Sun Channel Changes Reward Growth

The vendor is upping some rebates and discounts in its Strategic Data Center Elite and Storage Elite programs while cutting back on others.

At the same time, Sun is preparing a replacement for its SunFund marketing program that would replace soft dollars with more targeted funding, free training and reduced-cost demo equipment.

Sun channel executives last week sent a letter to partners detailing the changes, which are slated to take effect Feb. 1, 2006, as it readied its fourth-quarter products announcements. Sun is expected to announce new software and servers.

Sun&'s new programs clearly reward partners for growing new business, said Rob Wolfe, president and CEO of AvcomEast, a Sun partner in Silver Spring, Md. “Comp plans drive behavior,” he said. “Sun is making it blatantly obvious through its go-to-market programs and future rewards where it wants us to focus.”

Storage Elite, which many in the channel call Sun&'s most successful program, is getting a facelift to reflect Sun&'s storage focus after its StorageTek acquisition, and to make it clear that Santa Clara, Calif.-based Sun wants partners specifically to boost their storage business, said Bill Cate, director of Sun&'s U.S. partner programs. It also aims to help former storage-centric StorageTek VARs, he said.

Under the current program, solution providers with storage sales of at least 30 percent of their overall Sun revenue qualify for a rebate of 1 percent to 4 percent of their total Sun sales, depending on year-over-year growth for that month.

But under the new plan, Sun is giving partners 2 percent to 8 percent of Sun storage-only sales for monthly growth, plus an additional 1 percent rebate for opening new accounts, Cate said.

The change is meant to reward partners specifically for storage sales, he said. “We eliminated what we are calling an attach rate and are now rewarding [partners] for growing the business.”

Partners said the change means sales of other Sun products will not impact their storage rebates each quarter. Though they may get a smaller monthly rebate, they can at least bank on money coming in regularly provided they show growth in storage.

Mark Teter, CTO of Advanced Systems Group, a Sun partner in Denver, said in the past, a big server deal at month&'s end could completely throw off the storage-to-Sun revenue ratio the partner has to meet. “It was almost a disincentive to take a big server deal because it affects the attach rate,” he said. “We always consider the needs of our customers first, but some partners might delay server sales if it affects their Storage Elite status.”

Also changing is Sun&'s Strategic Data Center Elite program for its largest solution providers who sell a full mix of Sun products into the company&'s top 100 accounts.

Cate said that Sun is increasing the discount it gives its top partners who register new top 100 opportunities and engage with Sun sales executives on account planning, while halving the back-end rebates associated with such accounts.

The discount is in addition to Sun&'s Targeted Account Registration Program (TARP), which provides a 10 percent discount to VARs that register a deal. Sun also will reduce the 2 percent discount partners get for selling into the Top 100 accounts and add a discount for selling into midmarket accounts, where the vendor would like to see more growth.

Sun also is eliminating its SunFund program, which let partners accrue soft dollars based on Sun sales for marketing activities, including the purchase of demo equipment and training, Cate said. Instead, the company is providing all training and certification classes free, including travel fees, and is deeply discounting demo equipment.

Instead of accruing SunFund marketing dollars based on quarterly sales, Sun now will distribute money directly to distributors and its field sales groups to be funneled to partners.

John Sheaffer, president and CEO of Sysix, a partner in Downers Grove, Ill., said there&'s always some trepidation when MDF changes. “Hopefully there is an opportunity that if we submit worthwhile plans we would get more funds for support,” he said.

KRISTEN KENEDY contributed to this story.