Nortel Continues Channel Push In 2008

Nortel Networks is promising 2008 will see more enhancements to its channel program as the Toronto-based vendor adds new training specializations, focuses more on value over volume and enhances its relationships with distributors.

The updates come as Nortel builds upon the two-year plan it launched last March to re-invigorate its stable of VARs and distributors.

David Wilkinson, Nortel's vice president of North American channel strategy, said 2007's decision to revamp its once "unpredictable" Partner Advantage channel program business model resulted in the networking vendor focusing more on value than on volume, downplaying its product breadth and volume thresholds for partner rewards and keying in on the value partners can offer. Wilkinson said roughly 85 percent of Nortel's business goes to the channel in the enterprise space.

Where 2007 saw Nortel's discount structure change to better reward partners who were growing year over year, 2008 will continue on that path, Wilkinson said. Volume will still be rewarded; it just won't be the sole criteria for determining which tier partners fall into. Nortel currently has three partner levels: advantage, premium and elite. Going forward, partner ranking will be based on expertise and specializations along with growth and performance, not just on volume of business, Wilkinson said.

Putting more emphasis on value for its more than 600 contracted solution providers, Wilkinson said, Nortel will continue to offer one discount tied to partner level and then offer a different discount that reflects volume, meaning more partners will get higher discounts.

"We're really looking to drive mutual profitable growth for Nortel and our resellers," he said. "The infrastructure around our Partner Advantage Program wasn't adequate. We had this partner program, but it wouldn't scale."

Scott Davis, executive director of Broken Arrow, Ok.-based solution provider Xeta Technologies, said Nortel's new approach to how it will reward technical and vertical expertise will help him and other Nortel partners be competitive in their respective markets, ensuring resellers get a return on their investments.

"We are very excited to see this program become more formalized," he said.

By the close of the first half of this year, John Stasick, Nortel's director of channel management, said the vendor will offer a total of between six and 10 training specializations, another channel initiative that started last year when Nortel announced its advanced services, unified communications and SMB training specializations. A reseller's partner status is partly based on the number of specializations held by its staff.

The first new specialization for 2008 will be in advanced data -- a culmination of lab work and classroom work on Nortel's higher-level data products and switches -- with others to soon follow. Neither Stasick nor Wilkinson could say specifically what other specializations are on tap.

Stasick said Nortel's training specializations, which focus not only on the technical side, but on the practical side, are in response to market trends and partner needs and can ultimately help Nortel partners round out the skill sets they need to offer their end customers up to date and useful solutions and services.

While technical competency is still a large component, Nortel's specializations also have a "street smart component," Stasick said, meaning partners must have practical experience with solution sets. He said just recognizing the technical component is like recognizing a heart surgeon who reads the text books but has yet to perform an actual procedure.

NEXT: Nortel Enhances Distributor Relationship

So far, Wilkinson said, the specializations Nortel has offered are based on 70 percent to 80 percent of the feedback it's received from the partner community.

Davis said specializations help him ensure he has a cross-trained workforce.

"These specializations reward you on the investment you've made in the expertise of your staff," he said. "It allows us to maintain our Nortel competency at an elite designation without all of the empty calories. We invest in our workforce and this is a way for us to get a greater return on our investment."

While Davis said the training specializations are a big boost to Nortel's channel program, he would like to see some more added into the mix. For example, a wireless specialization would help Xeta as wireless becomes more prevalent and reaches a mass adoption phase. Davis said he'd also like to see more vertically focused specializations like lodging and hospitality, health care and finance.

"We would find those very valuable," he said.

As for the new advanced data specialization, Davis said solution providers who haven't nailed down such a specialty will miss out in the future.

"Any company that's not specialized in data in my market has to hang it up," he said.

Along with adding to its lineup of training specializations, Nortel also expects to expand its relationships with distributors, including Westcon, Tech Data, Ingram Micro and Synnex. While VARs will still have direct contacts within Nortel, Wilkinson said the vendor is better aligning its commercial relationships and programs with distributors with the programs it offers resellers.

Wilkinson said Nortel's distribution model was based on a flat fee structure in the past and 2008 will see that program add in more features of the reseller model, ensuring distributors are better rewarded based on partner satisfaction and value. Nortel will also better reward distributors that grow their reseller segments.

"This is one area Nortel has been lagging in, historically," Davis said. "Look at some of the other manufacturers that have found ways to integrate VADs in the value chain and supply chain. Nortel has always been hesitant on that."

Nortel, this year, Davis said, will better embrace distributors and how they can serve their resellers.

"Nortel is really driving that value point," he said. "They really want the VAD to stand in front and let them be the supply chain to their resellers. It's more efficient for everyone involved."

For Xeta, Davis said, it's more attractive to do business with distributors than with Nortel directly, since he goes through the same distributors for solutions from other vendors. Using one distributor, Davis said, boosts his economies of scale while it can also be better for trade credit and financing options.

"It's a neat deal for us strategically, from a business standpoint," he said.

Overall, Wilkinson said, Nortel's goal for 2008 is to simplify and motivate the channel to feel more invested in Nortel and its potential successes, making them integral partners. As Nortel moves into 2008, Wilkinson said the vendor will continue to focus on investing in the channel, maintaining the customer experience and reducing complexity.

"We're trying to make it simple and enable market velocity," he said.