Netformx: Maximizing Partner Margins in Complex Programs

**Editor’s Note: This is the first of a two-part Q&A. Click here to read part two.**

Channel Partners recently sat down with Netformx CEO Ittai Bareket for a wide-ranging conversation. The company’s mission is sales enablement and profit acceleration for channel companies of all sizes.

“There’s no such thing as a smallest customer for us,” says Bareket, because the company’s principle of best practices and repeatability are applicable up and down the solution-provider chain. The company’s KnowledgeBase contains more than 1 million devices and more than 3 million rules from partner vendors including Avaya, Cisco, EMC and Hewlett Packard Enterprise (HPE). Bareket says Netformx customers can dramatically increase the productivity of sales teams and the speed of proposal generation while growing customer satisfaction and boosting margins by up to 5 percent.

The suite helps partners automate proposal generation and tracking and reuse proposals.

“When you look at the average in the industry you find that, between the initial interaction with the end customer up to the sale, there could be 10 different iterations on the proposal and design,” says Bareket. “The first one took a lot of time to create, but then the customer says, ‘No, actually I want 20 more phones, and we need a little more backup and storage, and we want these headsets.’ During the iterations, less time is spent actually validating the entire design from soup to nuts, which means that it’s less error-prone.”

Netformx focuses on helping solutions providers maximize their margins in programs that can be very complex.

“For example, a Cisco program that ended at the end of July, all the products need to be shipped by Oct. 24,” says Bareket. “So we’re showing the partner, ‘Look, you have $39 million of orders that haven’t been shipped yet and need to be out by Oct. 24. If you don’t ship them, then you have $2.5 million in rebate at risk.”

Partners can continuously can track a project’s progress, and Bareket says customers often spot deals or line items that were missed.

“We take all the program rules and we take all the deals that we consolidated from all the different point-of-sale data, and then we run the rules on top of those and say, ‘Does that correlate to what Cisco is saying or not?’” says Bareket. “And if not, we highlight those exceptions to the partner.”

The system can also pull in custom programs, calculate rebates based on specialization and certification status, and show partners their status in the various programs they’re subscribed to and list required actions to be more prescriptive. A key point is certifications.

“OK, this advanced collaboration architecture, nobody’s holding this specific role, or the certification expired for this field engineer,” says Bareket. “So we will show them the name of the person and when it expired, so they know what actions they need to take. In addition, we’ll do the mapping for them against the different specializations. We’ll show them who holds what role. It will also show if there’s somebody else who’s close to meeting the requirements. What certification do they need to get in order to be able to replace that person? In some cases we can say, if somebody leaves the company, it’s not so bad because we have somebody else who can actually fill in the role for them.”

Here’s the first part of our Q&A, edited for length and clarity.

Channel Partners: Tell us about your mission. In a nutshell, why Netformx?

Ittai Bareket: We help the channel-partner community be more …

… profitable. That’s the bottom line. They can generate proposals faster, they can be more successful implementing what they sold, and they can also be more profitable in the process. We have a presence globally. We sell to large and small partners. I’ll refer to channel partners as solution providers, because they typically try to provide solutions to their customers. So as we look at those folks, we see four major areas of challenge.

The first one is supply-chain profitability and delivery. They sell solutions from different sources, be it routing and switching from Cisco and storage from EMC and headsets from Plantronics or Jabra and so forth, and then power protection from APC. Maybe they’ve deployed on the cloud. They have their own services. We help them take into consideration vendor programs and promotions. Where can I source the best solution? Where can I source the best price? How can I leverage programs and promotions from different vendors? How do I sell what’s most profitable for me? How do I implement successfully — you’ll find many times implementations don’t go as planned for different reasons. Maybe not all the equipment was shipped to the right site. Maybe not everything was taken into consideration. Money is lost if systems are not turned up on time, or if additional equipment needs to be shipped, additional services need to be provided, and so forth.

Second, there’s complexity in technology today, especially the conversion to cloud. I just read a study that says SMBs are not as happy with the cloud as they thought they would be. There are new technologies every single day, and sales teams have to take those into consideration as part of their proposal-generation process for customers. Folks like Cisco and Juniper and all those guys continuously evolve, continuously innovate, and the solution needs to be taken into consideration as part of the selling process.

