2001 partner acquisition plan cleaned

[COMPANY] Internal Use Only August 2000

Distributor Acquisition Team

August.30.2000

2001 Partner Acquisition Plan

“Times they are a changin’ ”- Bob Dylan


Meeting Objectives

Review a new partner acquisition strategy and framework Obtain management approval to proceed with the development of

a detailed implementation plan


Meeting Agenda

Current Situation Overview The Paradigm Shift

Technology Adoption Lifecycle New Partner Program Framework New Landscape

Conclusions 2001 Product Landscape

Action Plan Key Recommendations Deliverables and Timeline Critical Dependencies


2000 Situation Overview

Majority of existing partner base originated as interconnect VARs All partners are considered ubiquitous (“all VARs/Resellers are considered

equal”) and non-specific. Acquisition strategy based upon ability of prospect to sell products (data or voice).

Agreements established and acquisition programs in-development with key distributors ([COMPANY] North Supply) and 2-Tier manufacturers (Polycom, Sony). Other engagements (Cisco, Microsoft, Lucent) have not proved successful.

[COMPANY] selling “products through the channel” versus “components of a total solution delivered by the partner to the end customer”

No framework or decision criteria exists for driving partner acquisition Organization lacks sufficient understanding of profile of [COMPANY] partner

base and that of channel players/dynamics Acquisition value proposition used in market messaging is based on

“features/benefits” of Partner’s Program membership


Partners

Data VARVoice VARRegionalNational

ManufacturerDistributor

On

line

Mo

dels

Re

tail

Ag

ents

Affin

ity

Pro

fessio

nal S

ervice

s

Lea

d R

eferra

l

Current [COMPANY] Indirect Channel Landscape


Product Landscape

Voice Products Switched Voice Business Flex/All Calls All Day Real Solutions (Large/Small) Voice VPN Distance Free Voice Hospitality/Pay Phone Local Resale International

Data Products Dedicated IP Frame Relay DSL/Broadband Private Line ATM Internet VPN ISDN/SDS Web Hosting (Large/Small) Managed Security MNS ([COMPANY] ENS) eBusiness Applications Fixed Wireless ION


Voice & Data Programs

AcquisitionNew or

Transitioned Partners

Partners are ubiquitous and non-targeted

Acquisition is driven by the need for market share and gain more productive partners

Current Partner Acquisition


Objectives

Define an architectural framework from which successful partner models can be created

Define desirable partner models for [COMPANY] Indirect Channels

Define criteria set for use in partner identification Match product solution sets to appropriate partner model Define deliverables and timelines


The Shift

“Changes in latitude, changes in attitude”- Jimmy Buffet


Voice & Data Programs

Acquisition Partners

Current View...Partners are ubiquitous and non-targeted

Acquisition is driven by the need for market share and gain more productive partners

Partner Acquisition

Map to Partner Models

Match Product Solution

Future View...Partners are defined as being unique and by the solutions they sell

Acquisition driven by end user needs, product solutions and partner business models

End Usershave

Business Problems

moveto

The Paradigm Shift


"The Chasm"

LaggardsLateMajority

EarlyMajority

Early Adopters

Innovators

End User Technology Adoption Lifecycle

The technology adoption lifecycle was created to give technology companies a view of HOW end-users acquire technology and WHY these individuals are different


"The Chasm"


EarlyMajority

Early Adopters

Innovators

Marketplace Overlay

Audio Conferencing Dedicated IP

Hosting (colo and dedicated)

DSL

ION

Collaborative Services

ASP

Video Conferencing

Frame Relay

ISDN

Local Access

Long Distance

X.25

Dialup Internet

Where do [COMPANY]’s products and services fit within the Technology Adoption Lifecycle?


Converged NetworksVoice + Data + Video

ION, ASP, EBACollaborative Services

Separate NetworksVoice & Data & Video

IP, Frame RelayDSL, Private Line

Single NetworkVoice OR Data OR Video

Leased LinesVoice/Long Distance

"The Chasm"


EarlyMajority

Early Adopters

Innovators

Marketplace Overlay








"The Chasm"


EarlyMajority

Early Adopters

Innovators

Partner Business Model Overlay

Custom ServicesHigh Margin

Custom OfferingConsultants

Integrated ServicesMedium MarginStandardization

VARs/SIs

Commodity ProductsLow Margin

“Shrink-wrapped”Retail/Self Service


Web IntegratorWeb Integrator

Web DeveloperWeb Developer

ConsultantConsultant

Infrastructure ConsultantInfrastructure Consultant

ISVISV

E-Business Solution ProviderE-Business Solution Provider

Business Process ConsultantBusiness Process Consultant ISPISP

Application Service ProviderApplication Service Provider

Software DeveloperSoftware Developer

Web

Innovator

Web

Innovator

E-Business Engineering SpecialistE-Business Engineering Specialist

Internet Service IntegratorInternet Service Integrator

Network/Systems IntegratorNetwork/Systems Integrator

“VARs” Don’t Call Themselves VARs

The Great Name Game

Network Service ProvidersNetwork Service Providers


The Partner Landscape

Consultants Utilize technical expertise to enable

new or emerging technologies Focus on services and

relationships IT Consultants, ASP

VARs Provide solutions to specific

vertical industry or technology Lead with product sale and pad

margins with services (installation, setup, maintenance, etc.)

