Sun Changes Channel Strategy to Fill Gaps

By John Hazard  |  Posted 2006-08-23 Email Print this article Print
 
 
 
 
 
 
 

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Sun Microsystems will compensate partners not for how much they sell, but what they sell, where they sell it and with what solution.

Sun Microsystems has relaunched its Partner Advantage Program with new requirements and rewards to compensate its channel for covering white space and pushing technology adoption.

Partners will be rewarded less on how much they sell and more on what they sell, where they sell it and within what solution, to fill gaps in coverage—both geographically and vertically—push priority products and bring more value to the end user, Sun executives told Channel Insider.

The concept includes strategy planning at the territory and account level between VARs and Sun representatives to encourage the selling of specific products and solution classes to specific customers, geographies and verticals, a concept Sun calls "channel capacity," executives said.

"The partner's value underpins everything going forward," said Tom Wagner, U.S. vice president of Sun's Partner and Alliance Sales Organization. "We won't place as much value on fulfillment partners as partners who are able to deliver highly differentiated value to the marketplace."

Benefits are tied to three key initiatives, said Bill Cates, director of Sun's U.S. Partner Programs:

  • Where: "We're willing to pay more for selling to certain markets or bases than others," he said. Markets may even include areas within a specific account.

  • What: "Certain products or product categories—a higher margin or a priority—will be more valuable," Cates said. For instance, Sun may be willing to pay more for growth in storage sales in a certain territory, he said.

  • Solutions: Solutions that add more value will be treated as more valuable, Cates said.

    But partners are by and large concerned about what they consider a subjective compensation model.

    Value and compensation will have guidelines but will be determined largely by the market needs at the time and often at the territory level as part of capacity planning, with managers and partners determining together what areas present most opportunity or need coverage, Sun executives said.

    "I wish we had something more concrete to go on to know these are the core competences and this is the value you're bringing to the table," said Mike Thompson, president and CEO of Groupware Technology, in Campbell, Calif., a Sun storage partner. "I don't want to get into a situation where I spend two days arguing with Sun over what my solution is worth to the marketplace. But overall, it rewards selling solutions versus just selling boxes. The V [in VAR] does stand for value."

    Channel capacity planning is "about mapping the collective competence and intelligence, capital and collective capabilities to solve problems for customers in the marketplace," Wagner said.

    The practice is already taking place in pockets around the country where territory organizations saw fit, but the program will formalize the method worldwide, said Cates.

    Channel capacity will be part of a refocusing of Sun's priorities in the fiscal year to transform the organization into a sales-led organization, Wagner and Sun executives said. Partners and customers have complained that the Sun organization remains too deliberate and rigid to be a proper sales force.

    "You can have great products and good programs, but if that last mile of the sales engagement breaks down, it's a done deal," Cates said.

    "In the past, the company has been a little heavy on the legal and corporate side of the house and hindered the sales side," said John Murphy, executive vice president of Advanced Systems Group, in Thornton, Colo., a Sun VAR. "That's overhead while you're sitting around waiting for approvals. … I'm certain it's cost us sales when customers walked away from the deal."

    Wagner called sales success in the channel "Sun's trump card this year."

    Sun sees itself in a sprint to get sales in shape as part of the company's goal to return to profitability by the fourth quarter of the fiscal year, and sales are going to lead the way, Wagner said.

    "I'm a sales guy," he said. "I believe we fundamentally grow by being a sales-led culture. We're on a path to restore the company to a sales-led culture. With it comes speed. It is going to be a coordinated attack into the market to get the legal, marketing [department] and partners all lined up behind it. That is the mission we're on."

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