Computer Associates International Inc., in early 2006, will eliminate the single biggest complaint of its SMB (small and midsize business) resellers, when it ends the practice of sourcing sales of some of its SMB Security suites through volume resellers.
In the first quarter of calendar year 2006 —January to March — the software maker will allow partners in the SMB space to source sales of its SMB Security suites through distributors and the vendor itself, George Kafkarkou CA’s senior vice president of SMB and Consumer channels, told Channel Insider this week at CA World in Las Vegas.
Under the current model, resellers must sell two of CA’s six SMB security suites by directing customers to one of six volume resellers, including CDW Corporation, PC Mall Inc. and TigerDirect.com.
Kafkarkou said the intention was to leverage the market coverage of the volume sellers to jumpstart sales of the suites, which launched in October.
But the model chapped most partners, which said it ate away their margins and introduced their customers to their competition. It also was not selling well according to sources at a distributor selling the additional four suites.
“It’s not enticing for us, when once we get the sell to them, they can just take the deal,” said Sean Stenovich, a principal at M&S Technologies, a Dallas security solutions provider and CA reseller in the SMB space.
“Why would I put time and effort into it, just for someone else to take the business?”
Click here to read about CA’s SMB security offering and supporting channel play.
M&S adopted the only other model to sell the goods, a Trusted Influencer Agent, whereby partners receive a commission for directing customers to CA’s Web site where they may download the suites.
The maneuver is the latest of several CA has made in the SMB space this year as it tries to capitalize on market opportunity there, Kafkarkou said.
In conjunction with the launch of the SMB suites, CA announced a plan to penetrate the market on the backs of Microsoft’s 150,000 SMB VARs.
Those VARs were each mailed copies of the suites and offered resources to become sellers of the products, all of which are built around Microsoft small business technology such as Small Business Server 2003 and Windows XP.
The vendor also launched an SMB Specialist Track, which provides specialized training and resources for VARs proven to have special skill in reaching the SMB.
“We see tremendous opportunity for growth for CA by reaching the SMB and consumer markets, and more than just sales,” Kafkarkou said.
“We see opportunities to grow the CA mindshare, visibility and revenue by building CA’s presence there. And there is no delusion about the fact that it is impossible to reach the market without partners.”
But CA’s SMB presence is not likely to provide a major revenue stream, said one analyst at CA World 2005 this week in Las Vegas.
“When I think of CA and going after the SMB, I think they’re picking some low hanging fruit,” said Stephen Elliot, an enterprise management analyst at IDC.
“They have the product and they figure they can drive some additional revenue on the cheap. They’ll have some successes. They may have some big ones, especially in security services, but it is always difficult to grow SMB revenue when you are primarily an enterprise company—and that’s what they are.”
But Kafkarkou said CA’s position as a leader in enterprise security uniquely positions the company for success in the SMB.
Click here to read Microsoft’s plan to reach the SMB market through certified public accountants.
“We have something a lot of companies don’t have in the space. We have the ability to leverage our competencies into the market,” he said.
“We are the leader or the number two in many of these practices: security, back-up and recovery, data migration. It’s just a matter of leveraging that to the SMB. The packaging says ’95 percent of Fortune 500 companies use CA security.’ Shouldn’t you? Why is the security on your home computer any less important?”
But the space remains one of the most competitive as it is “well populated and well understood by many players,” said James Hanley, CA’s senior vice president of worldwide partner sales.
But more than just a scaled product line is necessary for success, Elliot said.
“When you talk to businesses in the midsize, they do want a decent amount of functionality. But it can get to the point where too much functionality equals too much complexity, and these guys need easy implementation and integration,” Elliot said.
“And as hardware vendors add security software to the product and there is enough decent freeware around, it’s going to be tough to compete with the free and the cheap.”
Elliot added: “If they want to be successful, it’s going to need to be with a major push in the channel. A major push with redevelopment of programs and new executives for the SMB.
“It has to be something less strategic than tactical if they want to do anything more than capture low hanging fruit.”