SMB Solution Provider, F500 Solution Provider, Vertical VAR, ASP, ISV

Integrators Leverage expertise in a specific

technology Usually lead with services, but may

provide products as part of a complete solution

Network Solution Provider, Systems Integrator, Web Integrator

Retail Sell products, not solutions (broad

range of technology) Typically low margin opportunities

for proven technology Staples, Office Depot,

bizbuyer.com








"The Chasm"


EarlyMajority

Early Adopters

Innovators

Partner Fit

Consultants

Integrators

VARs

Retail


Partners

Data VARVoice VARRegionalNational

ManufacturerDistributor

On

line

Mo

dels

Re

tail

Ag

ents

Affin

ity

Pro

fessio

nal S

ervices

Lea

d R

eferra

l

Current [COMPANY] Indirect Channel Landscape


Partners

On

line

Mo

dels

Re

tail

Ag

ents

Affin

ity

Pro

fessio

nal S

ervices

Lea

d R

eferra

l

Non-Selling

Selling Tiered

New [COMPANY] Indirect Channel Landscape


Non-Selling

Selling Tiered

LeadReferralAgent

Manufacturers

Distributors

Regional &National

InternetLead

Referral

Partners

LeadReferralAgent

New [COMPANY] Partner Framework

CLP

OnlinePartners


Components Non-Selling Selling Tiered

Contractual revenuecommitment

May be required, basedupon solution/product set

Yes – the amount will bedetermined based uponrevenue requirements,

number of sellingpartners and product

offering

Yes – the master will beresponsible for deliveringthe revenue requirement

Sprint branded products Yes Yes Yes

Product certification May be required Required May be Required forsome product offerings

Dedicated Sprint sales forceto support resell partner

May be required Yes Dedicated resources willbe required for success of

program

COOP advertising accrual forsales

No Yes Yes

Market Development Fundsavailable

No Yes Yes

Participation in SprintIncentive Programs

Special programs may bedeveloped for non-selling

partners

Yes Special programs may bedeveloped for tiered

partners

Proactive marketing andsales of Sprint Products andServices

Yes Yes yes

Commission payable to resellpartners

Variable 6% to 22% Varible

Partner dedicated sales force May be required Yes Yes

Online/Offline presence Both Both Both

Preliminary Partner Model Components


Preliminary Partner Model Functions

Function Non-selling Selling Tiered

Prospecting Yes Yes Yes

Pre-sales Support Yes Yes Yes

Pricing Optional Yes Yes, pricing support fortheir reseller base

Proposal to Customer Option Yes Yes, proposal support fortheir reseller base

Credit Application No Yes Yes, credit applicationsupport for their reseller

base

Ordering No Yes Yes, order entry supportfor their reseller base

Provisioning (act as customerliaison)

No Yes Optional

Billing/Invoicing to endcustomer

No No No

Post Sales Support No Yes, provide first call orcontact for customer

Yes, provide first call orcontact for reseller base


Conclusion

“The Long and Winding Road…”-Paul McCartney/John Lennon


ION

Frame Relay

IP

DSL

Product Description

2001Revenue

Target

Provides network capacity and dynamicbandwidth allocation to integrate voice,

data and e-business applicationsthroughout any enterprise

An efficient communications service usingfast packet switching technology to provide

reliable delivery over virtual circuits

Dedicated IP access which allows traffic to be connected directly through to the long distance

carrier with online sharing, bypassing the LEC

Converts standard phone lines from a singleanalog circuit into multiple, high-speed

digital circuits, which simultaneously carryvoice, video, and data traffic.

