Extreme Networks Channel Leader On Beating Cisco And HPE Aruba On Simplicity, Profitability With New Partner Program
Extreme Networks channel chief Gordon Mackintosh said his company is using recent acquisitions and a new, combined partner program to gain ground on Cisco and HPE Aruba.
All The Ingredients
After closing three major acquisitions in 2017 to the tune of $210 million, Gordon Mackintosh, Extreme Networks' senior director of the vendor's worldwide partner organization, is using the company's newly combined channel program to gain ground on rivals like Cisco Systems and HPE Aruba.
Mackintosh says that since launching Jan. 1, the program has already begun attracting Cisco and HPE Aruba partners looking for better margins and relief from the partner-on-partner battles and distracting technology strategies that come with larger vendors' programs.
Extreme's program took what Mackintosh considers the best elements of Avaya, Brocade and Zebra Technologies after Extreme acquired networking assets from each company.
"We've integrated four partner programs into one unified partner program," Mackintosh said. "I got to see all the ingredients all the companies were using and what was working well and took the best pieces of each of them."
Mackintosh then organized the program into three tiers – Authorized, Gold and Diamond – with an exclusive Black Diamond designation for partners that drive significant new business revenue. The result is a program that focuses on partner enablement and profitability without resorting to an inflexible one-size-fits-all approach.
What follows is an edited excerpt of Mackintosh's conversation with CRN.
How were you able to bring simplicity to the program given that you had to roll several different programs together?
That was tough. We took the number of tiers down from four or five to three. We focused on profitability. We thought it was most important to have a clear message around profitability. We didn't want to take anything away, we wanted to create new opportunities for partners. We did a really good job communicating, as well. We had webinars, we had acquisition helplines. We were responding to partners within the hour. It's still a work in progress, but within the next month, we'll be launching a new partner portal, which will really be a fantastic experience for partners. Partners will be able to customize and tailor the portal to exactly what they want to see rather than just us throwing everything at them.
How does the new program help Extreme go head-to-head with competitors like Cisco, HPE Aruba or Juniper?
It's a far more profitable program. We've done a profitability analysis and with our back-end rebates, our partners can generate up to 20 percent. We know that that's at least double our key competitors. We're trying to keep things simple. We don't want to be complex and [become] a behemoth like Cisco and HPE. We want to be more agile and more responsive to our partners. We've aligned our program to the technology the company sells, and we've created things like Black Diamond and the flexible MDF program so we can unlock new opportunities for our partners and do that as quickly as possible, to make time-to-revenue as quick as we can.
Why should a solution provider turn to Extreme rather than Cisco or HPE Aruba?
No. 1 is the profitability, and it's not just the partner program, it's the fact that we're not over-distributed. You don't have five or six competitive solution providers or VARs in every deal like you do with Cisco and HPE. We're very focused as a company on the enterprise networking space, the agile data center and the automated campus, and that's what we do. We're No. 3 in that space. No. 1 and No. 2 are selling far broader solutions and they're somewhat distracted. Then there's our agility, our speed in decision making. It's thinking partner-first, thinking about how we train and enable them, how we communicate with them. That's something we're going to continue focusing on over the coming quarters. The partner experience is going to be a major differentiator going forward.
What are you seeing in the market that is working in Extreme's favor?
Two things: One is the digitization of things, the IoT. All of that drives a need for networking equipment, and more importantly, intelligent networking software, which plays into our hand from a technology perspective. With more and more customers moving in that direction the need for intelligent networking is going to go up. The second thing is clearly customers are looking to outsource the management of the network, so managed services, cloud-based solutions, that's where there's fantastic profitability for partners, to do it with software and to customize the customer experience through an open environment.
How ready is your partner base to be a cloud- and managed-services partner base?
We already have 25 or 30 percent of our top partners participating in our managed services program. The vast majority of them already have some form of managed services practice. I believe they're ready. Where the opportunity now lies is in connecting our channel partners with the consultants and the influencers around digitization and IoT. We'll be launching a program in the early spring, if not sooner, that will be like a dating service where we'll bring in consultants to our partners who are experienced in installing and managing intelligent networking. That's going to be a great opportunity.
What are you seeing in the IoT market that looks promising for Extreme?
