Cisco Pumps $75 Million Into Partner-Led Programs, Channel Incentives4:38 PM EST Mon. Sep. 12, 2011
Cisco will put its money where its mouth is and invest $75 million in new resources for the channel during its fiscal 2012, the company confirmed to CRN Monday.
It's an apparent vote of confidence by Cisco's pursestrings holders in Cisco's ability to drive sales through partners to more midmarket and SMB customers, even as Cisco lays off employees and looks to remove $1 billion in expenses during the fiscal year.
The $75 million investment, described to CRN by Andrew Sage, vice president, world-wide partner led, will show up in the form of marketing resources, incentive programs for midmarket- and SMB-focused Cisco solution providers, a partner relationship management (PRM) system and access to a team of Cisco engineers put in place to help partners close deals more effectively.
Cisco, currently in the midst of a broad corporate restructuring, began to make changes to its Worldwide Partner Organization in June. The $75 million investment comes as Cisco is looking to remove $1 billion in overall expenses during the same fiscal year, but several Cisco executives have told CRN in recent months that the money and resources Cisco allocates to channel programs will be more, not less, than before -- even with the corporate slim-down in effect.
Partners have told CRN they're encouraged by many of Cisco's efforts around partner-led so far, which is the term Cisco is using to describe channel sales in midmarket and SMB accounts worldwide.
The ability to drive demand, the commitment to partnership and the ease and speed of doing business top Cisco's list of partner "care-abouts," Sage told CRN, and those things are what partner-led is about.
"It's a scalable go-to-market model which empowers and rewards Cisco partners to lead customer engagements in midmarket and SMB," Sage said.
Sage, well-known to partners for his role running small business channels within Cisco's WWPO, was promoted to vice president, worldwide partner-led in July. Sales to midmarket and SMB customers account for about $7 billion of Cisco's $43 billion in annual revenue, Sage said.
About 65 percent of the $7 billion is midmarket customers, with 35 percent SMB. The partner-led selling motion will affect thousands of Cisco solution providers that serve SMB- and midmarket-sized accounts, he explained.
Within the partner-led strategy are individual focuses by Cisco on sales to midmarket customers about 700 to 1,200 employees, and sales to SMB customers smaller than what falls into that bracket.
The midmarket focus is described as Partner Led Named, and the idea there will be to sell architectures, managed services and cloud services, Sage said, as well as meet the demand for services and integration, and sell collaboratively with Cisco. The SMB focus is described as Partner Led Velocity, focused on Cisco small business products, managed services, and cloud services with closer attention to selling products more quickly to customers, closing less-complex deals, and pushing demand generation and coverage needs.
The partners serving the former will primarily be Cisco-certified partners with advanced specializations, Sage said. The latter is primarily Select and Registered Cisco partners supported by Cisco distributors, as well as direct market resellers (DMR), service providers and national direct integrators (NDI) serving SMB.
Next: Cisco's New Initiatives For Partner-Led
Under the partner-led banner, Cisco partners will see new incentive programs and Cisco resources available over the next few months.
For example, partners that sell to midmarket -- that is, deals that would qualify under Cisco's Partner Led Named category -- will have access to new market development funds (MDF) program that will tie MDF rewards tied to the amount of Cisco revenue a partner produces.
Cisco hasn't decided on the revenue thresholds that will qualify for MDF awards, Sage said, but partners will be able to use those rewards for things like marketing, Cisco training and demo equipment. About 1,000 Cisco partners around the world do a majority of Cisco's midmarket business that would qualify as Partner Led Named. Cisco plans to launch the MDF program in its fiscal second quarter, which starts Nov. 1.
Cisco will also be using a piece of the $75 million for continued investment in Fast Track 2, the program Cisco launched a year ago to streamline transactional sales in the SMB segment by simplifying -- and publishing, on a suggested price list -- the pricing on several high-volume SMB product families sold through distribution. Cisco plans to add more elements to Fast Track 2 later this fall, Sage said.
Another big area of investment will be in partner marketing, Sage said, under the charter of Amanda Jobbins, Cisco's new vice president, worldwide partner marketing. More details are expected from Jobbins' team in the coming weeks, he added.
