PALM SPRINGS, Calif. – It has been just over a year since Symantec officially closed its merger agreement with Veritas. During that time, Symantec acquired five other firms (Sygate, IMLogic, BindView, Relicore and Whole Security) to position the company in both data security and availability markets.
The next step, according to Randy Cochran, vice-president of channel sales for Symantec, involves its channel of more than 60,000 worldwide partners. About 250 of its top partners attended Symantec’s PartnerEngage conference, held here this week, to listen to Cochran’s strategy on product extension. These 250 partners represent more than 75 per cent of Symantec’s US$5.4 billion revenue.
“If you are a partner that is deep and knowledgeable on security or availability I am asking you to open your minds wider to what are the logical extensions. To what you can add on,” he said during his keynote presentation.
Currently, Symantec boasts a portfolio of more than 100 products. Cochran admits that partners will be unable to be proficient in all. He expects, however, the channel to handle between 12 and 15 products up from the five or six they know well today.
Cochran believes that logical product extensions will be a way for the channel to increase margins, expand their customer footprint, and increase services offerings.
“We are not opportunity constrained,” he said. The company’s Opportunity Registration Program pays both front- and back-end margins, he said.
Cochran also dangled a carrot in front of his top partners. Symantec will pay an extra two per cent of margin for every deal on the back end that a partner closes between today and June 25 under the Opportunity Registration Program.
According to Tom Kendra, group president of worldwide sales for Symantec, the product extension plan would work similar to this: everyone would require some sort of anti-virus protection (Norton). From there companies should back up their data (BackUp Exec). “Now things start to happen as you deal with larger companies with licence compliance regulation issues especially those public companies that need to manage this,” Kendra said.
Kendra estimates that there are 44,000 public companies of which 16,000 are located in the U.S. And, of those only 4,000 are companies with less than 1,000 employees. “This is a huge mid-market opportunity,” he said.
IDC and AMI Partners have forecasted that the compliance market is worth US$12 billion and is growing at a 17 per cent clip.
Services will be key for partners in this area; Kendra said adding that Symantec’s services revenue is an insignificant four per cent of its overall revenue.
“Every single one is looking to mitigate IT risk and we are in there speaking to customers about it. We desperately need more partners to work in this area,” he said.
Harry Zarek, president and CEO of Compugen Systems of Toronto said everything Symantec spoke about on day one of its PartnerEngage conference was relevant to his organization and his customers’ needs.
“The challenge with compliance is it is ever changing and companies can’t be experts in all these areas. They will be looking to us to provide a role and we need to be backed up by world class software vendors. Symantec has stepped up as a partner,” Zarek said.
Greg Myers, vice-president of marketing for Tech Data Canada of Mississauga, Ont., said the message at the conference was very compelling, especially with the magnitude of the challenge with data from a regulatory point of view.
“Solution providers should have lots of work to do for years to come. This really confirms the need for channel partners to be focused on a compliance practice and solution process. Let’s face facts, the server market is flat and this opportunity is mind-boggling,” Myers said.
Another area of product extension is e-mail archiving, which relates to compliance. IDC pegs this market to be at US$6 billion within the next four years and Jeremy Burton, senior vice-president of data management for Symantec, believes Symantec can win more than a billion dollars of that pie.
“Companies big and small have to get better at managing their e-mail. Now that regulatory agencies want e-mail to be stored for seven years if your company has more than 30 employees and has more than $15 million in revenue,” Burton said.
This is one of the reasons why Symantec has aligned is products under the BackUp Exec brand for system recovery. Burton also announced that with this rebranding will be a new pricing structure, which will hover around the US$1,100 mark for the server edition. These new editions will hit the market on July 18.
Zarek said that when you get to present this type of solution to customers you really do not get into margins points. It combines hardware, software, professional services and a methodology into a package that is profitable, but there is no doubt that this is the highest margin potential out there today.
“Given the level of complexity and how large the market is, this presents a significant opportunity. The registration program alone is a front end investment where you look at time, sales, technical services and business people will understand the business opportunity. I look for a vendor who understands this and looks to pay us for it. Without it we would not sell their products,” Zarek said.
Myers said the clear opportunity today is to simply protect organizations from viruses, phishing scams and other traditional threats, but compliance drivers are making customers look at partners to help them manage their data and mitigate the risks involved.
As a distributor, Myers said it is his role to help partners understand the opportunity and focus resources around this. “Solution providers in this new world hold the same value as other professional resources such as your accountant, your lawyer and your auditor,” Myers said.
“The channel’s ability for mitigating the risks elevates their value and puts them into a new status.”