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Cisco Piloting An Outsourcing Channel Program
4:21 PM EDT Tue. Jun. 02, 2009
According to Surinder Brar, Cisco's senior director of worldwide channel strategy and programs, the outsourcing program is being piloted in three to four customers in the U.S. and Europe.
While only few details of the outsourcing program were available Tuesday, Brar said the global program won't pertain to a lot of partners but will facilitate bigger deals.
Word of an outsourcing program comes as Cisco readies to relaunch its Managed Services Channel Program, which will occur on Aug. 31. The program builds on one originally established in 2007. Currently, 61 partners are part of the Managed Services Channel Program, Brar said.
The goal of the next-generation Managed Services Channel Program is to enable partners to capture a $40 billion market opportunity that is growing at a rate of 20 percent annually. The previous iteration of the program had barriers of entry that were too high, Brar said, requiring partners to have their own network operations center (NOC) to qualify.
"We made it very hard to transact in the program," Brar said.
The new program will feature three tiers, the highest being a master tier. The second and third tiers have yet to be determined. In the bottom tier, the program will allow partner-to-partner collaboration through a white-label agreement that lets two partners work together to deliver a managed service using one NOC. For smaller partners, that alleviates the need to make the significant investment in a NOC to offer managed services. Partners without a NOC must pair up with partners from the top-two levels.
In addition, Cisco is now providing a single discount based on the partner level attained in the Managed Services Channel Program across all Cisco products that the partner manages instead of discounts based on a specific service.
"We need the rewards to drive the behavior," he said.
Along with the tier-based discounts, Cisco offers a "Cisco Powered" rebate, which gives partners an extra 10 percent based on services performance. For example, to be considered Cisco Powered, services must perform at a certain level, meaning in a unified communications services offering jitter and loss would need to be at a consistently low level.
Under the Managed Services Channel Program, partners must also build repeatable IT solutions, Brar said, and sell the same set of SKUs to customers. The solutions must be remotely managed, monitored and configured and services must be covered under SLAs. The program requires a one-year minimum agreement.
In the upcoming outsourcing program, partners will be charged with building custom services for customers, instead of repeatable solutions, and there is a minimum three-year contract requirement.
The main differences between outsourced and managed services, Brar said, comes down to facilities and people, which are necessary in an outsourced program.
The advancements in both managed services and outsourced programs, Brar said, illustrate the direction the market is heading, where customers don't want to pay up front for equipment but want to make incremental payments on services. For partners, these offerings help them realize more profit, a more predictable revenue stream and an ongoing customer relationship.
"The managed business is growing," he said. "The resale business is shifting to managed."
