CRN Exclusive: Cisco's Global Distribution Sales Leader Is 'Transforming' Distribution Channel And Partnerships Around IoT, Cloud

The Cisco Transformation

Cisco's global distribution organization is ripe for transformation, says Julie Hens, vice president of global distribution sales for the San Jose, Calif.-based networking giant. Hens is leading the charge of evolving Cisco's fast-growing distribution organization, which is bringing in more than $15 billion in revenue annually.

"I want to really put some energy into transforming our distribution channel and looking for more ways that we can help Cisco accelerate our growth in some key areas," said Hens, a 15-year Cisco veteran, in an interview with CRN.

With a current focus on distributors' selling security and software through channel partners, Cisco's future distribution trajectory targets the cloud and the Internet of Things (IoT). Hens also said Cisco's partnerships with its large distributors -- such as Irvine, Calif.-based Ingram Micro; Phoenix-based Avnet; Clearwater, Fla.-based Tech Data; Tarrytown, N.Y.-based Comstor; and Harrisburg, Pa.-based D&H Distributing -- are ready to evolve.

What is Cisco's distribution channel pushing now and what are you targeting for the future?

Security and software are here now. In the future, … two things -- one is the Internet of Things and the second is cloud.

One of my challenges, and I suppose it's a challenge we all have here at Cisco, is that I really have to balance our daily, weekly and quarterly execution. If distribution is the growth engine for this company, I need to make sure that is moving and that we really deliver for the company. But at the same time, I want to really put some energy into transforming our distribution channel and looking for more ways that we can help Cisco accelerate our growth in some key areas. I would say that's my biggest challenge, but also the most exciting thing.

What do you mean by transforming distribution, and will it play a bigger role in the channel?

The transformation comes from cracking open these new opportunities like IoT and cloud. I have a very strong distribution landscape, a very capable set of distributors, and we want to leverage that. I think we can leverage that to break into some of these new areas. In some of these, we may need to evolve how we work together. I don't have all of that sorted yet, but I think the distributors will play a big role.

Talk about your strategy and the opportunity for distribution in the Internet of Things.

IoT is a priority area for growth for distribution. We think there's an opportunity for our distributors to showcase some things in this area. This is all new.

We're looking at still leveraging [the] "recruit-enable-growth" framework, but the IoT world is highly fragmented. It's a segmented set of partners and it's a new set of partners. And many of those partners, we don't know who they are. So [we are] looking for ways for our distributors to drive solutions and innovation, and some of that comes [in] the form of a targeted vertical expertise. It could be in health care, connected factories, smart cities -- but we believe we can begin to set the stage for distributors to be part of that innovate engine.

How are you looking to execute in the IoT market through distribution?

I'm looking at really accessing this market through a hybrid strategy where I can leverage my existing distribution network to recruit and enable OT, or operational technology integrators, and really combine some of these OT distributors along with our IT distributors, and look for opportunities to go after this together. The OT value chain is very nonlinear -- it's ripe for disruption -- and together with our distributors, we can gain some experience in this space, and as we gain experience in this space, we can evolve our strategy.

What are you planning for distribution for the cloud?

While today there may not be a significant visibility and understanding of the depth of the distributors' ability in cloud services, I believe this is going to be a significant future value, and I know that folks like Ingram [Micro] -- they have a very robust cloud marketplace. They are connecting with vendors and partners today. In the future, they will be able to help Cisco and others to offer scale, and their success in this space is going to be inevitable. They'll move from "pick, pack and ship again" to maybe more provisioning, invoicing, billing, more services capability -- but still those things all work around partner recruitment and partner enablement.

They'll have to offer creative financing solutions and services. I know this is an area that our distributors are [capable of] helping us with. They become an aggregator in that situation.

Do you think this will be a difficult transformation?

We know that new rules are going to apply and that this is new for Cisco and our partners, but I'm committed to looking for ways to crack the code here that will help accelerate growth in these important areas.

We're going to balance that execution we have today with some transformation in the future.

Can you give me an overview of what Cisco's distribution looks like today?

Distribution represents about 35 percent of Cisco's total revenue, and that continues to grow.

Over the last three years, we've grown from $13.8 billion to $15.3 billion. What's most exciting about that is our two-tier business is growing at high double digits -- around 18 [percent] to 20 percent -- and that is what Cisco looks for me and my team to drive.

In fiscal year 2014 to fiscal year 2015, we saw five quarters of greater than 15 percent two-tier growth. Three of those quarters were greater than 20 percent. Our distributors are really fueling this growth globally, not only in just our traditional business, but also across our architectures.

How big is security right now for Cisco's distribution channel?

We're really doubling down on security. We think this is an area for huge significant growth, and our distributors can play a big role in that.

Our distributors have been investing and helping partners build security practices.

How are distributors playing a big role?

We call it "recruit, enable and grow." Our distributors are responsible for recruiting new partners, enabling those partners and growing those partners as well as our existing partners.

There are several main areas where distributors are growing their capabilities. From a sales and support perspective, globally, our distributors handle 10,000 pre- and post-sales support calls every day. They play a huge role in certification and training [of] our partners. Cisco knows that certified partners sell more, so it's a pretty key role and a complex process to manage.

Do they help channel partners on the services side?

They play a big role in services. Distributors helped our partners generate more than 400,000 service contracts last year. There's also technical enablement, where our distributors help our partners configure devices -- that number is 12,500 devices in a year.

The other big push at Cisco is software. How are you leveraging your distributors in helping partners sell software?

Our distributors have many years of extensive experience selling software. So this is a great time for Cisco to leverage their expertise, and we're going to do that by embarking on one of the largest enablement campaigns we've ever run around software through distribution.

That program is going to start with our distributors training and [improving] the software skill set of our partners to address the opportunity that exists for them in these growing areas.

How will distributors do that?

Our distributors [are] actively acquiring professional services companies to support this. In short, we -- my team -- have to educate our distributors to understand the offer of software and Cisco ONE, and our distributors, in turn, have to educate and offer capabilities to our partners, so everyone can have the right conversation around business outcomes and what … that software really does to unlock new services or capabilities.

What's the time frame for this enablement campaign?

The software one we've just launched these past couple of weeks. … It's a great example of how we're innovating off our recruit, enable and grow framework.

How big of an impact will this have on channel partners?

If we do this right, our partners are going to be able to capitalize on larger and more sticky deals. First, we train partners on technology and product, then show partners solutions that can be built using software, and then help our partners deliver professional services. In some cases, I hope to expand and enhance their offers.