Cisco Focuses On Channel, Buying Trends

Cisco

Wim Elfrink, senior vice president, customer advocacy worldwide service operations, detailed changes and improvements to the company's channel programs.

In the United States, Cisco is launching a 2 percent renewal incentive for base and attach rate increases. Elfrink pegged the renewal of maintenance contracts as a $1 billion opportunity today.

Based on partner feedback, Elfrink also said Cisco plans to align its programs to support various business models and recognize partner investment.

Cisco will move from full entitlement to selective entitlement with an "I Pay for What I Use" structure, and also reward solution providers for customer satisfaction, he said.

Solution providers will be able to resell Cisco's advanced services today, and in six months will be able to license those services and wrap around their own branding, said Elfrink.

By September, Cisco also plans to make its partner tools easier to use and will integrate the service contract center and online ordering in one place. The company also plans to beef up ROI, gap-analysis, analysis/audit, case management and asset management tools, and also share best practices.

In terms of technologies, Cisco executives said wireless, security and IP telephony--as well as the services associated with those technologies--would be the wave of the future.

Sue Bostrom, senior vice president of Cisco's Internet Business Solutions Group, said that based on her meetings with CIOs, applications including e-learning, communication and collaboration appear to be opportunities for solution providers.

Meanwhile Mike Volpi, senior vice president of the Internet Switching and Services Group, honed in on opportunities in security, convergence, VPNs and WLANs.

Still, top Cisco executives were cautious about the future.

Bostrom described the 2001-2002 IT buying patterns as "controlled innovation," with CIOs needing cost justification.

William Nuti, senior vice president of worldwide service provider and U.S. theater operations, said the global service provider market will be challenging for the next two to four quarters, adding that he expects the SMBs to recover first, followed by enterprises.

To weather the storm, all executives stressed the importance of solution selling and partnering.

"We are working feverishly on the alignment of solution providers with service providers," said Nuti.

But with complaints of service providers undercutting solution providers on networking equipment, it could be difficult to implement, said analysts.

"Cisco will be challenged to facilitate the relationships between Cisco solution providers and the large service providers due to lack of common goals between the two types of Cisco partners," said Bill Lesieur, director of industry advisory firm Technology Business Research, Hampton, N.H., adding that Nuti did not address how Cisco partners can tap into the actual network buildout deals of service provider networks.