Blue Coat undergoes facelift

Four months after being taken off the stock market, the security powerhouse is back with new messaging and a more channel-focused strategy, finds Doug Woodburn

Early last year, the vendor whose web security gateways are used by 97 of the world's top 100 firms was in danger of losing the hearts and minds of the channel.

There was a mutinous feel to Blue Coat's channel as partners voiced frustration over the vendor's falling revenue, lack of innovation, overuse of direct-touch sales staff and overemphasis on its WAN optimisation technology.

Eighteen months - and a change of management and ownership - on, the security colossus is aiming to win back the channel's affections as it returns to growth mode.

First among the new management's priorities, which have all been backed by new private equity owner Thoma Bravo, is the decision to refocus on security. The WAN optimisation technology that generates a small minority of Blue Coat's circa $500m (£321m) turnover will no longer be rammed down partners' throats.

Instead, the emphasis will be on expanding the footprint of its web security gateways among the world's top 1,000 companies above the current rate of 50 per cent.

Talking to CRN, UK senior sales director Pat Dunne (pictured below) said: "The first and biggest message is that we are focused back on security. We had a couple of years where you heard us talking a lot about WAN optimisation - and that is still a focus - but customers and certainly our competition looked at our marketing
and assumed that was all we are doing."

Blue Coat's revenue tumbled by six per cent year on year in the quarter before it was taken private, but Dunne said a recent innovation push has propelled it back to growth.

"Thoma Bravo is not interested in this company unless it grows significantly over the next three to five years and it is very focused on helping us polish up the plan and make us work even better," he said.

"Blue Coat is a hugely profitable company and that has never been an issue. We had a couple of years when revenue was not so good, but it's a cyclical business and some equipment is going end-of-life this year. There are lots of opportunities for partners to help us refresh those customers so we are having a bumper year this year."

By its own admission, Blue Coat was late to the cloud party, but Dunne argued that the vendor's Cloud Service beats rival offerings from the likes of Websense because - unlike theirs - it is built on the firm's own technology. "This is very important for customers who want to have continuity between the two products, where potentially you have someone who is in and out of the office switching from one to the other seamlessly," said Dunne

Blue Coat recently hired IBM veteran Venkat Raghavan to head up its research and development and Dunne said bring-your-own-device would be a key innovation focus.

"If you had asked me two years ago whether government departments and banks would be allowing staff to bring iPads to work and connect to the network, I would have laughed," he said. "But it has happened and people are not prepared for it from a security point of view. A lot of the big companies doing that are Blue Coat customers and are looking to us to solve that problem. That is an area
of growth on which we are looking to help our partners build."

As reported by ChannelWeb, Blue Coat has scaled down its direct-touch sales force and is pouring more resource into its UK channel. Within a month it will have four and a half dedicated channel heads.

"We looked at the investments and moved them around," said Dunne. "Resellers would probably have said they do not see enough of us. If you are trying to drive it all yourself, you can get a bit isolated."

Paul Spencer, director at top Blue Coat partner Axial Systems, said: "We had not been getting much attention from Blue Coat, which was definitely due to the channel team being widely stretched. It is encouraging to see they have recognised their shortcomings and are taking positive action to address it."

Niall McGrane, UK country manager at Westcon Security, also welcomed the changes.

"I am pleased to see Blue Coat returning to its core strengths and we have seen a general recovery over the past six months. We can now take two messages to the different sets of partners, rather than shoving both down their necks at the same time," he said.