A fourth area in which Cisco partners will see changes is sales assistance using Cisco engineers. Cisco has had a service called the Technology Solutions Network in place for several years as a way to support its own sales people with easy access to Cisco engineers that can help with technical comparisons, product information and customer requests.
Going forward, said Sage, the Technology Solutions Network (TSN) will be opened as essentially a sales help desk for Cisco partners that sell to the midmarket -- what Sage described as a "pre-sales engineering service" to help partners in competitive situations.
"This is an engineer-to-engineer conversation," Sage said. "What we don't want is for partners to replace their pre-sale capabilities with TSN. We want them to leverage the TSN in the same way our engineers leverage the TSN."
The TSN engineering team is composed of several hundred Cisco engineers, Sage said, managed by Jim Smith, senior director of virtual systems engineering at Cisco. The team will be available to help partners respond to RFPs, do product comparisons among various Cisco products or between Cisco products and those by competitors such as HP and Juniper, create presentations for customer pitches, and other services.
Initially, Cisco won't charge partners for access to TSN and will pilot TSN-based assistance with 300 partners worldwide starting in early November. Down the road, Cisco will charge partners for the service, Sage said.
Next: PRM System and Cisco's Partner 360
Other new partner resources will be part of a program called Partner 360, which will include the new PRM system.
The PRM system, described to CRN by Edison Peres, senior vice president, worldwide channels, last month, will let Cisco do things such as send targeted marketing messages to certain partner executives, as well as share data on partner-led deals in various stages of approval and reward from Cisco. It's not a new system, according to Cisco, but has been updated to support the partner-led effort.
Sage added that as part of Partner 360, Cisco will also reward points to Cisco partners depending on the amount of Cisco products and services they sell and the technical competencies they've achieved.
Points accrued in the program can be redeemed for things like Cisco learning credits and travel and merchandise, Sage said, for partners' Cisco account managers and systems engineers.
Everything from point totals to deal statuses will be viewable in the PRM system, Sage said. Cisco has spent the last six months tweaking its partner database so it has the most up-to-date information on existing partner AMs and SEs that work with Cisco, he added.
"It's all going to be a much closer and more informed view of what's happening out there in the field," he said.
Cisco has slowly begun to brief partners on what the partner led resources will entail. Based on early conversations, partners say the changes from Cisco will make channel business run more smoothly.
"Some of the early discussions we've had about being easier to do business with definitely sound appealing," said Brett LaCourse, senior market development manager for the Cisco business at Teracai, a Syracuse-based solution provider whose Cisco business is up 10 percent year-over-year.
Having a more streamlined approval process for SMB and midmarket deals will remove a logistical headache, LaCourse said, because it means deals won't get stalled in bureaucracy if they need to be adjusted for customer needs during the process.
"Things change and products change, and sometimes you have to go back through and start the approval process over again if that happens," he said. "You do spend a lot of time getting the deal approved."
"If it's harder to get to that 'buy' decision, there are some competitors [to Cisco] to portray themselves as easier to do business with," added Pete Belyea, president of Teracai and sister company CXtec, also based in Syracuse.
Sage said the PRM system will go live early in the second half of Cisco's 2012, whose third quarter begins Feb. 1.
Sage added that a lot of the partner-led resources will be available to partners only if they've agreed to take Cisco products or services to market. Entering a deal into the PRM system, he said, is acknowledgment of that agreement.
Along with the new resources, Sage has spent the summer building his partner-led team inside Cisco's broader WWPO.
Leading the Partner Led Named effort, focused on midmarket, is Donna Wittmann, the former channel chief for Cisco Canada who was named director, Partner Led Named, in August. Leading the Partner Led Velocity effort, focused on SMB, is Sanjay Jindal, senior director, Partner Led Velocity.
Along with Smith, who is leading the TSN team, another key executive is Brian Carrier, director, new capabilities, who will be driving Partner 360 and the PRM system, Sage added.
Overall, said Sage, Cisco's focus on channel sales to midmarket and SMB customers hasn't changed, and Cisco doesn't want the perception that its selling strategy to that segment of the market has been overhauled.
"Foundationally, we are still the same channel company," Sage said. "We can create some new value for partners in this concept."