Years from now, Cisco Systems' landmark restructuring could be viewed as a highly profitable sales game changer that effectively squelched the rising competitive threat from from aggressive competitors like Hewlett-Packard, Juniper Networks and Brocade.
That's right, you read it here first. Cisco gets it and has made the changes to shore up its networking dam. Cisco CEO John Chambers and the rest of the management team know they took their collective eye off the ball with regard to its bread and butter network switch/routing business with far-flung efforts, including a costly move into the consumer video market with Flip that was shut down like a bad dream.
Now the networking leader is taking steps to double down on partner profitability in what it is calling a partner-led sales model that is being championed by none other than Cisco's top sales executive Rob Lloyd. In an exclusive interview with CRN, Lloyd, Cisco's executive vice president of worldwide operations, provided the most expansive view yet of the sales changes that will be felt in every nook and cranny of the Cisco partner network.
"We are, as a company and an organization, focusing on more resources facing our customers and partners and less resources talking internally to one another," says Lloyd.He says partners can expect to see "more resourcing, more program dollars, more engagement capabilities and more investments in systems that face our partners, and they'll feel a greater degree of alignment going forward."
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Make no mistake about it. Lloyd, a one-time solution provider, gets that this game is all about making money with high value solutions -- not point products -- and he is leading the charge to make sure that the company doubles down on partner profitability as it takes its next step in what has been a 10-year journey with solution provider partners marked by big technology bets that have paid off in huge profits for Cisco partners. More than a few partners have cashed out as millionaires by following the Cisco innovation machine.
"When I think of that decade-long march in this shift to a value based portfolio of product and services that drives profitability and differentiation, we're just going to continue to pour more fuel into that engine," he said."It has been a great relationship. It's one built on trust. It's one that's mutually beneficial. It's one that's enabled partners to grow and improve their profitability. So what we're going to do is keep doing more of the same."
Keep doing more of the same and more. That means, as Lloyd pointed out, Cisco is going to place some big bets on partners in what it calls a partner-led sales model that by nearly all accounts is a lot crisper and less muddled than the go-to-market sales motion of Cisco's largest competitor, Hewlett-Packard, which at $120 billion weighs in at three times the size of Cisco.
Lloyd knows that HP wants to play a price game. But selling on price has never been and never will be a Cisco strategy. "Our view is to sell value, sell up the value chain, sell the features and capabilities not only for today's requirements, but also for the future," says Lloyd."Understand how an architecture creates a broader conversation than a point product does. That's in the interest of the overall profitability of the practices our partners run today."
By the way, selling on price is never a long-term successful strategy unless, of course, you're Walmart. "It's a simple formula," says Lloyd. "I'd rather sell something for $100 for a certain percentage of margin than something at $60 for the same percentage of margin, because the unit of work I had to deliver with my sales force, with my infrastructure, with my services capabilities, I'd like to maximize that, the gross profit dollar that came from that unit of work. I'm confused as to how you make more money if the value proposition is to sell less dollars at the same margin or 'we'll give you a rebate to make it try to look like more."
There are more than a few partners in the sales trenches selling both Cisco and HP who see the Cisco restructuring as a watershed moment for Cisco and its partners."Cisco gets it," said one CEO for a top solution provider that partners with both Cisco and HP. "With Cisco there is no confusion. They are a channel organization. They get it. They know the channel needs to be profitable and healthy. They understand they need to take costs out and they are going to look to reduce their field sales organization so it minimizes the four legged sales call. They are going to look to partners to pick up the slack. It's wonderful that they have a high level of confidence in the channel to develop a greater reliance on partners. I do think that there will be a big difference between those that embrace this and make it happen and those that don't. If you are in the middle of the road, you are going to get run over."
Those partners that don't embrace the new Cisco partner led model may not be the only ones that get run over. The networking business of HP, Juniper and Brocade could also be flattened like a pancake.