SAN DIEGO, CALIF. – After a rough year in 2011, Cisco Systems (NASDAQ: CSCO ) will be consolidating its long list of channel programs and introducing a few others to take advantage of market transitions in the cloud, mobility and video.
Company channel chief Edison Peres told partners at this year’s channel conference that, after 10 years of the Value Incentive Program (VIP), Cisco would expand its channel philosophy from partner profitability to partner valuation.
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He explained it this way: “I always wondered why some partner acquisitions got two-time EBITDA (Earnings before interest, taxes, depreciation and amortization), while others got eight-times or more. What I learned is those companies have better management skills, customer density and differentiation. Cisco will invest in partner valuation and we will base it on operating profit, growth potential, business risk and sustainability.”
The idea here is to help channel partners become more valuable because there is an ongoing trend of channel partners acquiring other channel partners.
“We’re expanding our partner philosophy beyond profits and we’ll measure your company’s valuation. We want to maximize your business value. We’ll use this new model to help create new programs for you in the future,” Peres said.
The biggest new program announcement was Partner Plus, announced by Andrew Sage, vice-president of the PartnerLed business at Cisco. Sage said Partner Plus is targeted at growth for mid-size customers and offers three benefits: Preference, Support and Investment. For example, under Partner Plus those solution providers who are targeting mid-size customers will be provided with marketing support and customer intelligence.
“We want to be side-by-side to make it happen and Cisco’s sales force will remain on this space for pre-sales service,” Sage said.
Partner Plus will also have a new incentive fund to reward solution providers who are growing consistently. This fund will be paid quarterly and will help with demand generation to get after a $60 billion market, Sage said.
Developing technical expertise
Also at the Cisco Partner Summit, Peres introduced the EASE program or Enabling Architecture Sales Excellence. This program with work with top technical learning centres to train up to 10 sales people per partner per country.
Canadian channel chief Mike Ansley told CDN that people resources are a huge challenge especially in going after small to mid-size business. Ansley said there was one Alberta-based solution provider that had to turn down more than $500,000 in business recently because they simple didn’t have the man-power.
Peres then announced a Master Cloud Builder Partner specialization that is intended to help solution providers add more competencies such as V-Block, FlexPod and VXI.This new specialization will come with a brand new logo that can be downloaded today from Cisco’s partner portal.
The company will also consolidate its Managed Services channel program with its Cloud Provider program, now calling it MSCP or Managed Services Cloud Program. Peres said this combined program is an example of how Cisco is making things simpler for solution providers. “It will eliminate pricing complexity and have more rebate incentives,” he said. The new program will also be part of the umbrella VIP program.
Nick Earle, the vice-president of Cisco services, announced the Cisco Services Partner Program, which is part of the company’s overall smart services strategy that includes SmartCare. This program is currently in the pilot stage and will be rolled out throughout the year. It is here where Cisco is consolidated 47 programs into one, while continuing to provide upfront discounts and back end rebates.
Earle said that partners who are invested in collaborative professional services with Cisco get $5 in services for every dollar spent on product and that also leads to $9 more dollars in new product sales afterwards.
Earle added that potentially there’s up to 32 per cent in rebates in this new program.Cisco is also changing up its customer satisfaction requirements. Instead of doing paperwork for both certification and VIP solution providers starting today only have to do this work once to get their rebate money.
Also, Gold and Master partners no longer have to do yearly audits anymore. They just have to run through audits for updating new products or customers.
Peres also said the ordering process has been streamlined. Cisco had multiple systems for imputing a quote. The company has invested millions, Peres said, in a new Cisco Commercial Workspace that is scalable and be able to save partners time and money. “What used to take days – sometimes five days – will now take just hours and hopefully minutes down the road,” Peres said.
The current system will be retired sometime in 2013, Peres added.
Follow Paolo Del Nibletto on Twitter: @PaoloCDN .