably see a ten-fold increase in revenue because we've integrated the two routes to market to work on the account together. …

Hurley: I think the Software Alliance in particular is one of the areas I'm very excited about because it's a channel in and of itself. But it is also a message to the world that says, 'We are not going to try and build everything ourselves. We are going to do what we do best around the network, and then we're going to bring in partners to help solve our customers' business problems, whether it's through a channel or it's a direct relationship with a customer.'

How does that differ from how other telecoms use the channel?

Hurley: The ability for us to take this incredibly powerful community of software developers and that alliance community, and bring that to bear to help solve customer problems, I think is very powerful. It tells our customers CenturyLink is not going to try and figure everything out ourselves. We're going to figure out your problem, and we're going to find the best way we can to help solve your problem, whether it's CenturyLink or a CenturyLink partner.

I think that's different than what your traditional telco/service provider approach might be. I was talking with some folks earlier today and they say, 'Who do you think are your competitors?' We don't have a lot of competitors. We have a lot of co-opetition, where we're competing with a company on one situation but then in the next situation we're actually partnering with that company in order to solve another customer problem. Or buying from that company.

The new Ascend channel program marks the first time CenturyLink has codified incentives for its partners. How big a change is this?

Hurley: It's a complete change in the management's approach, in CenturyLink's approach to the channel. And now it's a complete change in terms of the program itself. We're turning over every stone.

Corbin: Don't get me wrong. CenturyLink had a good program, and it really did define in the telco space how you engage a channel partner, so it did a good job. It just needed to be dusted off. The program of the past was one size fits all, first in, first out. Ascend is really targeted at investing in those partners that want to invest in us. And if a partner doesn't want to invest to a certain degree then we're going to invest the same way. So all partners are not created equal. Those that are bringing us the big dollars, those are the ones that get the big investments.

How does Ascend impact CenturyLink's smaller channel partners?

Corbin: Those that are happy with a lifestyle business and they want to do 'x' dollars, that's great too, we want those partners. But we're not going to spend the same kind of money on them that we're going to spend on the Diamond partners, or the Platinum partners.

It's been very well received. It's virtually been rolled out to every partner at this point. We had a lot of small partners that did very little business. Maybe they did $60,000 a year or something like that. You know, it's very expensive to manage those partners. So what we're doing, we're rolling those up into a master. So giving a little more breadth and depth to the master agents, and giving the [smaller partners] more personal touch because the masters can do that.

How big is the certification and training component for Ascend?

Corbin: The gates are all revenue-based. So you go to one of the higher levels based upon your revenue. That's a monthly billable revenue that we manage and measure.

The certifications are no more complicated than they were in the past. It's all the engineering and the pre- and post-sales certifications. Of course we support that, and we allow co-op to help pay for that. It's a bit different than the Cisco CCIE [Cisco Certified Internetwork Expert] program. To get to be a gold DVAR [Cisco Direct Value Add Reseller], you got to have 16 CCIEs on staff or whatever. We're not requiring that. But to be a Platinum partner or a Diamond partner, it comes with the territory that you have to have the pre- and post-sales support. Otherwise, they just can't get to the revenue gate.

CenturyLink's direct sales team is preparing to resell NetApp's storage hardware and software. Will CenturyLink offer such a capability via its channel partners as well?

Corbin: The NetApp resale agreement is not directed at just the CenturyLink direct or global team. It's across all routes to market within CenturyLink. The globals, the SME, the federal team -- we're now turning out CPE [customer premises equipment]-as-a-service and CPE resale through all of those routes to market. ...

The question was, can the channel part sell it, right? We're going to be piloting in Q2 a CPE re-sale which won't just be NetApp, but will be all the CPE that we have contracts to sell through the channel, so yes. We recognized three, four months ago that it was a deficiency in our channel program that we can't offer to them because most of them don't have the channel partnerships with the major OEMs. We do. So we're going to have a program that we can incent them to sell CPE.

When you say 'CPE' what are you including?

Corbin: The hardware and software that makes everything work.

Hurley: Anything from routing and switching to desktops. Phones, switches, routers, servers, storage, all of that. I think the cloud has re-defined what 'CPE' is because it's everything that's not in the cloud.

A lot of CenturyLink's channel partners are not partners of its strategic partners like NetApp. Who then owns the paper on these solutions when they go to the customer? Do channel partners need vendor-specific certification and training?

