A QandA With Cisco's Tushar Kothari

Cisco may seem an odd choice given its go-to-market strategy is a hybrid, including both channel and direct options. But Cisco thinks outside the box. Last April, Tushar Kothari, vice president of channels, led a significant change in the company's partner program, shifting the focus from a volume-based assessment of a partner's worth to a valuation of a partner's value-add and skills in any of 14 areas of specialization.

Since the changes were announced, the number of VARs signing up for the company's partner program shot up from its initial 400 or so partners to nearly 3,000 partners today. In the following interview, Kothari tells us why.

VB: Why focus on VARs' capabilities through specializations rather than sales volumes in your partner program?

Kothari: They've allowed us a mechanism by which we're able to provide training tools, as well as to validate a partner's skills for our end customers to choose from. So, customers needing wireless technology are naturally attracted to partners that have a wireless LAN specialization, and similarly IP telephony, and so on.

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VB: Don't these specializations fragment your partner program? Why not cast your net a little wider?

Kothari: Our message to our partners has been that, to be profitable, you need to focus. Choose an area of specialization and really master that particular technology or solution and add value so that you can command a premium for your services. It's our way of guiding our partners to focus and select areas of expertise.

VB: What triggered you to institute these specializations and to get involved in helping your VARs choose an area of focus?

Kothari: The challenge we see some of our partners facing is this transition to value-add. Many of our partners are transitioning to more of a services-based focus, a more value-added focus. That's where they'd like more help from us.

VB: What happens when those cutting-edge technologies and services become commonplace?

Kothari: Certain specializations lose their importance over time, so we have point systems that let us diminish the value of those specializations, indicating to our partners to focus on newer areas.

VB: Given that 12 percent of your business is direct, how much of a struggle do you have in terms of avoiding channel conflict?

Kothari: None of our partners feels threatened that Cisco is going to take business direct. It does not happen. We are very, very consistent, and we never hear that as an issue.

VB: What do you do to encourage loyalty among VARs that other vendors may not do?

Kothari: [Our internal sales force gets the same compensation, whether business goes direct or through partners, so there's really no incentive to take something direct. Any direct engagement is restricted to large, historical end-user customers.

VB: Any other reasons why you don't hear more objections from your partners about your direct business?

Kothari: [Partners understand exactly what accounts we will be dealing with directly. And even in those accounts, we are actually eager to bring partners in. %85We design everything so that our salespeople are incented to bring partners into the picture.

Consistency is very important in this business, because we realize partners are forming their companies and building the future of their companies around us. If you keep changing directions, that is very disruptive and causes disloyalty.