Verizon Blockbuster: Billing Shift Paves Way For Solution Providers To Drive Massive Cloud Services Sales

Carriers and solution providers have locked horns for years over the refusal of carriers to let channel partners hold what is commonly referred to as the "paper" -- the billing and revenue for the cloud services for customers.

In a blockbuster move aimed at leveraging the sales muscle of solution providers and systems integrators, Verizon has broken the logjam.

Under a new program shift, all of Verizon's more than 1,000 partners now will be able to capture the sales for critical cloud and telecommunications services deals as part of a complete managed services offering rather than just collecting an agent fee.

[Related: CRN Exclusive: Verizon Rolls Out Rapid Response Retainer Program To The Channel]

"We needed to change in order to deliver our products and services in the way our partners like to traditionally sell them," said Adam Famularo, global channel vice president for Basking Ridge, N.J.-based Verizon Enterprise Solutions. "They manage the customer, and they are paying us in that traditional reseller model they are used to ... It should have a significant impact upon our channel business within Verizon Enterprise Solutions."

The new Verizon program, which went into effect last week, covers Verizon's full portfolio of services, including its IP stack, the Secure Cloud Interconnect service and the carrier's latest security offering, Rapid Response Retainer (RRR), which all can be sold through a reseller model by partners, Famularo said.

The major policy shift is one of a number of sweeping changes made by Famularo, a 16-year channel veteran, since taking the top channel job at Verizon last September. Among the other changes are a Partner Advantage program that allows new partners to come on board at existing levels they've already attained with competitors.

"We can go to market with Verizon's portfolio of products as if it were our own. It's going to be on our paper, and that's pretty big," said Kevin English, director of mobility at SHI International Corp., a $6 billion solution provider based in Somerset, N.J., and No. 12 on the CRN Solution Provider 500. "Up until this point, carriers worked with us when they needed us. Now the carriers are starting to think of us as partner instead of a competitor."

Carriers and solution providers typically work together in a referral model in which partners refer customers to the telecommunications provider. The end customer is billed by the carrier, and the carrier pays the solution provider a commission on the contract.

But this billing shift by Verizon lets channel partners act as the reseller of the carrier's services in the same way that they've been working with vendors -- like IBM and Cisco -- for years, English said.

"Now we are actually the reseller of this product," English said. "We handle quoting and billing, which is pretty unique in the industry."

CDW, a Vernon Hills, Ill.-based $12 billion solution provider and No. 6 on the 2015 CRN SP500, believes that its partnership with Verizon helps give it a more holistic approach to helping customers with their mobile computing strategies with a large portfolio of capabilities, said Andrea Bradshaw, CDW's vice president and general manager of mobility solutions.

"Customers now have the ability to buy Verizon products and services from CDW that are secured, managed and integrated into CDW solution offerings," Bradshaw said in an email to CRN.

The billing shift will not only help relationships between carriers and partners to blossom, it also will drive channel growth in recurring cloud and communication services, solution providers said.

Herndon, Va.-based ePlus Inc., a $1.14 billion systems integrator that's No. 32 on the CRN SP500, has been working closely with Famularo to define programs for the channel, said Mark Marron, COO. "We are excited about the opportunity it presents for ePlus,’ Marron said in an email to CRN.

Partners will continue to see a lot of investment and support from Verizon. The carrier is adding 40 to 50 new resources to its team to help drive channel growth, Famularo pledged.

"There is going to be a lot behind this," he said. "I think it will be very big for our next fiscal year. We have some very aggressive numbers that are counting on the resell business to catch up to what we are doing on the agent side."

By making IT spending easier, customers will be inclined to purchase more services from a solution provider they trust, said Bob Foley, president of Acuative Corp., an IT services provider and Verizon partner based in Fairfield, N.J., No. 158 on the CRN SP500.

"Most clients would like to deal with one organization, so I think it's going to work out well from the client perspective," Foley said. "Especially having one bill and one organization that will be responsible for it, as opposed to multiple companies and a complicated bill where [customers] need a half dozen CPAs to figure out what they owe and why."

The change drives home the power of partners like Acuative as the single strategic IT supplier for customers in a complex, fast-moving telecom cloud services market with dozens of potential vendors, said Foley.

"Customers doing all their IT spend though us can now put Verizon through us as well, and that's a big change, especially as people try to cut costs," he said.

Solution providers acting as the single strategic IT supplier for customers is a "big benefit and everyone wins,’ SHI's English added.

Acuative plans to bundle Verizon's RRR security service within its own managed security offering and take it to the market quickly, Foley said.

By putting the "paper" in the hands of partners, Verizon is evolving the relationship between carriers and partners, which could promote more channel partners to sign on with carriers, Foley said. Other carriers will have to follow suit, he predicted.

"Carriers have had channel strategies that have changed over time as they figure out the best way to take their solutions to the market, and I think this is probably the better way to do that," he said.

PUBLISHED AUG. 18, 2015