CA calls for end to direct/indirect conflict
The software giant hopes that its Channel Preferred strategy will end the war between the two sales models.
Direct and indirect sales teams have long been at war with each other but, if Computer Associates (CA) has its way, a truce could soon be declared. At least between CA sales teams that is.
The world's third largest software vendor has pledged to eliminate the long-standing conflict between direct and indirect and has launched a strategy which it claims will encourage the two sides to work together.
According to chief executive Sanjay Kumar during his keynote speech at CA World in Orlando last month, the "entire software industry will have to follow [the model] over the coming years".
CA pulled out all the stops with its latest annual showcase event. Renting out the huge Orange County Convention Center in Orlando and entertaining 400 journalists and analysts from around the world was no mean feat.
And nor was hiring out the entire Magic Kingdom to entertain 15,000-plus CA customers, partners and staff on the last night. The firm even hired Rudy Giuliani, former New York City mayor, as a speaker.
Speaking in front of a 10,000-strong audience, Giuliani offered his five top tips for good leadership, and spoke of the bravery of New York's emergency services and citizens.
He even managed to fit an IT angle into his speech, claiming that technology advances would eventually eliminate the inconveniences caused by increased security measures imposed following the 11 September attacks.
Channel focus
However, the real focus of CA World seemed to be the channel. The firm had even set up a channel symposium aimed at helping resellers and distributors get to grips with the changing world of ebusiness and to talk about its brand new strategy.
Initially centred on its storage line, CA's new Channel Preferred model will encourage its direct sales teams to sell through CA's enterprise resellers by offering them commission on business conducted through the channel.
David Ball, European vice president of indirect marketing at CA, said: "We have had 26 years of selling direct and there has always been conflict, but now we want to eliminate that conflict.
"Previously the direct and indirect sales teams were arguing all the time and the customer was getting confused, but now the direct sales teams will be working together with our enterprise partners and the competition has gone away.
"We have managed to keep consistency at the lower end of the market and have adapted it for the enterprise level. We suddenly have about 4,000 extra people generating business for the channel."
He added that as far as the small to medium sized enterprise channel is concerned it is business as usual.
"We prefer to put business through our partners because they have so much more advantage in terms of offering the customer other products and services to complement CA software," he said.
The model will eventually be rolled out to other product areas, Ball explained, claiming that the firm is close to implementing the strategy in its European security channel.
Refined strategy
CA also took the opportunity to launch a refined general strategy centred around six core areas: enterprise management (Unicenter), security (eTrust), storage (BrightStor), application lifecycle management (AllFusion), data management (Advantage) and portal and business integration (CleverPath).
Tarkan Maner, vice president of corporate marketing at CA, claimed that this strategy would be easier for the channel.
"We are making our strategy much more modular, or Lego-based, which makes it easier for resellers and distributors to deal with," he said.
Channel partners who attended the event seemed genuinely pleased with CA's increasing commitment to its indirect route to market.
Andy Sheppard, general manager of networking at broadline distributor Computer 2000, said: "For me the Channel Preferred strategy is quite a significant announcement.
"CA has always had a significant direct sales arm, and it is a bold statement from CA to declare that it is going to incentivise its direct force to go through the channel."
New opportunities
Going on to suggest that the announcement is a "tremendous opportunity" for resellers, Sheppard said: "Value added resellers should get connected to this opportunity. This level of business has been done before, but it wasn't available through the channel.
"Now gain is incremental to resellers in terms of the possibilities of services and additional revenue. The kind of products CA has just made available to the channel will retain good margin.
"This announcement shows how CA has changed and the efforts it has made with the channel over the past two or three years."
Alex Tatham, vice president of global software distribution at Bell Microproducts, was also impressed with the vendor.
"CA's channel focus is great for us as a value-added distributor, and gives us access to the higher-end products which were previously not available to the channel," he explained.
"Bringing lots of high-end products into the channel is a big change and shows that CA is moving in the right direction. This is a great opportunity for all CA's resellers which now have the knowledge that CA is supporting them from the top to the bottom."
Rekindling trust
Analysts also seemed positive about CA's channel-friendly mentality. Paul Mason, group vice president for infrastructure software research at IDC, insisted that the vendor is taking the right steps to re-establish trust with its partners.
"CA has recognised channel conflict issues as being of the utmost importance, and understands that it has to build on channel relationships and understand exactly what it is their partners do to avoid mutual misunderstanding," he said.
Mason added that the channel is essential to CA's success, and the company has to move away from just selling big contracts towards selling to different companies through multiple channels.
"CA is evolving rapidly, and has developed a different approach to everything it does, but there are still some rough edges which require work," he warned.
James Governor, an analyst at Illuminata, agreed that, if a vendor wants a successful channel, it needs to sort out which accounts its direct and indirect sales teams will be targeting.
"We have seen similar announcements from Hewlett Packard and Compaq over the past six months and, if CA gets it right, it will definitely benefit their business," he said.
However, all the major vendors still have a long way to go to regain the channel's trust, Governor said, adding that there has been "ongoing tension for as long as there has been indirect and direct sales in IT".
He suggested that CA's "formal way" of implementing the strategy in selected parts of the business is "very interesting" and "a very good way of doing things, working out the processes in selected parts of the business rather than applying it willy nilly across the entire company".
Reiterating the company's feelings towards the channel, George Kafkarkou, general manager at CA, said: "We are aware that other vendors have mixed feelings towards their direct and indirect business.
"At a time when our competitors are issuing confusing messages as to the role of the channel, we are thrilled to announce this strategy for our partners. We believe that our partners provide value-add to customers that CA cannot."
Kafkarkou also issued a warning to CA's biggest competitor in the storage arena. "We can't do without our partners if we are to get to where we want to be, especially in storage and security, and we have to get the right approach. All I can say is, watch out Veritas," he concluded.
SUMMARY:
- CA is determined to eliminate competition between direct and indirect sales teams in the high-end market by encouraging sales through the channel.
- Its new Channel Preferred strategy will be centred initially around CA's storage products.
- Analysts say that the company still has a way to go to re-establish complete trust with partners, but it is on the right road.
- UK distributors believe the strategy to be a great opportunity for resellers.