Siemens Channels Success with New Strategy

By Tara Seals

It’s been less than a year since Siemens Enterprise Communications Group announced its goal of bringing in 75 percent of its revenue through the channel within three years, up from 15 percent. And so far, so good: As the fiscal year ended, it had grown its indirect orders at about 20 percent over the previous year. If that growth trajectory continues, it should meet its goals handily. More importantly, the organization itself has made a holistic, channel-centric transformation. And, it has been helped along by the sunset of Nortel Networks in the enterprise IP space.

“The cultural change is somewhat phenomenal,” said Mike Garland, senior vice president of North American alliances and channels for Siemens, who was brought in last year specifically to head up the channel effort in the United States. “We moved a year ago to being a more channel-centric model and it was new for everyone. But now people inside the company really get it, and we have an overarching channel organization that didn’t exist a year ago.”

He said that in evidence of this, Siemens has implemented a centralized channel approach across its business, globally, including standardizing certification programs. The vendor also has an overall internal target of how much of the sales need to go through the channel this year. “We tell each region the goal they need to hit,” Garland said. “In the past we let individual countries to choose their own channel percentage.” As a result, Siemens has turned 27 countries into exclusively indirect countries.

The linchpin of the strategy is a two-tiered model of forging relationships with large distributors who oversee thousands of VARs and integrators. In 2009, SEN had 15 new partnerships for 2009, including, most recently, Shared Technologies Inc. – the No. 1 Nortel Networks VAR in North America – with 8.7 million Nortel lines under maintenance contract. Siemens just signed a new five-year contract for shared to resell its OpenScape portfolio.

Garland said that Nortel’s sale of its enterprise business to Avaya Inc. has loosened up opportunities for vendors like Siemens to gain a heretofore nonexistent piece of some VARs’ business. “Shared was an almost 100-percent Nortel shop, but now what they and others are interested in doing is overlaying the Nortel infrastructure their clients have in place, without ripping and replacing,” said Garland. “With the consolidation in Avaya and Nortel, there are a bunch of channel players that are looking for alternatives.”

The Nortel driver is unlikely to recede anytime soon. Garland explained that in the wake of the Canadian vendor’s dismantlement, VARs see an initial need in the marketplace to not only overlay existing Nortel infrastructure to get the most out of those assets, but they’re also looking for something that will allow an elegant evolution to an open, interoperable, cloud- and UC-based strategy for their clients. “These resellers need an alternative solution now that can act as a migration strategy to another technology that’s more open,” Garland noted. “For the benefit of their customers, they want to be able to offer whatever makes the best solution for them and offer more options, but they don’t want to disrupt that Nortel revenue stream either.”

Garland added that Siemens is “absolutely committed to go down this path to grow through the channel.” The vendor has several channel announcements in the works for the rest of the year, which he said will continue to clarify the company’s overall strategy, including, perhaps, a carrier strategy involving a hosted platform. That could be a boon for operators’ agents.

“The fact that we have the open architecture lets us scale in a number of different directions,” he said. “We’re well aware of the opportunity, but I can’t really talk about what we’re planning – yet.”