Siemens: Shifting 75 Percent of Sales to Channel Partners

It’s a moon shot. A big hairy audacious goal in the unified communications market. A bet-your-business statement: Within the next three years, the Siemens Enterprise Communications Group hopes to generate 75 percent of its revenue through channel partners, up from a scant 15 percent today. Here’s the scoop from the unified communications specialist.

The VAR Guy spoke yesterday with Mark Vayda, president of sales for Siemens Enterprise Communications. During the conversation, Vayda conceded that Siemens Enterprise Communications had struggled in recent years because of the company’s unclear ownership status and market position.

But clarity, Vayda insists, arrived in October 2008, when The Gores Group, a U.S.-based private equity firm, acquired 51 percent of Siemens Enterprise Communications. Former CompDyne CEO James O’Neill stepped in as Siemens Enterprise Communications’ new CEO, and Vayda — a BearingPoint veteran — joined the party in November 2008.

The Big Bet

Now that you know the back story, let’s look ahead: Can Siemens really drive 75 percent of its sales through the channel by 2012, up from 15 percent today? Actually, the answer to that question may not matter. More importantly, Vayda says he needed a big, hairy, audacious goal to make sure everyone within Siemens was focused on true change.

“Even if we only reach 60 percent instead of 75 percent [of sales through the channel] in three years, that’s still tremendous progress,” said Vayda. “The point is, we’re not out in the market saying we want to grow our channel sales to 25 percent of our revenue. We’re really out to move the needle far higher.”

In December 2008, Vayda presented his channel plan to O’Neill and the Siemens board. They all signed off on a strategy to overhaul Siemens’ global sales compensation plan — ensuring Siemens’ internal sales team would be enticed to work aggressively with channel partners.

Still, the effort is a work in progress. The new compensation plan was implemented across North America in April 2009, and will be rolled out incrementally across the globe through October 2009 — the start of Siemens Enterprise Communications’ fiscal year.

New Owner, New Culture

Signs of a corporate culture shift first surfaced at VoiceCon Orlando 2009, where Siemens Enterprise Communications disclosed plans to offer unified communications software in Amazon’s Elastic Compute Cloud (EC2). The normally reserved Siemens was suddenly out in the market talking about its cloud vision.

Hmmm. Pie in the sky stuff? Not quite. Some customers and partners are already testing Siemens’ EC2 work, and Siemens is reaching out to EC2 software developers to measure their interest in potential relationships.

Meanwhile, Vayda sees opportunities in more traditional markets. A prime example: Cisco’s recent move into the server market could allow Siemens Enterprise Communications to work more closely with server vendors who are looking to counter Cisco’s moves.

To be sure, the Siemens Enterprise Communications channel strategy is a work in progress. Let’s not forget, the company faces pressure from entrenched giants (Cisco Systems) and up-and-comers across the unified communications market. The VAR Guy will check in with Vayda at least quarterly to see how those efforts are progressing.

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