Sun Bets on Channel Strategy Revamp
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Sun Microsystems has initiated some changes in its channel program designed to help support partners and increase sales, something it desperately needs to do to get the top line growing in its quarterly earnings reports.
The two-pronged plan is designed to put more emphasis on Sun's reseller partners, rather than involve the company directly, according to Tom Wagner, vice president of the North American partner sales organization. Two-thirds of Sun's business comes from channel partners and the company is looking to increase that percentage.
The first part of the program is the Partner First model, where Sun (NASDAQ: JAVA) will turn over the reigns of selling to customers. Right now, the company has sales reps calling on customers jointly with partners. Under the new plan, the company will stick to directly servicing the top 300 accounts only.
Below that, all business will be sold or transacted through business partners. That means Sun partners will be servicing newer accounts, since no one comes on board as a top level account.
"We recognize that the path to growth is acquiring new customers," Wagner told InternetNews.com. "We enjoy a fairly nice share of the wallet in our top accounts, but recognize that to grow the business, bringing new logos into Sun is paramount."
In the past, Sun reps would call on accounts but didn't know the account or its business the way a local provider might have. So, "in an attempt to fully leverage breadth and depth in the channel we are modifying the model," said Wagner.
Sun currently has 600 partners in the U.S., but Wagner did not know if more would be added. Sun regional managers would look at a region and decide if there is enough partner coverage or if more is needed.
A more strategic role for the channel?
Bill Calderwood, president of The Root Group, a Sun reseller in Boulder, Colo., is waiting to see all the details, but so far likes what he sees. "What's important for us is the commitment that we'll be in some larger accounts to help grow the market," he told InternetNews.com. "The channel's going to play a more strategic role for medium-sized business customers, and that's an important thing."
What might be a small account for Sun could be a big one for The Root Group and they would gladly take that business, he added. "What they see as accounts that don't get attention due to the low possible revenue they could generate for Sun could generate a huge amount of revenue for us, so it could be a win-win situation for everyone," said Calderwood.
The National Coverage model is a revamping of the Sun reseller support structure. As it stood, Sun's internal sales staff had little motivation to help a partner outside of their headquarters. If, for example, resellers based in Los Angeles wanted to open a new office in Las Vegas, they were on their own.
Under the new model, sales executives have been incentivized to help partners that are expanding outside of their corporate headquarters. "It was saying 'good luck' when you expand," said Wagner. "So the partner wouldn't have anyone to run interference for them, help them understand the geography, learn the local situation."
Both plans are designed to boost Sun's sales, which have been flat for the last few quarters. "We're definitely going to see some nice lift on the top line of the business. That's what this is all about," said Wagner. "We've acknowledged that we place tremendous value on our partners and we're making a statement here that one of the paths to growing the company is leveraging the sheer scale and experience our partners bring."