Extreme Networks Channel Chief On How The Aerohive Deal Will Drive More Subscription Services And Transform Partners Into MSPs

‘We want to capture the transition in the market. Subscriptions and cloud offers up the opportunity for partners to fine-tune solutions on an ongoing basis to support the customer, so we want to drive as much subscription business as possible where it makes sense,’ Extreme Networks' channel leader Gordon Mackintosh tells CRN.

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Now with its acquisition of Aerohive Networks under its belt, Extreme Networks is growing into a wired and wireless powerhouse bent on helping partners pivot into managed services, according to Extreme’s vice president of worldwide channels, Gordon Mackintosh.

The Aerohive-Extreme tie-up gave Extreme Networks a much-needed SD-WAN answer and a robust cloud-based network management solution. On top of that, the deal is moving nearly 30 percent of Extreme's revenue mix to that of valuable recurring revenue. Mackintosh, who is leading the channel charge for both companies, believes there is something for every partner in the newly-combined company's portfolio.

Mackintosh sat down with CRN to talk details about the Aerohive deal, the importance of subscription-based offerings and the MSP model, as well as the future of the two companies' channel strategies. What follows are excerpts from the conversation.

How will a combined Aerohive-Extreme give partners more choices for cloud and premises-based wired and wireless technology from a single vendor?

We are seeing excitement from both the Aerohive and Extreme partners because it really expands the portfolio for them. [Extreme] partners have been asking for SD-WAN for some time and now we'll be able to participate in that [market]. Our partners have also been asking for us to develop an MSP practice and based on [Aerohive's] HiveManager, the third-generation cloud management platform, it really gives partners actionable insight into customer networks from a very easy-to-use platform. Partners can become experts very quickly and make changes and improvements to the network through the cloud that will boost productivity of the customer's workforce and when that happens, typically stickiness with the customer goes up. So that is going to be a great opportunity for the Extreme partners.

The Aerohive partners are excited about the credibility and size of Extreme and the other technologies, like our switching platform and some of our software and data center products that they can now purchase from one manufacturer. We are doing a lot of work to introduce them to the Extreme portfolio.

Now with the Aerohive deal complete, how is Extreme better armed to help partners transition to the MSP model?

Aerohive has had an MSP program in place for a while and partners really like it. One of the interesting things they offered [through their platform] was IT subscriptions and more partners are buying subscriptions, so the HiveManager platform itself is brilliant. It's using artificial intelligence and machine-learning to give [partners] a really deep understanding into what is going on. Partners can look across all of their customers on a map and just using a simple color-coded screen -- green or red -- they can determine if everything is well or if there are some issues they can drill into, and they are able to do that remotely.

We're really going to build on that platform and expand it into our partner base for partners who haven't already made that transformation into becoming an MSP. On HiveManager, we are going to include more of the extreme portfolio of offerings as well. So, the solution that Extreme partners are used to selling are now becoming available in a cloud platform, which brings them closer to their customers than ever before.

What is the demand for subscription services like from partners as they look to become MSPs and build their recurring revenue streams?

There's absolutely demand from customers and partners, but the question from a lot of partners is; How do I do it? How do I move from a traditional model to a subscription model? So, we are going to be investing heavily in supporting the partner communities to develop into capable MSPs that can provide these services to their customers. The great news is with the technology we just acquired, the management of that technology is really simple and highly intuitive. It's going to give partners insights into their customers they never had before and help partners build relationships with their customers. I think they'll jump on this when they see the platform.

How is the tie-up with Aerohive helping Extreme build out its own subscription-based services and recurring revenue?

We're looking at 25 percent of our business becoming recurring revenue right off the bat with the acquisition closing, which is fantastic, but it’s the technology -- the HiveManager platform and the simplicity of the portal where they have two skews, one for the hardware and one for the subscription -- that will help us start to drive more of our products into that sales motion. We've started to use some of the automation that we have been building to improve and take friction out of the sales process, too, so that combination of automation, technology, HiveManager and the speed of DevOps is going to help us move so much faster into a subscription model.

We want to capture the transition in the market. We are seeing more and more people moving to the cloud. It's really about being customer-centric, and our goal is to provide best possible solutions to the customer. Subscriptions and cloud offers up the opportunity for partners to fine-tune solutions on an ongoing basis to support the customer, so we want to drive as much subscription business as possible where it makes sense for the customers.

Will there be any partner program changes partners should expect as the two programs eventually become one?

In the short term we will keep the two programs separate. We are going to take a "business as usual" approach -- we don't want to disrupt anything – then, over time, we will look to take the best of both programs and integrate them into an even better program for the partners. But also in the short term, we will put some additional incentives for both sets of partners for selling the cloud Wi-Fi solution.

I'm going to be assuming responsibility for the Aerohive channel partner program and channel go-to-market efforts.

What has the feedback on the Aerohive deal been like from partners?

The feedback had been tremendously exciting. We had a bit of overlap with some of our larger partners, so they are obviously excited to have one vendor to go to now instead of two. There's also a lot of partners who are selling a competitive solution and now they can standardize on one vendor from the data center to the Wi-Fi edge. If [partners] aren't selling in one of those spaces, this is a real turnkey solution for them, and we are going to invest in partners to help them achieve more sales and take advantage of the full opportunity. The feedback has been really positive -- more so than I was even expecting!

What are Extreme's plans for its channel strategy moving forward?

We are investing more in channels in terms of people, platforms, and programs going into our fiscal year 2020, which has just started. We are going to have more partner account managers in the field working with our larger partners to develop them and help them build out their capabilities, and in turn, help us go after new customers. We are also in the process of setting up an insight partner account manager team so that any partner of any size can always get some support and have someone to help grow their business with them.

We are investing heavily in platforms, enablement, and e-learning training systems. We are enriching our content and we are adding the Aerohive content, which is a really unique, gamified learning experience for partners that is very different than anything else I've seen in the industry. We are also going to be laser-focused on driving frictionless sales for our partners. As part of that transformation strategy, the final phase of that is going live soon and partners will be able to place orders based on their level in the partner program without any touch from Extreme. Lastly, we are going to focus on taking that new technology in our portfolio to new customers, so we are going to make improvements in our MDF [marketing development funds] processes and tools and adding new campaigns. In summary, we are adding resources to align our partner opportunities and help them specialize and build new capabilities. We see partners specializing in Extreme Networks growing faster -- sometimes 10-15 percent faster than the partners that aren't -- so we'll continue to double down on that.