Brocade Says 'Doubling Down' On Federal Market, Recruiting More Cisco Federal VARs

Despite government cutbacks and sequestration putting a pinch on federal IT budgets, Brocade says it's "doubling down" on investments within its federal business and that solution providers -- especially Cisco partners -- are starting to take notice.

"As you look around at some of the other OEMs in this space ... we are seeing and we're hearing about companies actually cutting back because of what's going on in the federal marketplace," said Joe Muscarella, director, U.S. Federal Partner Sales at Brocade. "Brocade is taking a different approach and actually investing in the marketplace. The company has made a decision to double down and actually invest more."

Muscarella said these federal partner investments -- including a revamped deal registration program and the company's upcoming Federal Forum event -- are also prompting a number of Cisco solution providers to sign on with Brocade as a federal-focused OEM partner.

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"We are seeing partners that, I'll use the term, are looking to challenge the status quo," said Muscarella, noting that Cisco is still the "dominant" player in the federal Ethernet LAN market. "We are seeing that more and more, especially around some of the larger Cisco partners."

Muscarella said that out of Brocade's top 10 solution provider partners in the federal space today, roughly 30 percent of them are Cisco Gold partners. "And that has definitely changed since 2010 or 2011," he told CRN.

Overall, Brocade has roughly 100 federal-focused partners and, according to Muscarella, the company has rolled out a number of initiatives to help those partners take advantage of the fact that federal spending is slowly bouncing back. In its first fiscal quarter, Brocade's federal business -- which represents 10 percent of the San Jose, Calif.-based networking vendor's overall revenue -- saw sales slide 49 percent year-over-year. Muscarella said he expects Brocade's federal business to be down again at the close of its second fiscal quarter, but return to growth in the third.

Cisco, for its part, reported in its most recent fiscal quarter that public sector sales dipped 4 percent sequentially, while product orders increased 1 percent year-over-year.

"The good news is that we are starting to see increased activity in terms of quoting and increased activity in terms of opportunities that are being released by the federal government, so that's positive," Muscarella said. "There's a lot of smoke, but there's no fire yet."

NEXT: Brocade Increases Footprint By Doubling Number Of Fed Sales Reps

To prep partners for the day that fire comes, Brocade is bulking up its federal business unit, Muscarella said, having doubled the number of federal sales reps to 40 over the past two years.

Josh Furrer, director of federal sales at Pacific Star Communications, a Portland, Ore.-based Brocade partner, said the increased footprint of Brocade's federal team has definitely been a benefit.

"They have increased all their channel managers, which allows us, as partners, to get a lot more hands-on from Brocade in that aspect," Furrer said, noting that his Brocade federal business is on target to return to growth this year, after being down in 2013. "They help move opportunities with us and are in weekly contact with us to make sure we have everything we need to engage with their sales team."

In February, Brocade sweetened its deal registration program, Muscarella said, increasing the discount from 10 percent to 15 percent for Elite-level partners. The new program also offers partners an additional 3 percent discount for registering net new deals.

Muscarella also said Brocade’s Network Subscription (BNS) offering, a pay-as-you-grow subscription model for federal customers, has been a game-changer for partners, allowing them to go to market with an option for targeting federal agencies' opex, rather than capex, budgets.

BNS works by letting customers refresh network infrastructures or add and scale-down capacity on-the-fly with no long-term contract or commitment.

"It's the perfect solution when you have a customer that doesn't have a very predictable source of funding," Muscarella said.

Gartner last year projected that the next two years will see a continued downturn in federal IT spending from $74.4 billion in 2013 to $70 billion, and $68.2 billion in 2014 and 2015, respectively. By 2016, however, the firm predicts spending to rebound to $69.9 billion and then reach $73.4 billion in 2017.

PUBLISHED MAY 2, 2014