Sage Channel Chief: Microsoft Lost Touch With Partners

Tom Miller, Sage's vice president of channel management, who oversees all channel programs, operations and channel marketing for the $2.55 billion applications software vendor, spoke Thursday with Channelweb.com's Steven Burke and Rick Whiting about partner enablement, channel changes in the wake of the failure of Sage's largest partner, MIS Group, and how the Sage partner philosophy compares with rival Microsoft. Miller, who has 28 years of channel experience, joined Sage in June after eight years with Microsoft.

You were at Microsoft for eight years. Talk about the difference between Sage and Microsoft.

The reason I came to Sage is I started in this business in 1981 as a Great Plains reseller. My company was the first one authorized outside the state of North Dakota. So from 1981 to 1987 I grew up with that company essentially. Of course they epitomized customer service and partner service. And so when I had an opportunity to sell my business in 1987, (former Great Plains Chairman and CEO) Doug Burgum had decided to put a field sales force out as a differentiator in the marketplace.

So I came on board as the regional general manager for the Northeast. I had a team of eight people that had regional territories that worked with partners. A couple of philosophies that we internalized [involved] the importance of the partner as a customer. So in our meetings we'd sit at tables thinking about programs and what partners need to be more successful. Anytime we had a major strategic change on pricing or product strategy or whatever the case might be, we always asked what the impact was going to be on our channel.

If you really look at Great Plains, we didn't always do everything right but we did develop trust because we were always, always honest, and if we made a mistake we admitted it and corrected it. And we had that relationship built. Many of the partners we recruited during that period of time are still there and still totally committed. However, that philosophy is gone from Microsoft. It is no more a personal touch.

Jodi Uecker-Rust, now president of the Sage Business Solutions division and previously a vice president at Microsoft, comes from the same environment that I came from. We understand how important that is. If you don't have a trusting relationship with your partners you are not going to be successful. You just aren't. That is missing at Microsoft. That is not missing here. That is what we are here to do.

What moves you are making to change some of the channel dynamics in the wake of the failure of MIS Group, Sage's largest revenue producer for the last fiscal year?

Historically the recognition at the highest level [for our channel partners] has been on revenue production and customer adds -- and not that that isn't important, [because] I think that is critical to the lifeblood of the organization -- but there are other measurements where we can recognize a broader set of channel partners who make just as important a contribution both on revenue and customer adds, maybe not at the same level, but just as important.

In addition to that, we are going to recognize two new [award] categories: a community service category, because [among our] nearly 5,000 [channel partners] in North America, there are incredible examples of partner organizations that have done just wonderful things for their community either in the form of donations or community service, volunteer work and supporting lots and lots of causes. We want to recognize that. We think it is important that as you build out community, this aspect is recognized.

Secondly, we are going to recognize partners that are viewed as Champions of Sage. By that we will give a "Sage Spirit" award. That will be given to partners. They can nominate themselves. Their peers can nominate them. Really those are partners that exemplify the Sage spirit and the Sage principles: agility, simplicity, innovation, trust and integrity.

We already give recognition to four partners each year for exceptional customer experience. We will recognize those four along with the new awards at our President's Circle event, which will be a retreat for all of those award recipients [and] which will number about 71 partner organizations this year. That retreat this year will be at The Arizona Biltmore in January. That event is intended to celebrate their achievements.

What compensation changes have you have made for the new fiscal year, which started October 1?

We did have a change as far as our tier structure is concerned. What we did with the tier is reward partners who performed in terms of new customer acquisition. So we actually increased the tier margins for them, and we built into the tier qualification process different plateaus in terms of new license revenue. And we will continue to review our tier to make sure it aligns with the results we are trying to produce.

NEXT: A New Tool That Helps Sage Partners Increase Sales

Talk about the new tool you developed to increase your partners' skills around new customer acquisition and channel marketing?

I think that tool is going to be extremely valuable as we look at a launch of programs, market by market, and try to be more finite in terms of helping our partners identify narrower targets within their markets to drive new customer acquisitions.

What the tool does is look at the Dun & Bradstreet Moody's data, which is updated monthly, and then allows partners to go in and slice and dice all the businesses in a particular MSA (Metropolitan Statistical Area). So a partner could go in, for example, and look at wholesale distributors of produce. I can get that finite in terms of identifying the market opportunity. It also will overlay what our existing customer data is and the partners we have in that particular market. So you can get a holistic look in terms of the opportunity.

We are looking at the addressable market per year and then making some determination of our share and whether there is an opportunity that makes sense for that local partner to go after.

What has been top-of-mind for you since you took this job?

First and foremost it was a learning process. Having been in this business for an extended period of time, I had some perception about Sage and the channel. The reality of it is completely different than what my perception was. I have spent the majority of my time really getting out to meet partners face-to-face and talk about the challenges they face. That has helped shape what we need to do in terms of helping them.

Initially we were looking at the functions on my team. This is the first time we have actually had a channel management team at Sage. The functions I have are channel marketing, distribution optimization and channel programs and enablement. Those functions were in different parts of the organization. Just assembling that has been a learning process along with understanding how we interact with the business units.

We are basically a service to the business units. The primary focus was really getting to a more disciplined analysis of distribution and opportunity.

We are really looking at the economics of our channel model and trying to understand from a more detailed perspective all of the components. For example, we spend an awful lot of money on co-op [advertising programs]. Are we really getting the return? Should we be taking that money and putting it into market development funds? We are analyzing that. We are looking at the commissions that we pay our internal salespeople who support our channel partners. What is the objective of those commissions, and are we getting the right behavior for those commissions?

So it is taking a really detailed look at all the elements that affect our channel partners and looking at [whether] we are we doing the right things there. Could we do them differently and really get a bigger return to create more value for our channel partners?