Cisco Systems To Channel Partners: Make Your Choice

The vendor this week at its annual Cisco Partner Summit will launch the next evolution of its Channel Partner Program, introducing changes that will push solution providers to make a choice between two business models: carrying a broad range of technology expertise or taking a deeper dive into given technology specializations.

At the San Diego conference, Cisco executives also plan to showcase broader plans to roll out four “offer-based” partner programs. Two will launch at the conference, including a Local Resale program, which encompasses the existing Channel Partner Program and the bulk of its specialized and certified partners, as well as a Global Resale program for large systems integrators targeting Global 1000 accounts. During its first quarter of fiscal 2007, the company plans to launch a managed services program, Cisco executives said, followed in the second quarter by the launch of a program for outsourcers. Partners will be able to participate in multiple programs if they meet the required profile.

With the Channel Partner Program changes, Cisco aims to boost channel growth, help partners differentiate themselves, meet customer satisfaction requirements and better align its channel efforts with its Intelligent Information Network strategy to build more intelligence into network infrastructure, Cisco executives said. Just as Cisco is continually adapting and changing as it drives the notion that the network will become the primary platform for delivering applications and services, so partners must evolve to meet customer demands for such solutions, said John Chambers, president and CEO of Cisco, in a recent interview with CRN.

“If this market transition truly evolves the way that I think it’s most likely to, the worst decision you could make is not to move,” Chambers said.

In selecting a future path between a broad focus or a deep technology specialization, solution providers will have to do some soul-searching, Chambers said. “This is where I think each partner has to say what they want to do and be realistic on what is their sustainable differentiation and what is not, and how much resources they’re willing to put in play to achieve that goal,” Chambers said. “But I think the takeaway here is that the real risk is in not moving.”

The channel strategy shift is recognition on Cisco’s part that some solution providers are extremely good in niche markets and the shift should help attract and retain such partners, said Ben Patz, president and CEO of Coleman Technologies, an Orlando, Fla.-based Gold partner. “This is Cisco telling specialized partners that they really can make a difference,” he said.

Broad Vs. Deep
Keith Goodwin, Cisco’s senior vice president of worldwide channels, likens the new strategy to building a home. “The key is to have a good general contractor who owns the project and makes sure everything comes together. But you also have electricians, plumbers, a finish carpenter, who are specialized in given areas,” Goodwin said. “A large enterprise customer might want both,” he said. This week’s Partner Summit is San Jose, Calif.-based Cisco’s first since Goodwin assumed the role of worldwide channel chief in August.

The Channel Partner Program transition—which Cisco executives said was hashed out through a variety of partner council meetings over the past two years and will take the next two years to implement fully—also comes in response to solution providers’ calls for the vendor to overhaul its Certified Partner Program, particularly its Silver and Gold badges, to better support them as they work to invest in solution-selling and services practices. While Cisco’s existing Premier, Silver and Gold partner badges will remain intact, the vendor is stratifying its technology specializations into three tiers: Express, Advanced and Master.

Currently, Cisco’s 2,800 worldwide certified partners pick their way through a points system to earn their certification level, a process that allows solution providers a fair degree of freedom in choosing the technology specializations they will earn to count toward their certification badge. Generally, Premier partners need at least one technology specialization, Silver two and Gold three. Now, however, Cisco is integrating multiple technology areas and expanding training requirements around life-cycle services for the new stratified specializations.

The Express level, the minimum requirement for Premier and Silver partners, includes a mandatory Express Foundation specialization that combines routing/switching, security and wireless capabilities, as well as an optional Express Unified Communications specialization. Silver partners need both Express specializations and one Advanced specialization or Express Foundation and two Advanced specializations. Gold partners need Advanced specializations in routing/switching, security, wireless and IP communications. The top-level Master specialization initially will be available for voice and security but will likely incorporate other technologies going forward, executives said.

The end result is that Cisco is establishing a baseline of knowledge for all of its partners while simultaneously offering the high-end Master specialization that enables partners to be recognized for top-level technical expertise without requiring them to chase Gold certification, Cisco channel partners said.

The foundational requirement with a broad range of basic skills was something a lot of Premier partners pushed for to keep the badge from being watered down, said Ethan Simmons, partner at NetTeks Technology Consultants, a Boston-based Premier partner. “How can you have a Premier partner selling all this different technology but only have a wireless specialization?” he said.

Simmons said the new specializations—particularly the Master-level voice and security offerings, both of which NetTeks plans to pursue—should also help address inequities he saw in the previous program, where partners like NetTeks might have deep technology skills but not gain as much recognition as a partner that achieved Silver or Gold status by hiring the requisite number of Cisco Certified Internetwork Experts. “I don’t think Silver or Gold really measures anything in terms of expertise,” Simmons said. “Just because a Silver partner has two CCIEs, [it doesn’t equate to skill level]. They could be two routing/switching guys who know nothing about voice,” he said.

Cisco is also eliminating lab requirements and reducing the required number of certified individuals partners will need to maintain their badge status. At the same time, however, it now forbids role-sharing within the specializations, meaning that each technical and sales role must now be filled by a separate, dedicated individual. “Because we’re eliminating the lab requirement and reducing the number of people slightly, the up-front cost has actually gone down but the training investment is going up for the first year,” said Surinder Brar, senior director of worldwide channels strategy and programs. “Once everyone is up to speed, when they renew, the number of training hours is going to be much less,” he said.

Some partners lauded the elimination of role-sharing because it discourages the “eggs in one basket” method of using a small group of individuals to fulfill specialization status, which could then be jeopardized if those people leave the company. But others said its abolishment could result in an undue burden.

“It creates an expensive model,” said Mike Vitale, owner of TriNet Systems, a Westwood, Mass., Premier partner. “[Margins] are already bad to begin with, so if you’re asking partners to invest more, that’s a bad model,” he said. Vitale said his company typically leads with Avaya VoIP solutions instead of Cisco because the deals tend to be more profitable for TriNet.

To support the specializations, Cisco has overhauled training and testing program content, which partners will see when their badges come up for renewal.

Masters Of Their Domain
Partners ahead of the conference said they were still awaiting final details of requirements and rewards before they could determine the true financial impact of the program on their business. Nevertheless, several contacted by CRN said they had already made up their minds to pursue the Master-level specializations.

“We would want to be a Master [VoIP specialist] because of our relationship with Cisco and our position within our geography,” said Gia McNutt, CEO of Special Order Systems, a Rocklin, Calif.-based Premier partner that is on its way to earning its Silver certification.

Still, some partners questioned whether Cisco’s dangling of another high-level designation would prove too enticing to ignore. Patz cautioned some would chase the Master level even if it didn’t fit their business model. “There’s going to be a fairly large group of partners that feel like they have to have this to be relevant or competitive and it won’t necessarily make sense for them,” he said.

For pursuing higher-level specializations, solution providers will receive extra discounts on related advanced technologies, executives said. In addition, Cisco is rolling out tiered rebates based on a partner’s specialization level for its Value Incentive Program. As of press time, Cisco had yet to finalize those details.

“I’m hoping that the carrot gets bigger and there will be additional back-end dollars for people that make the investment,” said J. Stephen Johnson, president of Optimus Solutions, a Norcross, Ga.-based Silver partner that plans to pursue both Master specializations. “If we can use it [as a brand] the way Gold partners do, I think it will be a great selling tool.”