The great news is that everything is going to become connected. Everything that can be connected will be connected. The network is going to be at the heart of that. We're seeing it in a lot of the verticals Extreme is strong in, in retail and manufacturing, health care and education. There's some major differentiation in digitization, and I think it's at the point where it isn't about the future, it's happening now and it's only going to get bigger and better.
How can partners really capitalize on the move toward the software-defined data center?
First, they need to make sure they have the capabilities and they've taken our software specialization for the data center. That will unlock additional rebates to drive profitability. They also have to have developers within their company as well. At the end of the day, software has to be highly dynamic, and as customer environments change, with all this code that exists now in the cloud, partners can get their hands on it quickly and customize it really quickly to what the customer needs if they have the right software developers and engineers on staff. Making sure they have that capability is a major thing.
What do you need from partners that you aren't getting today?
We're seeing a lot of pipeline building in terms of cross-sell. We're seeing the pipeline happening. What we'd like to see is that translating into revenue. We're seeing it, but we really want to see the cross-sell happening. That's on us, too. We have to enable the partners. It's a joint objective.
What does the ideal cross-sell situation look like to you?
We're seeing data center partners with the opportunity to sell edge switches and wireless. For the Avaya partners, we're seeing them show a real interest in our software and wireless technology. Overall, software is the key. That's where we're going to be focused, as well, because that's what's going to differentiate us.
What kind of growth are you targeting for the channel?
The channel, I'm expecting to grow faster. I think they're really well positioned to take advantage of the cross-sell opportunity. I can't put a specific number on it, but there's a lot of momentum right now at Extreme. We're getting great feedback from customers and partners. There's definitely a lot of excitement. We're seeing new partners coming in and transacting with us. That's coming because we're now No. 3 in the market, and customers are asking about us as a potential alternative solution, which is great.
What are your partner recruitment plans, and where are you seeing new partners coming from? Cisco? HPE Aruba?
We're looking for partners that are capable of selling software managed services. That's really where we're driving toward. One of our biggest differentiators is that we're not over-distributed. We'll be looking for partners where we're missing coverage in a specific region, or where we maybe don't have wireless partners. These new partners I'm talking about are coming from Aruba and Cisco because it's a very crowded channel, and there's not a lot of profitability to be made. We have to be careful that we don't become over-distributed, but we do have regional gaps and technology gaps that we're looking to fill.
How have you structured your MDF program? How can partners take advantage of it?
We moved our MDF program to become proposal-based to give more flexibility for the partners that apply for funds. In the past, it was just a percentage of revenue. Previously we had one specialization, which was around wireless technology. We saw some phenomenal growth in wireless as a result of that. We now have five specializations in the new program, which is switching, data center switching, wireless, software and cloud. There's also the capability for partners to become master specialized in the data center or the automated campus. We're putting a lot more value into the program. There's a lot more value-based training and enablement for the partners, and you can use the proposal-based MDF to purchase training to become specialized.
How are the new program's tiers structured?
We moved to three tiers within the program. Avaya and Extreme used to have four. Now we have simple Authorized, Gold and Diamond levels. This program has been way more successful than we expected, and I'm a glass half-full guy. But we have Black Diamond, and what that does is challenge the partner to make a $1 million incremental revenue bet with Extreme, and to make that bet in a technology they don't sell today. If it was a traditional Extreme partner, we're asking them maybe to get into the data center. For a data center partner, maybe it's wireless or software. We've had 107 of our Diamond partners participate in that program. We've made a big investment in this quarter in training and marketing for those partners to help them achieve $1 million.
Do they have a year to get there?
It's a calendar year, and each quarter, we'll give them unique benefits. For this quarter, January to March, we'll give them about $12,500 in training and marketing. We're also giving them a Black Diamond credit card for sales and kick-off meetings. We're making a good investment to make sure they have a strong start to the program and have every opportunity to get to $1 million.
How big was the investment in the new program?
It leveraged external consultants, but it was mostly all done in house. A lot of it came from time that partners invested. We had a lot of roundtable events in the spring and summer, and in October when we finalized the program. We did a good job of testing it with partners and allowing them to have input into what they liked from Avaya, what they liked from Brocade, what they're seeing from other vendors. That's the reason we're sitting here two or three weeks after launch and I haven't had one complaint. Everyone is raving about how good it is, and it's really driving great profitability for partners. They like the flexibility of it too.