Revenue targets are an integral component of any acquisition strategy

$M

$M

$M

$M

2001 Targeted Growth Product Landscape


New technology Early life cycle High service content Solution/service product

Target Markets Large Business

Head quarter locations Large Branches Small branches/retail Telecommuters

Small Business Desktop businesses Networkers Connected enterprises

Non-Selling Partner

Selling Partner

Tiered Partner

Implements, hosts or maintains customized solutions

consultative approach to selling for end-user applications

system/network design and engineering expertise

lead generator

analytical/research oriented

tech savvy/ focus on Fortune 500 companies

customer base typically lacks internal IT department

National or Regional reseller of equipment or services

customizes solutions for hardware, software or communications services

sells, provisions, installs, and maintains CPE

able to design and install LAN/WAN

located in or service ION cities

equipment manufacturer or channel distributor willing to bundle with [COMPANY] ION solution

consultative approach to selling of end-user applications

mature two or three-tired distribution channel comprised of existing relationships with VARs and distributors

substantial back office infrastructure; able to support on-line order entry

ION Partner Landscape


Non-Selling Partner

Selling Partner

Tiered Partner

Mature product Late majority lifecycle Medium margin Operational excellence

Target Markets Mid to large businesses with multiple locations Businesses which need company wide secure connectivity to mission critical, productivity enhancing applications




lead generator


National or Regional reseller of equipment or services(routers, network management, Managed services)

customizes solutions that require a high level of security



multi-regional presence

partner company consists of sales and technical resources

equipment manufacturer or equipment manufacturer or channel distributor willing to bundle with [COMPANY] Frame services




Frame Relay Partner Landscape


Non-Selling Partner

Selling Partner

Tiered Partner

Accepted technology Early majority lifecycle Medium to Low margin

Target Markets Small business and telecommuters Businesses that currently have dial up internet access and want to have high-speed dedicated service at a price point below dedicated T1 Businesses who do not require SLAs for dedicated internet access




lead generator


reseller of equipment or services (routers, modems, servers, workstations)

resellers of web hosting, e-commerce, ASP services)



network equipment manufacturer or channel distributor




DSL Partner Landscape


Non-Selling Partner

Selling Partner

Tiered Partner

Mature product Early adopters to late majority Medium margin

Target Markets Business requirement for “standardized” data communication Small to medium sized business up to T1 Large sized businesses to mulit-megabit




lead generator


reseller of equipment or services (routers, network management, internet applications, servers)

customizes solutions for hardware, software or communications services


able to design and install LAN/WAN and internet technologies

network equipment manufacturer or channel distributor

internet application developer




IP Partner Landscape


Partner Acquisition

Map to Partner Models

Match Product Solution

Future View...Partners are defined as being unique and by the solutions they sell

Acquisition driven by end user needs, product solutions and partner business models

End Usershave

Business Problems

The Paradigm Shift

Map [COMPANY] products and solutions...

matched to appropriate partner...

based upon their business model...

which is determined by their end user relationships.


Product Fit (Lifecycle and

Solution)

BusinessModelProfile

End User Purchasing

Habits

The IdealPartner

The IdealPartner

The Focal Point


Action Plan

“Taking Care of Business”- Bachman Turner Overdrive


Key Recommendations

Implement proposed acquisition strategy and framework and develop detailed partner acquisition implementation plan

Develop acquisition criteria set(s) and compile target acquisition list(s) Define and implement end-user market research to identify trends and

changes in buying patterns/models and user requirements Define and implement indirect channel market research to identify

trends and changes in the VAR/Reseller community Develop partner cost-of-acquisition model(s) Incorporate relevant conclusions/recommendations from Partner

Productivity analysis into Acquisition Implementation Plan Leverage SEG2K program to facilitate targeting of prospective

partners based on end-user needs


Finalize 2001revenue forecastrollout and offering (s)

Partner AcquisitionImplementation Plan

Compile Partneracquisition target list

Develop Partneracquisition criteriabreakdown anddemographics

9-30-00 9-30-00 9-30-00

11-15-00 11-15-00 11-15-00

TBD TBD TBD

9-15-00

10-30-00 11-15-00 11-15-00 11-15-00

10-30-00

TBD

ION Frame Relay DSL

IP Services

Deliverables and Timeline


Critical Dependencies

ION End user demand generation programs developed to support Partner

acquisition Firm product offering and roll-out schedule Sales organization resourced to support acquisition efforts Resources available within database marketing to compile target lists Process exists for new Partner lead tracking and management Partner acquisition directly impacted by geographic rollout schedule and product

functionality Availability of DSL access to enable demonstration of ION capabilities

Commitment of sufficient resources to define, execute and maintain process for partner profiling and indirect channel and end user market research

Support from Finance to develop/maintain cost-of-acquisition model(s)


Appendix

“If I could save time in a bottle…”- Jim Croce


Corporate Solution Provider National or regional reseller organization that sell to Fortune 500

organizations. These organizations are usually national and have existing long term relationships with their end customers, Tends to be volume purchaser of product with full integration capabilities. Companies like Vanstar, Entex, CompuCom, MicroAge, CompUSA/Corporate Sales, Inacom, etc.

Vertical VAR Resellers who sell or consult with customers in specific market segments

such as medical, education, government, financial. Tec.

