Channel brushes off Citrix investor broadside
Calls from Elliot Management for a channel and strategy overhaul given short shrift by some partners
Last week Citrix received a roasting from its activist investor Elliot Management which attacked the software giant for a number of its strategies.
Among the criticisms levelled at Citrix was that its "channel strategy is stretched across too many channel partners", with Elliot calling for a "realignment" of its channel management.
The investor, which holds 7.1 per cent of Citrix's stock, also called for a meeting with the Citrix board and came up with a strategic plan for how it wants the company to move forward, with cost-cutting initiatives front and centre on the agenda.
When CRN approached Citrix for an interview, the company declined but it did direct us to the statement it issued in light of Elliot's public letter.
"Citrix has always maintained an ongoing dialogue with our shareholders, and we welcome their input. We will review Elliott's suggestions and respond as we do with all shareholders who engage with us. The Citrix board and management team continually evaluate ideas to drive shareholder value and are committed to acting in the best interests of all our shareholders," the statement said.
A disservice to the channel?
Rupert Collier (pictured below), channel manager for UK and Ireland at IT monitoring vendor Paessler, previously worked with Citrix during his time at distributor Computerlinks, and felt that Elliot's criticisms were unfounded.
"To double your revenues in five years when you are already a $1.5bn (£950m) company, is pretty good. On the subject of having too many partners, all that growth came from the partner channel," he said.
"Citrix had a very small amount of direct business; in their main core infrastructure it was pretty much all channel, so to say they had too many partners is probably doing the channel a bit of a disservice. Considering it was Citrix and their channel partners together that made Citrix what it is today, it's a bit disingenuous."
Collier said it was perhaps Elliot's desire to make sure Citrix has the "right type" of partner which prompted the critique, but he commented that the company's leadership has always been aware of this.
"Going back a few years Citrix was very cognisant of the fact that it was the behaviour of channel partners that really helped the strategic partner stand out from the crowd, and not just revenues. They brought in something called the Citrix Advisor Rewards scheme which is a kind of rebate scheme for partners if they do lose the deal at the last minute to a licencing house," he said.
"That for me was a fantastic investment in the channel to say to the partner that, even if you lose out on a deal at the last minute, we appreciate and understand the business and sales process so much that we can actually reward it. The Citrix channel partner programme was much the envy of many other vendors."
Change is needed
But while some feel Citrix is doing enough to support its channel, there are others who feel the vendor is not making the right noises.
One Citrix partner, who did not wish to be named, said Citrix is "the most difficult" vendor it deals with.
"I think Citrix themselves are very arrogant. They think business is going to come to them anyway and we find them quite difficult to deal with. VMware will do everything to make sure customers are happy and the deal is in, but Citrix are more laid back and I agree with the statement that their channel model needs a complete revamp," he said.
"We struggle with deal registration because even when we have a deal to register, they will say you have to jump through this hoop or that hoop. They have too much red tape in their partner programme and of all the vendors they are the most difficult to deal with."
Dale Hyde, virtualisation sales specialist at Citrix partner Frontier Technology, did not advocate a partner cull but said many Citrix partners lack the requisite skills.
"Perhaps there are too many partners in the Citrix channel; the ability to transact licences does not necessarily mean that the partner can deliver a solid solution. I come across some partners and I do get the impression that some guys are trying to sell licences without the real skills required," he said.
Heightened scrutiny of partner accreditation is not alien to Citrix, however. In February 2014 Citrix shifted a trio of partners - Esteem, Point to Point and Intercept IT - from Platinum to Gold status in a move which, it claimed, followed customer demand for increased competency in its partners.
Pricing is also a concern for smaller partners, said Roger Harry (pictured below), managing director of Circle IT.
"Microsoft has started eating into that space at the lower end," he said. "For a lot of the smaller partners it's quite difficult to push Citrix forwards because of the cost justification between that and Microsoft.
"Because you still need the Microsoft licencing and then you need to put Citrix on after it, with the XenDesktop and XenApp, the smaller partners are being forced to look at the Microsoft side of things."
He added: "What we have typically seen is people have positioned Microsoft because people won't pay for the Citrix product because the benefits are not perceivable at the lower end of the market.
"Citrix has all the bells and whistles which are better than Microsoft but people at the lower end don't really care about that as much, so you are seeing a lot of the lower-end partners not doing as much [Citrix] anymore because they are going down the Microsoft Hyper-V route."
Casting doubt on Elliot's contention that Citrix is spreading the partner love too thinly, Harry argued that, unless you are doing big volume with Citrix, the vendor does not provide much focus to its partners.
"It's a big partner programme and because we are not transacting enough, it's like the Microsoft partner programme where you are just one of thousands and thousands and you are just a number. Unless you are doing some serious numbers with these guys you are not really in their focus," he said.