Las Vegas – The word “growth” echoed through the halls of the MGM Grand Conference Centre where Avaya was hosting its annual channel partner conference.
For Avaya, this year and next is all about growth and they are willing to significantly pay channel partners who can deliver growth results especially on its new Flare and Aura SIP product lines.
Company director of global channel programs Barat Dickman told CDN ahead of tomorrow’s announcements that Avaya will offer channel partners a growth program that will incent them to grow quarter-over-quarter that could see solution providers double the amount of margins they get today from the vendor.
The new growth program will work this way: The payout will be based on two quarters of growth. For example, if a channel partner grows its Avaya business by $100 in the first quarter and $30 of that $100 is in new solutions. Then in the second quarter the business jumps to $120 of which $50 is in new solutions the channel partner will be paid on the difference in growth between the quarters, which is $20 amounting to 10 per cent of margin. That margin will be then doubled because the channel partners was able to grow the business in new solutions, which also grew by $20 in this scenario.
“This is substantial from a profit and cash flow perspective for the partners. Avaya is one of the only vendors that has a program like this in the channel. This is a direct incentive for growth and we are going straight after growth,” Dickman said.
But Dickman admitted that this growth program could be risky for Avaya. He can see certain channel partners growing tremendously with new Avaya solutions such as Aura SIP and Flare which could mean that Avaya writes some big cheques. “Remember there is no limit on the payouts for this program,” he added.
Besides the new growth program, Avaya overhauled its deal registration program for the channel. Dickman said that based on partner feedback Avaya needed to dramatically increase the margin payout for channel partners who won new business. Avaya was paying only five percentage points of margin through its old deal registration program. That has now been doubled to 10 per cent. Dickman’s plan here is that this new incentive will spread out channel partners in the market place. Dickman explains that he did not want six or seven channel partners going after one big account. Instead he hopes that the new margin incentive will push solution providers to go after another opportunity in the market place. If successful Avaya would get additional coverage in the market place through its channel network.
Also part of the new deal registration plan is a better policing method that Dickman hopes will prevent channel partners from registering the phone book. “We will be enforcing this strongly next year so partners who are engaged with a customer will have to prove it with proposals or meeting notes,” he said.
Avaya’s current coverage model is of concern to Dickman. He said that Avaya has a dearth of coverage, not necessarily channel partners. This problem is being addressed with these new programs and he hopes that Avaya partners will be considered in more deals for 2011. For example, if there are 100 unified communications deals in the city of Montreal, Avaya is unable to get after all those deals currently with is partner network or direct sales arm. Right now he said that Avaya could get to 60 of those 100 deals. Dickman’s goal is to get to 75. “We are optimizing this right now so that we can get more at bats and be in more deals in that province,” he added.
Avaya’s channel business is at 73 per cent worldwide and the goal is to surpass 80 per cent.
The Nortel acquisition helps the company in this regard with new products, channel partners and programs.
Since the acquisition Avaya’s channel team was able to integrate Nortel’s three main channel programs into the main Avaya Connect program.“There is no more issue of are we going through the channel; it’s now all about coverage and opportunity,” Dickman said.