Industry Definitions



Aggregator Term used to describe large reseller organizations offering franchises to

smaller resellers and distributing first-tier products to these organizations under favorable terms by “aggregating’ their many smaller orders. Examples include MicroAge, Computerland and Inacom. Term is being used less frequently today, as the reseller agreements have changed to a “cost-plus” model (similar to distribution), rather than the royalty agreements typical of franchisers. Another factor: As the aggregators become more distributor-like, the leading distributors are competing for aggregation business with dedicated divisions. Many former aggregators are being referred to as Tiered resellers today, along with the leading national distributors.

Tiered Reseller Term previously used to describe the largest, most influential national

distributors such as Ingram Micro, Merisel, Tech Data, and MicroAge. They play in all product and technology areas and offer one-stop shopping to a broad range of resellers.


Systems Integrator Combination of professional services and expertise in hardware, software

and communications technologies. SIs maintain full financial and performance responsibilities for the entire project from design to post-implementation stages. Examples: IBM Global Services, Hewlett Packard, Andersen Consulting, EDS, AT&T, Ernst & Young, Digital, Unisys Integrate, Deloitte & Touche, AmeriData, Booz Allen & Hamilton, Memorex Telex, Alltell, Loral.

Other organizations often refer to as System Integrators are those companies who integrate components into system solutions and sell under their own brand names, These companies are also referred to as 2nd or 3rd tier OEMs. Build Your Own (BYO) VARs, and System Builders. There are several business models for these types of resellers ranging from distributor like practices to the typical reseller profile encompassing software application development, system development and integration.



Total Solutions Provider Non-retail organization which take title of products from a vendor or

distributor, add tangible value which is accounted for in the purchase price, then resell the turnkey/custom solutions which include hardware and software to end-users.

Enterprise Partner Working directly with IT departments and CIOs of Fortune 1000 companies,

these solution providers deal with large corporations. Research proves these are not only large solution provider companies, $25 million and above, but small organizations with sales of less than $1 million as well.

Solution Providers who sell into Small and Medium Businesses These companies specialize in customizing solutions, servicing and

supporting end user customers who categorize themselves as small (10 to 100 employees) and medium size businesses(100 to 999 employees).



Internet Solution Providers Traditional VAR or integrator that specializes in internet/intranet solutions. These

organizations must derive at least 40% of their total hardware, software and services revenue from web based solutions. Primary customers are entry-level e-business solutions to Small and Medium businesses.

ASP An Application Service Provider manages and delivers application capabilities to

multiple entities from a data center across a wide area network. Rather than sell solutions to customers, ASPs implement, host and maintain solutions for a fixed monthly fee.

Web Integrators Organizations that define themselves as full-service e-business partner for their

clients. Their expertise is technology implementation, strategy consulting and creative web marketing and branding. Web Integrators limit their involvement in hardware integration and reselling. They also tend to focus on larger sized, better-branded clients




IT Consultant Offers consulting services for information technology, but usually does not

sell hardware or software. Often overlooked by manufacturers of product when recruiting partners due to the non-product sales business model. However, this type of reseller is extremely influential in recommending and specifying specific technologies, products and brands.

ISV (Independent Software Vendor) Refers to companies who develop and provide software applications and

services often integrating software solutions from other vendors


Innovators - Technology Enthusiasts

Primary Motivation: Learn about new technologies for their own sake

Key Characteristics: Strong aptitude for technical information Like to alpha test new products Can ignore the missing elements Do whatever they can to help

Challenges: Want unrestricted access to top technical people Want no- profit pricing (preferably free)


Early Adopters - The Visionaries

Primary Motivation: Gain dramatic competitive advantage via revolutionary breakthrough

Key Characteristics: Great imaginations for strategic applications Attracted by high- risk, high- reward propositions Will commit to supply the missing elements Perceive order- of- magnitude gains — so not price- sensitive

Challenges: Want rapid time- to- market Demand high degree of customization and support


Early Majority - Pragmatists

Primary Motivation: Gain sustainable productivity improvements via evolutionary change

Key Characteristics: Astute managers of mission- critical applications Understand real- world issues and tradeoffs Focus on proven applications Like to go with the market leader

Challenges: Insist on good references from trusted colleagues Want to see the solution in production at the reference site


Late Majority - Conservatives

Primary Motivation: Just stay even with the competition.

Key Characteristics: Better with people than technology Risk averse Price- sensitive Highly reliant on a single, trusted advisor

Challenges: Need completely pre- assembled solutions Would benefit from value- added services but do not want to pay for them


Laggards - Skeptics

Primary Motivation: Maintain status quo.

Key Characteristics: Good at debunking marketing hype Disbelieve productivity- improvement arguments Like taking a contraire position Seek to block purchases of new technology

Challenges: Not a customer Can be formidable opposition to early adoption