Next is responsiveness, time to proposal. I was just meeting with a customer that said there’s a big cloud vendor, takes them 30 days to generate a proposal. Wow, that’s a long time. That means, in those 30 days, somebody else can come in and steal the deal. The ability to close business these days is tied very tightly to being able to generate proposals quickly and then implement them as proposed.

And the last thing is differentiation. So many solution providers out there — there’s some consolidation in the market, but still, just to stay competitive, they really need the ability to migrate quickly to new solutions, and for generalists to sell any new solution. In the past it used to be, I have a data-center expert, I have a voice expert, I have a routing expert. And when I create a solution, I have to put everybody in the same room, or at least on the same team, to make it happen.

What we find today is that the lines are very blurry. In the data center you can do a voice delay, so is it a voice or is it a data-center issue? Solution generalists need to be able to quote and generate all those different proposals.

As we look at these challenges for solution providers, we have major benefits that we aspire …

…  to deliver: the ability to collaborate among the sales team and the implementation team, create a complete solution that they know is going to work and that they’re going to be successful at implementing. Wrap that with automation, so the process can be accelerated and managed properly. And throw analytics on top of that to ensure they are successful and they actually get a closed feedback loop on what it is that they quote, what it is they sell, what it is that’s profitable, and be able to manage their business better.

CP: What are some benefits of automation?

IB: Leveraging domain experts and getting that knowledge into the system so can they can share designs between different engineers, with the salespeople and implementation team. Spend more time in front of the customers, less time in front of the computer. Creating best practices and making sure they’re repeatable and consistent.

So for example, if we have a customer that is focused on health care, they can generate a design for a small, medium-size or large hospital. As they go to the next opportunity, they don’t have to start from scratch. They already know to map this hospital they’re targeting right now. “Ah, that’s a medium-size hospital. Here’s the design we did very successfully a few months ago. Let’s start there.”

You can very quickly build confidence with your end customer by showing them the design and saying, “This is what a typical midsize hospital design looks like. These are the different solutions that have been implemented, from hotspots, Wi-Fi, backup data center, and everything else, and now let’s assess your needs against this and fine-tune this best practice.”

CP: It’s repeatability.

IB: Not to mention consideration of a lot of data points in the design process. Used to be that the sales engineers or solution architects would create the designs, salespeople would go sell them, and after the fact somebody noticed, “If we replaced one chassis with another, we could have gotten a higher rebate from the vendor, but now it’s too late.”

So enabling the optimization of design for profitability early on in the design process is really important, and that’s part of what comes in automation. But of course it’s the ability to create a solution design out of the box instead of using paper napkins, Visio diagrams and PowerPoint presentations, Word documents, Excel spreadsheets. Having all that consolidated to one solution is part of the automation we deliver.

And the next piece is analytics, the ability to correlate data from multiple sources – vendors’ point-of-sale data, distributors, the solution providers’ systems themselves – to better understand the …

… business insight on what is it they’re selling and quoting and how to optimize that, and influence the user behavior early as well.

CP: You’re pulling in an enormous amount of data, and it’s data that, from what I’ve seen, changes quite often. Vendors are always rolling out new incentives, pulling incentives, updating product lines. How do you ensure you have the most up-to-date data?

IB: We work very closely with different vendors, and we continuously evolve and enhance our coverage for those vendors. It’s both getting their product data, including the pricing and all of the rules associated with the product, how to build the product and solution, and also the programs and promotions. We extract data on a daily basis from vendors in order to deliver that data to the solution providers.

CP: It sounds like you’re looking to become the Salesforce for channel companies. Do you see overlap? Are you gunning for Salesforce?

IB: Great question. So I’d say that we actually integrate with Salesforce, we don’t really compete. We are saying, “This is the layer on top.” Because, with all due respect to Salesforce, they go very broad, and we’re very focused on this vertical, so we build very complex configuration, optimization, profitability engines that adhere to this industry, and the complexity of the industry is fairly unique for different reasons. One being, it’s a multivendor industry, so we need to make sure there’s compatibility of concepts between different manufacturers to put a solution together. And the second is that the solutions being presented are very complex.

