Mitel Stands Out with Exclusivity, Flat Fees

When your competition includes the big phone carriers and networking giant Cisco Systems, you have to find a way to stand out.

If you’re Mitel, you do so by offering partners unmatched leasing options and business training and evaluations in exchange for exclusivity. And in so doing, you manage to embrace one of the IT channel’s growing trends while bucking another.

Exclusivity, after all, is not something too many vendors can get away with demanding from partners. When Hewlett-Packard CEO Mark Hurd first suggested a couple of years ago the vendor would favor partners that committed to the HP brand, he raised some hackles among partner ranks.

But on the financing side, Mitel has created a solution tailor-made for the managed services model. The communications vendor has revamped its TotalSolution managed services program to include a leasing component calling for set monthly fees to cover a host of offerings, including unified communications, IP network planning, technology provisioning and upgrades, phone carrier services, as well as related IT services, training and support.

The program, says Joe Ward, senior vice president of managed services at Mitel, removes the high barrier of entry for customers that cannot afford to pay upfront for the technology. And it has the added benefit, he says, of including 24/7 maintenance services, which typically require customers to put up extra money.

The typical customer contract runs for five years and covers software upgrades, user training and insurance for such things as floods and theft, says Ward.

The contract also carries guarantees for pricing for future add-ons and for equipment obsolescence, he says. These guarantees prevent sticker shock when customers have to expand their network while taking cost out of replacing equipment and software that are no longer current.

Mitel does business with about 1,500 partners worldwide, including 800 in the United States. The company has 120 partners that sell Mitel-branded products exclusively. Exclusive partners get some extra perks and a little more hand-holding from the vendor.

When signing up an exclusive partner, Mitel assigns a company representative to review the partner’s business and make recommendations on how to improve sales and other business processes, such as recruitment, accounting, inventory management and customer support. Exclusive partners also get access to training and support unavailable to other partners.

“What we bring to the table is much more of a business partnership,” Ward says.

Exclusivity was more common when PC companies such as Compaq (now part of HP) and IBM were building reseller channels two decades ago. And while some channel companies still prefer to deal with a primary vendor, many prefer to keep their options open by avoiding exclusivity. Especially in the area of services, a growing number of solution providers would rather lead with their own brands, around which they build a palette of service offerings, than pushing any one vendor’s logo.

But for Doug King, president of DataVoice Inc., a Mitel partner since 1991, exclusivity has benefits.

“If you focus on one product, you become an expert on that one product,” he says. In the era of the PBX, which is gradually being replaced by voice-over-IP systems, the equipment was so complicated that it didn’t pay to represent more than one brand, he says.

But even today, King says he plans to stick with Mitel because the vendor has proven itself a responsive, solid partner. “A lot of the design changes in Mitel’s product line have come from suggestions from the field and partners,” he says.

Besides, he says, Mitel has an extensive enough product line that leaves his customers wanting for nothing as far as communications technology.

Another exclusive partner, Steve Klenner, vice president at BSB Communications, told the Channel Insider in January that representing a single vendor simplifies his business. "Before we joined the [exclusive] program, we were selling three or four manufacturers' products, and it was impossible to keep all our technical people, sales and marketing up to speed on all the software, hardware and other products," he said.

King says Mitel’s TotalSolution program is a hit with customers who welcome the flat-fee financing options. Because of the leasing contracts, replacing equipment as needed becomes that much easier, he says, especially in the area of VOIP, where software changes take place frequently.