Nortel to make changes to channel programs in Q1 7 January, 2008 By Chris Talbot

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Towards the end of 2007, Nortel looked over the revisions it had made to the Partner Advantage program, and it realized that its stocking distributors and the structure in place between them and Nortel was out of sync with the partner program launched in March, said David Wilkinson, vice president of North American channel strategy at Nortel.

The relationship structures between Nortel and its distributors didn't align with the value-based model the networking vendor had been moving towards, so Nortel plans to launch a revised program on March 1, 2008 that will bring its distributors (Westcon, Synnex, Ingram Micro and Tech Data) into line with its channel strategy.

"This program is similar in a sense that it focuses on three main areas. It's really focused on growth of certain strategic segments to us," Wilkinson said.

Distributors will be able to earn incentives by growing their Nortel businesses, by meeting Nortel's "world-class customer experience" strategy and by improving operations that lower Nortel's costs, he said. Each of these areas will be met with incentives for the distributors.

All of these changes to Nortel's channel partner programs began in 2006 when the company began transforming its enterprise product business, and many things were done internally to align business practices with the market, Wilkinson said. After the internal work was completed, Nortel worked to bring its partner program into alignment.

One of the issues that needed changing was the way Nortel's partner program operated, which was based on a March-to-March timeframe.

"Our partners were telling us when we made changes to the program, they didn't have any time to react and that we were missing their budget cycles," Wilkinson said. They weren't able to change in time to meet the requirements of the new program, so Nortel changed its overall commercial structure and fundamentally changes its plan from a volume-based business to a value-based business.

The result was the three-tiered Partner Advantage program, which 15 per cent of Nortel's partner base belongs to (the rest are contracted Nortel resellers), Wilkinson said. With the launch of Partner Advantage in March 2007 came a two-year plan of record to complete the change to a value-based channel sales model.

All of the changes being made are being done in a way to improve partner profitability, said John Stasick, director of channel management at Nortel.

"Partner profitability is kind of number one on that list of things we're trying to execute as we change the overall partner program," Stasick said.

The second most important item on the list is building the program around "world-class customer experience," followed by simplifying the program so partners can get things done faster, Stasick said.

Last year, Nortel also launched its first deal registration program, which was designed to reward partners for bringing in net new customers (defined as an organization that has not purchased Nortel equipment in the last five years).

"We've heard a lot of good feedback from the partners that we've made the right changes commercially. The deal registration program is the right way to go," Wilkinson said.

However, partners asked for Nortel to broaden the scope of the deal registration program, so the vendor plans to open up the deal registration program so partners can register net new business, even from existing customers (with some restrictions), he said. Nortel plans to make the change during the first quarter of 2008.

Nortel will also continue to expand on the specializations that it launched last year. It created three specializations in 2007 that partners could apply for -- advanced services, unified communications and SMB -- and it plans to launch a fourth (data networking) in the next 60 days, Stasick said.

"The one key differentiator for us is we've taken a bit more firm stance on not just having technical expertise and the ability to understand the classroom aspects of this stuff, but we've also built in the requirements to have real-world customer requirements and experience around the technology," Wilkinson said.

Stasick said the specializations were designed in a way that would combine book smarts and street smarts. Partners have to prove the specialization they're applying for is a core piece of their business and that they have the customer experience to back up their certifications.

Nortel plans to increase the number of specializations it has to between six and 10 during the first half of 2008.

"The specializations will be built around market trends and partner feedback," Wilkinson said.