Hurley: No, that's not the idea. The idea is that we would sell through the partner. It's very similar to the way that we transact with the partner today. We actually sell through to the end user, and carry the contract with the end user, and compensate the partner for bringing the deal to CenturyLink. It would be very similar. We would sell through them and compensate them on a fee or commission basis.

Would t hat would bring CenturyLink into more competitive environments, given that these strategic partners also have their own partner eco-systems and sales activities?

Corbin: I don't think so. The strategic partners -- you know Cisco, Juniper, NetApp, VMware, all of those folks -- have been begging for CenturyLink to figure out how to incent the channel to engage with them. So it's very well received within the strategic partner organization. We're working out the compensation and the programs and the contracts to do this here in the next quarter. I don't think they see it as a conflict at all. I think they see it as an uplift for them.

Hurley: We'd really have to exhaust a lot of sales before we would run into conflicts. We've got a lot of upselling to do before they have to worry about it. … So there's plenty of opportunity for everybody.

So why did it take seven years to say you needed to look at the partner program and rework the incentives?

Corbin: We weren't here seven years ago. I've been here about a year.

Hurley: CenturyLinkessentially brought in a chief marketing officer who is channe- focused. It's different, I think, than in the rest of the industry. You've got, in the form of Dean Douglas, a president on the CenturyLink business side, who has a long-standing positive success in the channel.

That's right. Douglas is also new.

Hurley: [Douglas joined] a year ago. We said, all right, we've got to fix this, we want to make the channel a better player, and Bill Corbin joined us, and has been driving that and making it real based on an illustrious job career. …

One of the messages I was trying to relay with our partners -- it's kind of fun to see the look in their eye -- is, it's not just that we said, 'Oh, let's build this little Corbin channel.' No, it permeates every part of our management and marketing organization, above and below and beside the channel. It's not that they're an island. That is the way that the senior management team thinks with everything they do. That should be good news for everyone.

You guys have actually been working together for some time before CenturyLink, right?

Hurley: Bill Corbin and I met at Westcon 10 years ago along with Dean Douglas, who is the head of CenturyLink sales and marketing for our enterprise business. We've known each other for 10 years.

Corbin: Kind of got the band back together.

Hurley: Got the band back together here at CenturyLink in the last year, and it's been really great. It allows us to hit the ground running a lot harder and a lot faster. I already know how Bill operates, what he needs in order to be successful, and we can kind of talk quicker and get things done, and execute. … [There's], what's a nice way of saying, just let's get to work. Especially in the channel. There's no time for political correctness in the channel. You've got to get on it.

The channel accounts for how much of CenturyLink's revenue?

Corbin: It's about 35 percent of the business revenue. You have to strip out CenturyLink revenue from consumers.

Hurley: So think of it in very rough numbers. Two-thirds of CenturyLink's revenue is B2B, one-third is consumer. Now, what I would want to point out is in six months, when we finish the Level 3 acquisition, that ratio switches to 75 [percent B2B], so we're increasing. Level 3 has no consumer business, so all of that business, that's another $8 [billion] or $9 billion in revenue, that is focused purely on the business side.

So 35 percent of CenturyLink's business revenue goes through indirect. What was that a year ago?

Corbin: It was a little smaller. I'm going to say it was probably around 25 or 28 percent. We're expecting it to jump significantly this year.

Hurley: Give the guy a break. He's only been here six to nine months. To be able to see a substantive improvement, that 7 percent, even in that short period of time, it's pretty special. But, as I said, an important part of our plans for 2017 and beyond is the production we get through the channel.

I s there a big indirect component in Level 3's business?

Corbin: They have an indirect component as well. It's not as robust as ours. The programs aren't as mature, and the revenue therefore is smaller from a percentage standpoint. [But] the opportunity is great. I think one of the things we did strategically right is, we put these four routes to market in the same business unit. I don't see any of our competitors structured the same way. Bringing Level 3 into that is going to give them a boost.

What else does Level 3 bring CenturyLink?

Hurley: The Level 3 acquisition puts us in 350 metros. That's a lot of metros. Puts us in 60 countries, a lot of countries. It puts us in a very strong presence in Europe, very strong presence in Latin America, 75,000 lit buildings that we now have access to, as a combined entity. So if I'm a partner, and I'm attached to CenturyLink today, and I know that's coming in six months, I'm a pretty excited person right now. I would think you'd be a pretty excited person. …

Although the channel may not be as strong, the relationships, the customer relationships Level 3 has, are very good, well respected, solid relationships. Well respected in the industry. I think that our partners will really enjoy being able to participate in that.