CANCUN — As Avaya enters the third year of a three year plan to restructure its partner channel from a volume to a value channel, the company’s top partners heard, at the Avaya Executive Partner Forum in Cancun, Mexico, the next set of plans to move forward. And while the first two years of the restructuring were mainly about new partner benefits and what Avaya will do for its partners, partners also heard about what Avaya will now be expecting of them.
“We are on a path to move from volume to value,” said Richard Steranka, the recently-appointed VP of Avaya’s Worldwide Partner Organization. “FY 14 is a game-changing year for us.”
It’s also a year where Avaya is determined to compensate partners for growing their business with them, not for backsliding.
“We are not going to be compensating partners for shrinking their business,” Steranka said. “We’ve done a lot of that in the past. It’s called loyalty. We will reward for being flat, because some of our largest partners have big bases. We start rewarding at a point slightly below flat but really kick in the accelerators above that.” Steranka noted they have done the same thing with their internal sales people, indicating that if they don’t hit 80% of goal, they don’t get commissions. He indicated, however, that they won’t be as hard on partners as that.
“We are pretty far down the road, of moving from a volume to a value channel,” said Barat Dickman, senior director, global channel programs and go to market strategy at Avaya. “We are two years in, and are 60-70 % done. We did the benefits side of the migration first and, then we moved to the requirement side.”
The new requirements reward partners for behavior, rather than just volume of business, such as determining MDF based on a percentage of business with Avaya.
“This last 30% is a pretty material change,” Dickman said. “Partners really value predictability, and don’t like changes in the channel program. These changes are a big deal. You have to give the partners plenty of time.”
So what are the changes?
“To recognize partners who provide most the value to customers, we are moving to a specialization/CSAT driven model,” Dickman said. “The medal status will be driven by master specializations and CSAT. That won’t happen tomorrow. It will be a gradual transition, and there is no time line, but there will be ample time to get master specializations.”
Dickman said that the first four master specializations have been decided on and are being put together. They are networking, UC (Aura, Messaging, Video), CC (Aura, Contact Center), and Midmarket.
“I want to get the first set of Master specs out by June, and then give partners at least nine months to skill up before we shift the requirements model,” Dickman added. “If they want a year for this, we will give them a year. Many partners want me to move faster out of volume, but the largest partners require time to earn these new designations.”
The new designations will require credentials, services performance criteria, sales experience, and demo capabilities.
Steranka and Dickman also outlined their channel priorities for the year ahead. This starts with better alignment with segment selling motions. In each market, a global accounts manager has been appointed to work with partners in selling to Avaya’s largest customers.
“Below that is the enterprise, and we certainly aren’t giving up on that, but we won’t just be selling the products we have sold there in the past, but new strategic ones,” Steranka said. “We want to knock on more doors in close collaboration with you.” Steranka emphasized these strategic areas like apps, Web collaboration, video business analytics, and security are growing at a brisk pace, while more traditional product sets are flat or declining.
Steranka acknowledged that the new go-to-market model will be a little more complex in terms of who partners have to meet with to sell the new strategic products, but it will pay off by being more focused to attack. It will also feature more frequent engagement with partners, increased co-selling, with a partner play everywhere, named channel account managers, and customized incentive plans which end the cookie cutter approach.
Better alignment with services strategy is also a priority.
“I understand the significant of a services strategy,” Steranka said. “If we don’t have a way for you to make money servicing our solutions, we don’t have a channel.”
“Our services platform will also evolve,” Steranka added. “We are committed to making services profitable to you.”
The midmarket is also a major priority this year.
“We’ve given most of that to our competitors,” Steranka said. “We just haven’t shown up. We want to re-engage here in the old Nortel market, where we now penetrate less than 5%. We want to see that grow up tenfold.”
Another key priority is driving outcomes through incentives.
“We are adding 50% to the budget for global channel programs,” Steranka said. At the same time, they are simplifying things. Avaya has already moved from 22 incentive programs to nine, and will move to three in FY 14. Services rebate money will increase threefold, in order to grow attach by maintaining customers and lessen the chances of their defection at some future point.
Boosts to deal registration, new customer incentive and distributor programs were also announced.
Steranka also said that some running sores which had bothered partners in the past have been cured, and remaining ones are on the fast track to be addressed.
“We’ve corrected the root cause of some of the problems and got the quality back to what you expect,” Steranka said. “We are doing a better job in sales and design training, although I personally think we have more room to grow. We still have challenges. Billing and collections and services renewals are problematic. There is a cost of complexity, and when you process paperwork, you are not in front of customers selling. The entire team is committed to making these changes.”
Steranka also pledged Avaya will continue to improve ease of doing business with them.
“We just simply haven’t kept pace with our competitors there,” he said. “We will fix that, and get all these done this year.” This includes replacing multiple systems to access for quoting and pricing for Avaya, Nortel and Radvision product, a lack of real-time pricing, so that quotes take days or weeks, dozens of pricing models, log-in delay issues and separate product and services processes. While Avaya One Source has been launched to improve quote creation, and has been rolled out globally everywhere but in the U.S. and Canada, it will finally be rolled out here in January 2014.
Some improvements and enhancements were also announced for existing channel programs. The Grow Right program sees several changes. Dickman said that the bar to participation had been too high because it was based on quarterly growth which didn’t account for seasonality, and because too many partners weren’t eligible. Eligibility has now been expanded to all medalled partners, and it will be based on a year-over-year growth rate.
The SME Expert program, which was introduced in response to midmarket partner council requests, is also being expanded. While Steranka indicated that initial numbers of partners in the program in the U.S. and Canada were disappointing (113 in the U.S. and 15 in Canada), Avaya is addressing that by expanding the categories covered.
“We are adding a fifth category for services in a month, and within a year we intend to add additional attach categories for midmarket contact center, wireless and mobility to increase ability to earn rebates,” Dickman said.
Other changes include the shift to performance-driven payouts seeing the maximum payout for top performers go up from 17.5 to 27%. Deal reg changes in the U.S. and Canada make every deal now eligible, but with a maximum payout limit. Before there was a maximum deal size limit. A new Distribution Dormant Partner Program rewards distis for activating dormant programs. It is available now in the U.S. and is expected to be in Canada by the middle of the year.
“We are asking you to get into every deal on the market, sell the whole stack, compete on value, play offense, and hunt for new business,” Dickman told partners.