CP: This import, you say it’s daily. Is it very automated, do you use APIs and you’re just connecting to the vendor systems?

IB: It really depends on the vendors. You’d be surprised — sometimes they’re still working on spreadsheets and price books and so forth. Some vendors use API Web services. Some vendors update on a quarterly basis. So it really varies. With the big ones it’s usually fairly automated.

CP: Do you also work with the telecom providers … Verizon, AT&T, CLECs? So say I want to bundle Verizon services as part of the solution I’m offering to my end customer.

IB: That ties into what we call private contents. We also offer our customers the ability to model their own data and bring their own services. At the end of the day, most of the profit is accomplished by delivering their services, if it’s maintenance, installation, warrantees, or managed, hosted and so forth. So we allow them the ability to add to our knowledge base their private content, whatever that may be, and also create their own bundles, their own packages, and their own go-to-market strategy.

One of the best examples we have, and are very vocal about, is Sprint Business. So every quote that comes up for Sprint Business, if it’s managed services, hosted, cloud, SIP trunking, everything that Sprint sells, we model for them on our platform so their sales team can generate that as part of the proposal. So if you want to sell something from Sprint, Sprint sits in front of the customer and the customer says, “Look, I want a unified communications solution. I want it all on premises. Cisco switches, and so forth.” They can sit in front of that customer right there and create that design.

So the customer says, “Can you manage it for me?” And right there they can implement the managed-services rules on top of it, and in 10 minutes give them a …

… proposal for that. And then they say, “Can you host it for me?” and 10 minutes later they have a proposal. In the past they said, “I need to bring the managed-services team. Give me a couple weeks. We’ll get back at you.”

CP: Can you describe a typical customer?

IB: We’ve kind of divided the landscape a little bit, from the designing, selling, operating – those are the actions – and then winning, implementing to get to profitability. We see different types of solution providers. The passive ones — not necessarily a negative, but those that basically capture the enterprise requirements and provide a solution based on that requirement, without really looking too much at what was successful in the past, what vendors are proposing as a program, the promotions and so forth.

We see the ones that are more proactive, that capture some best practices and try to implement them on the next deal as well and actually propose to the end customer a solution rather than just respond to what they need.

On the top left, we see those that are more predictive; they try to predict when their profitability is going to be on a specific field, and maybe look at being more proactive and predictive in growth of the customer and offer them a solution that maybe will suit them a year or two from now, not just today.

“Prescriptive” is really where we want to take our customers and say, “You’re looking to sell a solution. Here’s an alternative solution that you should aspire to sell because that’s going to enable growth and also take advantage of some vendor program promotions. Cisco has a big rebate right now, so let’s be more prescriptive to the sales team and what we want them to sell.” Or more prescriptive in, “To get a better discount from the vendor, you need to achieve a certain sales booking target, and you’re very close to the booking target, so here’s the deal that you should be closing in order to meet the booking target so you get better rebates or better discounts later on.”

So that’s the area we’re really migrating to and focusing our solutions on, the prescriptive side.

CP: I’m sure that as their businesses grow, it’s a real worry that they’re going to drop the ball on something.

IB: Oh, yes. We see that happen on a daily basis where it’s very difficult to track. We focus a lot on Cisco. Obviously quite a significant vendor in the industry, and the programs and promotions they have are fairly complex to track. So the first thing you want to do is adhere to them so you can benefit. And many partners say, “Well, if we adhere and we sell what Cisco has to sell, we’re going to reap the rewards at the end.”

But guess what? Like any rebate program that we as consumers participate in, we forget to fill in the rebate, or we forget to mail it, or we mail it but we don’t track it. We thought we were going to get $100, but we only got $50 back. With a manufacturer program, it’s the same concept in bigger scale.

**Editor’s Note: In part two of our Q&A on Dec. 30, Bareket discusses competition in the channel sales-enablement business and what he’d say to solution providers struggling to justify the expense and integration work of adding Netformx’s product.**

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