Despite some solution providers' concerns about Cisco Systems' enterprise sales organization, attendees at Cisco's Partner Summit last week in Las Vegas said the company is demonstrating increased commitment to the channel and investment in its partners.
"Cisco has made a huge effort to show the partner community that they are serious about helping us. Overall, they're doing a lot of good things," said Dana Zhaka, president and CEO of Select, a solution provider in Westwood, Mass. The changes Cisco introduced at this year's summit indicate that the vendor was listening to concerns partners expressed at last year's conference, she said.
Gheorghe Olteanu, global services manager at IBM Romania, said Cisco is now "providing us [with] tools and the means by which to improve business."
This year's summit also brought increased emphasis from Cisco on the quality vs. quantity of partners in its ranks, said Hunter Dorroh, vice president of network integrator American Business Systems, Norfolk, Va. "Last year they wanted to get everyone certified on the emerging technologies. Now they don't want everyone, they want the best," Dorroh said.
During the conference, Cisco executives unveiled a slew of new programs and tools aimed at helping Cisco partners improve margins and become more profitable, including a revamped eAgent direct fulfillment program, new leasing options, a channel-neutral compensation program for services sales and a new partner portal called Partner View.
Paul Mountford, vice president of worldwide channels at Cisco, also unveiled target margins for solution providers selling Cisco products: 4 percent to 8 percent on desktop switching products; 12 percent to 20 percent on core routers and switches; and 20 percent to 30 percent on advanced technologies, including security, IP telephony, storage and wireless. Partner margins today range from 7 percent to 10 percent on core products, he said.
Zhaka said she hopes to see those margin levels become a reality but questioned whether Cisco will be able to manage them, given the frequent price drops in the market. "I'm not sure they're prepared for the constant erosion in the market. Prices are reduced every month," she said.
Solution providers also applauded Cisco's Value Incentive Program, launched earlier this year, a rebate program for partners selling advanced technologies. The rebates should help Cisco's IP telephony partners see return on their investment in training and equipment more quickly, said James Francis, president and COO of AAC Associates, a solution provider in Vienna, Va., that focuses primarily on federal government customers.
AAC began building its IP telephony business three years ago and is now starting to see return on that investment, Francis said.
For American Business Systems, the investment made in Cisco's advanced technologies was well worth it, Dorroh said. Three years ago, American Business Systems did about $50,000 worth of Cisco business. Now the company's Cisco business has climbed to $3 million per year, a shift Dorroh attributes to the solution provider's focus on the new technologies.
"We've easily made back our investment," Dorroh said.
,Jennifer Hagendorf Follett