CRN exclusively chats to Darrell Rodenbaugh, Senior VP Mid-markets for McAfee and asks the hard questions about the economic downturn and its effects on resellers and that acquisition of Secure Computing.

CRN: Following the Secure Computing acquisition, how confident should Secure’s partners be feeling right now?

Rodenbaugh: “We will absolutely embrace the Secure Computing partners. We will not negatively impact their business, we’re largely going to run a lot of the partner programs they have today, as is we’re not going to make dramatic changes to them, we’re not going to disadvantage or disenfranchise the resellers that are working there.
“What you will see over time is we’ll take Secure Computing’s capabilities, we’ll meld them into McAfee’s capabilities and you’ll see us particularly in the mid-market space making it more broadly available to the traditional McAfee channel. Generally, I don’t think you’ll find many of Secure Computing’s partners getting too concerned about that particularly because they tend to focus on specific areas of the marketplace, what we’ll be doing is generally opening it up to other areas of the marketplace.”

CRN: Will McAfee take over the Secure Computing role with partners?

Rodenbaugh: “Secure Computing has its own channel organisation and that will in the foreseeable future continue on, that will run unchanged. Overtime it will integrate with McAfee’s program. You’ll probably see it running jointly but not converged probably through 2009. We want to get to know the partners, the partners need to get to know McAfee, we’re not going to put them through any major change. They’ve invested in the Secure Computing business and we don’t want to change the dynamics of that. I will tell you that we will go through great lengths to make sure we don’t disadvantage those partners.

CRN: How will the current economic climate affect your channel partners?

Rodenbaugh: “Everyone is facing it right now, I’ve met with partners in Brisbane and Sydney and I know that’s a common question.”
“In our business, we generally believe that the last project a company will reduce is going to be security particularly in economic downturns. In some measure, the security risks actually become greater in this sort of environment. You’ve got people walking out the door and that creates an environment that is potentially laden with risk.
“We don’t think that many companies can aggressively downsize they’re security investment; we don’t think they’re going to dramatically reduce their spend in security. I believe that’s unique to security.
“Within IT you’re going to find and a lot of reseller partners are telling us that a lot of purchases around hardware, networking upgrades and new applications, are going through a level of delay and customers are deferring some. [But] we’re not yet seeing that same sort of response in the security space.
“In our quarterly report to stock holders and investors our CEO took the position that he felt like we were largely insulated from downturns in the marketplace.”

CRN: What about the SMB space is that also insulated from the downturn?

Rodenbaugh: “We’re going to probably see some softness in our consumer space, our consumer business is heavily dependent upon individuals who are buying new computers and that market is clearly impacted so it’s going to start there in terms of where it’s going to affect us.
“We believe that we will probably see some of that turning up in the small end of the SMB space, how far that goes I don’t yet. The general reaction from the partners I talk to is that people are asking questions, they’re expressing concern, but are not yet seeing them change buying patterns.
“It remains to be seen whether we see an impact over the next few weeks that make up this quarter, but we haven’t seen it yet. Our mid-market has proved to grow the fastest in five years, worldwide, our overall business grew over 20 percent; our enterprise business grew 28 percent, so we’re just not seeing it yet, that’s not to say that we won’t but the indication so far is to be cautiously optimistic.”

CRN: Are your partners asking for any additional help?

Rodenbaugh: “Most partners that resell our products look at us as a relatively profitable line over our competitors. In fact I have had this conversation with partners many times around, we’ve worked very hard to make sure our line is profitable for our partners. So, we are not going to step back from that, we’re going to continue that strategy to extent that when partners need help from us in terms of sales assistance and marketing assistance, we’re going to continue the things we’re doing, we’re not going to reduce any of that based on any of these times. We have not plans in our business to make any reductions in any of those areas.”

CRN: What are some programs that can boost their confidence?

Rodenbaugh: “We have a program called ‘Deal Registration’ where a reseller would come to us and say, hey I have this new opportunity, if they bring us the opportunity, we’ll actually give them margin enhancement through incremental discount that we pass through to them for them having found the opportunity and brought it to McAfee. That’s a program we initiated in some of the larger regions, and are now rolling it out into the APAC region as we speak.”

CRN: Have you had any innovative suggestions yet?

Rodenbaugh: “Our partners are wonderful, in that they bring us a lot of new opportunities anyway – this just allows them to invest competently. The impact of new opportunities globally in our ‘Deal Registration’ program from partners constitutes over 25 percent of new opportunities that McAfee creates. It’s been a tremendous success around the world now we’re going to make sure it’s successful here as well.”

CRN: How important is the channel to McAfee?

Rodenbaugh: “There have been a lot statements by others in the marketplace by some of our competitors about different things that they’re going to do with the channel. Some of the relatively famous statements from Symantec COO, around a plan to take a lot more business direct, a plan to take a lot of the low end of the business direct online.
“We are absolutely not about that, in the mid-market space in particular we absolutely, 100 percent of the time will take our opportunities through our reseller partners. I don’t think we even know how to take it direct; we don’t even have the systems or structures to go direct; I don’t think we could.
“We’re recommitting our position with the channel and I have that dialogue with channel partners who ask the question, ‘hey I see others decreasing their focus, and lowering their investment, reducing channel account management, what are you guys doing?’ We’re just not doing that, we’re doing the opposite, we’re staying consistent with rebate programs, we’re pushing every single mid-market transaction that goes through our channel partners, unquestionably.
“In fact, we’re actually increasing our channel account management force. Globally it’s 20 percent increase, we’re also redirecting the channel teams we have today to refocus on small and medium mid-market space. Largely, because we believe that’s where channel partners most effectively play.”

CRN: What does that then mean for the enterprise space?

Rodenbaugh: “We’re going to continue to see the channel play as a non-trivial role there. We have established a process of teaming agreements that we put in place on specific opportunities we’re our sales personnel or corporate sales reps are working hand in hand with our channel partners.
“We’ll establish teaming arrangements to make sure we have an honest open communication about how we’re going to go to market together. So no dramatic change there other than a formalisation of that process, frankly. And we’re really going to shift some of that