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Extreme Networks announces $50m channel investment
Extreme Networks investing in building up its channel after going through a challenging year
Extreme Networks is making a $50 million investment to shore up gaps in its channel operations following three major acquisitions over the past two years.
Extreme’s VP of worldwide channels, Gordon Mackintosh, said partners have “been starved of information, and haven’t had all of the materials and sales tools they need to be successful.”
Extreme’s executives this week admitted that 2018 has been a “difficult” year after the networking vendor snapped up Zebra’s wireless business, Avaya’s networking operation and Brocade’s datacentre division, all between 2016 and 2017.
“There’s a reason why companies don’t make three acquisitions within 18 months – it’s pretty hard,” Extreme’s chief revenue and services officer, Bob Gault, told attendees at the company’s Global Partner Conference in Prague, Czech Republic.
“We didn’t think acquiring and integrating three multi-million-dollar companies was going to be a piece of cake. We just thought it was going to be a little bit easier,” said Gault, adding that as a result, “a lot of people were uneasy. There was a lot of nervousness in partners and customers and we lost some revenue.”
The integration was hampered by several factors, including some initial resistance among sales leaders of the acquired companies. “Sometimes you need two people to have a dance. Sometimes we didn’t have a dance partner, which made it extremely difficult for all of us to see and call the business the same way,” said Gault.
In addition, the acquisition of Brocade’s datacentre partners, which Extreme anticipated would close in June 2017, didn’t complete until November of last year.
“Any well-oiled sales company, you hate to make changes in the middle of the fiscal year; you hate to make account changes, customer changes, partner changes or territory changes but sometimes you have to do that. And when we did that we lost time getting in front of the customer and in front of our partners,” said the exec.
On the channel side, partners were asked to cross-sell across the new portfolio, but said they lacked the tools or resources to do so.
“We didn’t have all the training materials or sales tools, and everything [partners] needed top build a new technology practice,” said Mackintosh. “It was fragmented, and a little difficult to find information.”
Now Extreme is “doubling down” on its channel resources to make its engagement with partners “simpler, smarter and stronger”.
“We’re not Cisco, we’re not HPE,” said Mackintosh. “We don’t have those levels of complexity, but there are areas where we could become simpler.”
The $50 million investment will include updates to the firm’s partner programme, as well as sales, technical and marketing resources.
One of its investments is the Extreme Dojo programme, a new gamification-based, online training programme for partners the company says can translate into 50 percent less time away from customers. It is tiered by four ‘belts’ – white, yellow, green and blue – and once each belt level is completed, partners are recognised for their achievements and are eligible for incentives.
The vendor is also moving to more upfront pricing, with the current system too complicated and time-consuming for partners. “92 percent of our business today is transacted through special pricing. That’s not a frictionless business,” said Mackintosh.
He said it is investing in pricing automation tools and working with its distributors “to drive frictionless sales.”
In addition, the exec said there would be improvements to its deal registration process where Extreme will be “taking people out of the approval loop on smaller deals, automating things and getting a faster response time than before.”
Extreme has also opened up deal registration to all its distributors, so they can raise registration on the partner’s behalf.
Elsewhere it says it has revamped its marketing tools to improve the quality of lead generation for partners.
Looking forward, the company is looking to put its troubles behind it and focus on its post-acquisition successes – growing from $500m to $1 billion in business and leaping from number 11 to number three in the networking market.
“Some folks will say FY18 was a lost opportunity. I say it was a transitional year that we’re going to parlay into fantastic results in FY19,” said Gault. “One of the things we’re most proud of is how we fought through adversity over the last couple of quarters…We’ve taken a few shots in the kisser over the last couple of quarters. Equally important, we’ve been able to give a few shots back as well.”
And while Mackintosh said there were “lots of distractions” in 2018, he highlighted partner successes such as $33m in new customer acquisition and the firm saw a 133 percent year-on-year upturn in deal registration.
In addition, at last year’s GPC, Extreme launched the Black Diamond programme where it asked partners to commit to bringing in $1 million in revenue a year on a new technology to their portfolio. This generated in $25m of new products sales this year, said Mackintosh.
“We are looking for partners that are willing to invest, willing to make bets on Extreme Networks,” he said.
The vendor is keen to position itself as a “premium alternative” to Cisco and HPE, and is lauding being named a challenger in the Gartner Magic Quadrant for datacentre, and a leader in the wireless and wireless LAN Magic Quadrant – for which, Gault said its partners “have played a key role”.
“We are in the challenge position. The industry has needed something like this for a long time…We are perfectly poised to drive solution selling and drive competitive disruption and differentiation. We want to put Cisco and HPE on their toes.”
Meanwhile, the company isn’t ruling out any future acquisitions to bolster its business. Norman Rice, chief marketing, development and product operations officer told Microscope that acquisition remains a “key part of strategy.”
He said: “Consolidation will continue. We believe we will have a better execution scenario with more scale,” adding that the areas the company is looking at are “tangential to our existing space in wireless, software and application management, network assurance and performance management, SDN and SD-WAN.”
“We’ve accomplished a lot,” said Gault. “And if we don’t leverage what we’ve learned in FY18, shame on us.”