Cisco Rolls Out Partner Program For Managed Services

Cisco Systems Wednesday launched a new channel program designed for partners building managed services on its technology.

The new Cisco Managed Services Channel Program was built to meet the specific needs of MSPs, which differ from partners that are reselling products, said Surinder Brar, senior director of worldwide channel strategy and programs at Cisco, San Jose, Calif.

"Our partner program is not geared toward the type of partner but the offer they're making," Brar said.

For example, a typical resale partner is regional in nature but MSPs are often global in reach. "Our resale program tends to be local: you need four CCIEs (Cisco Internetwork Certified Experts) in every region. Here we want them in a central NOC," Brar said.

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MSPs also need to set costs on equipment to correctly price their services, so the program offers predictable, upfront pricing. That differs from Cisco's resale program which rewards partners with back-end Value Incentive Program (VIP) rebates for meeting sales growth and customer satisfaction targets.

Analysts have pegged the managed services space as an $18 billion market in 2007 and expect it to climb to $42 billion by 2011. Cisco estimates that its technology is used to deliver $4 billion in managed services.

Cisco has had a pilot of the program for over a year, testing it with a dozen channel partners and service providers.

"The big thing we like is that it takes advantage of the remote managed services business we've already established and validated in the market," said Pat Scheckel, vice president at CDW Berbee, Madison, Wisc., a Cisco partner that participated in the pilot program. "From a routing/switching and security perspective, it's reasonably attractive and something we can use as a competitive differentiator."

Partners testing the program have encountered pricing difficulty, as some products are available at better prices under different Cisco programs, but Cisco is working to address the inconsistencies, Scheckel said.

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To participate in the program, partners must meet criteria aligned with industry-standard best practices guidelines such as ITIL (Information Technology Information Library) and ISO 20000-1. Partners also have to pass third-party audits of their NOCs

Cisco defines managed services as complete IT solutions that are proactively managed remotely from a NOC. They are subject to Service Level Agreements (SLAs) that cover a minimum of one year and typically are offered on a pay-as-you-go pricing model that requires minimal upfront capital outlay from the customer.

The program splits services into three levels, offering bigger financial incentives for higher-value services. At the low-end of the scale are what Cisco classifies as Legacy Managed Services, which include edge and transport services that are not built on Cisco's advanced technologies. Mid-level Strategic Managed Services are based on Cisco IP networks and Cisco advanced technologies, such as security, wireless and unified communications. Top-level Cisco Powered Managed Services have to meet stringent guidelines. Five service categories are eligible for the Cisco Powered designation, including unified communications, security, mobility, connectivity and data center services.

Minimum discount levels for the new program start at the same levels offered to Cisco Gold partners and go up from there. To ensure that MSP program members aren't using equipment purchased at higher discount levels for traditional reseller deals, MSPs have to provide a POS report on each product that shows it is under a minimum one-year SLA and being managed by them, Brar said.

Additionally, products purchased through the MSP program are not eligible for VIP rebates offered to Cisco resellers, he said.

Cisco's plans to develop the program first surfaced in 2006 when the vendor disclosed its strategy to build four new "offer-based" channel programs. It launched local and global resale programs at its 2006 Cisco Partner Summit and unveiled plans at that time for two more, the MSP partner program and another for outsourcers.

The program for outsourcers is still in the works. Cisco plans to launch a pilot of the program on Nov. 12, Brar said.