Cisco Takes Steps To Boost Partner Profitability

At the annual Cisco Partner Summit this week in Las Vegas, Cisco plans to detail changes to its eAgent program that will make it channel-neutral by removing administrative fees, said Surinder Brar, senior director of marketing for the company's worldwide channels organization.

Under the existing eAgent program, certified Cisco partners place orders with the networking hardware vendor, and Cisco handles the customer financing, billing and product delivery, Brar said. Cisco then pays partners a fee for the order,essentially, the difference between the price that the partner negotiated with the customer and the partner's discount with Cisco, minus a 1 percent administrative fee to cover the cost of running the program, he said.

Robert Ditta, CEO of ShoreGroup, a New York-based Cisco Gold partner, said dropping the 1 percent administrative fee from eAgent turns it from "marginal to very useful."

Without the fee, Ditta said, "eAgent has the potential to let us stay in transactions where we'd normally have to walk away because the margins are too low. Ultimately, I'm after the services, and this keeps me in the game."

Cisco also is introducing a 24-month lease program to make it easier for partners to acquire demo lab equipment, Brar said.

The new initiatives are designed to improve partners' return on invested capital (ROIC), according to Brar. At the summit, Cisco channel executives will explain the ROIC metric to channel partners and will encourage them to use it in their own businesses, he said, adding that Cisco also will commit to measuring any new channel initiative against that metric.

John Cosgrove, vice president of marketing at Expanets, a Cisco Gold partner based in Englewood, Colo., said he likes the changes. "This is a good thing," he said. "Cisco is giving us choices, and the choices are good."

Also at the partner summit, Cisco is slated to introduce Paris Arey, who was appointed to the newly created position of vice president of worldwide channels distribution strategy. Arey will be responsible for implementing a new approach to distribution at Cisco, including consolidation of distributors, logistics management, policy implementation, and process automation and systems integration with key global distributors.

While Cisco will cut the number of distributors it deals with globally, the vendor said it has no plans to eliminate any of the distributors it works with in the United States.