When two become one

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Ever since shareholders gave the necessary approval for an US$11 billion mega-merger 18 months ago, Alcatel-Lucent has been working hard to shore up its channel strategy and build a partner network that fits its vision of how to address the market.

The man charged with making sense of it all in the Middle East - channel sales director Philippe Cros - lays out the vendor's channel strategy.

Talk us through Alcatel-Lucent's channel strategy in the Middle East.

Besides the direct cases, of which we make two exceptions - the intelligence sector and multi-solutions coming from Alcatel-Lucent - our business is strictly indirect and is built on three fronts.

The first one consists of value added resellers, which includes three categories: Premium, Expert and Certified. The second part consists of carriers, and today we have partnerships with companies such as Etisalat, which are reselling Alcatel-Lucent onto the market. The third route to market is through distribution. In June 2007 we signed a partnership with Mindware for the region.

Prior to appointing Mindware as your master distributor for the Middle East, you didn't use the second tier channel. Why did you decide to change your strategy?

It was mainly to do with the SMB sector and extending our reach in that market. Mindware has the complete portfolio - IP networking, VoIP and applications for SMB and large accounts - but there is a specific focus on the SMB segment. Nevertheless, on a case-to-case basis we'll still target large enterprises through the partners of Mindware.

What is the split of the business in the Middle East today?

Around 70% comes from the value added resellers. And then I'd say 20% comes from the carriers and 10% from the master distribution side.

Does Alcatel-Lucent want that balance to change and if so, how?

Yes, definitely. Today we rely too much on the value added reseller side. We are going to keep growing the level of value from the VARs, where it is more project-driven, and we will continue increasing the revenue from that side of the business.

But with the push on the master distribution side we expect a lot of our turnover - or certainly a large increase - to come from the SMB side.

How challenging has it been to merge the Alcatel and Lucent channels. Both companies had very different Middle East strategies prior to the merger.

With Lucent coming from an American culture and Alcatel the French, or European, way of handling things, it created differences in the organisation. Nevertheless, we saw lots of added value coming from Lucent on two fronts, particularly in the enterprise sector.

They had great ‘Brick' security solutions, which are very powerful, and all the IP management for large organisations called the VitalQIP.

These two products lines - Brick and VitalQIP - are now my responsibility under the enterprise umbrella and there has been a very seamless integration of the Lucent portfolio within our channel strategy.

With regards to people, Lucent didn't have a strong channel organisation so that side of it was done very seamlessly too.

As the channel manager tasked with uniting these channels in the Middle East, what is the greatest challenge you faced?

The customers were different. Lucent had a channel approach to addressing the carriers, which Alcatel did not have. On the carrier side it is direct so we therefore had to break this go-to-market model of selling through partners to the carriers because this is not possible within Alcatel. The channel only sells to non-carriers accounts - real enterprise accounts.

So have you axed Lucent partners that previously sold to carriers in the Middle East?

They have been asked to reconsider the business plan. If they want to focus on the non-carriers they are part of Alcatel-Lucent as a partner. But if they still want to address the carriers, it is looked at on a case-by-case basis within the Alcatel-Lucent carriers team. They will look at whether we are inside the account and the value that the reseller provides.

Has the channel integration process now been completed in the Middle East or is there still some more work to be done?

It is still an ongoing process. I would say that in another three months it will be completely integrated. The business partners of Lucent have to make business plans on whether or not they are going to address the enterprise. If they are then there is definitely a business plan and interest for becoming a channel partner from our side. If not, then they will have a ‘spot-opportunities' alliance with Alcatel.

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