New CEO Robbins Changing Cisco's Sales Compensation For Cloud, Managed Services

As Cisco Systems pushes its channel partners to incorporate more cloud and managed services into their portfolios, the company is upping compensation for direct sales reps selling partner services built on Cisco infrastructure.

"We are making changes that will more tightly align our sales organization around the world with, candidly, the consumption changes that we see happening in the marketplace and will more tightly align to some of the cloud offers and managed services offers that many of you are taking to market so that we can minimize any conflict out in the field," said Chuck Robbins, senior vice president of worldwide field operations, speaking to an audience of 2,200 solution providers at the 2015 Cisco Partner Summit in Montreal days before being named as Cisco's next CEO.

With the change, Cisco will be increasing the compensation for direct reps that push more consumption of partner-provided services, he said.

[Related: Chambers: New CEO Robbins Will Grow Cisco Sales Faster 'Than I Would Have']

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"If a partner makes a commitment to build out cloud or managed services off of our infrastructure, then we want our sales teams to then correspondingly help them accelerate the consumption of that in the marketplace," Robbins said when asked about the compensation changes by CRN during a press conference at Partner Summit. "We're tweaking [our sales force's] compensation to recognize not only selling routing and switching products in the Net 30 mode, but also working with the partners."

The compensation change likely will be among the last projects spearheaded by Robbins as the head of field operations before he replaces John Chambers as CEO on July 26. Cisco Monday named Robbins as Chambers' successor and said Chambers will become executive chairman. Robbins also was named to Cisco's board as of May 1.

Solution providers welcomed the update, saying the company needs to change its sales compensation model to better align with how partners are selling to customers.

"Partners are adapting pretty fast, and Cisco needs to adapt their sales team to the same model as ours," said Ethan Simmons, vice president, East, at Lumenate, a Marlborough, Mass.-based solution provider and Cisco partner. "Partners are coming up with new models to evolve our business, and we want to make sure that it's seen as being in lock-step of what Cisco is doing in the field too. ... What Chuck's doing is he's better aligning what the Cisco field team is doing with the partner field team, so the more we align, the better off we are."

Edison Peres, senior vice president of Cisco's Cloud and Managed Services Partner Organization, said partners working to become an Intercloud cloud builder will get more attention from Cisco's sales force as a result of the compensation adjustment, expected to be rolled out during Cisco's fiscal year 2016, which begins Aug. 1.

"[Robbins is trying] to ensure not only that we sell more from the partners' point of view, but that our salespeople start to evolve and transform aggressively in being able to offer an end-to-end solution to our customers," said Peres in an interview with CRN. "It's great for our partners, but [it's also] great for our customers to be able to have the right option, evolve more effectively and more efficiently."

Peres said preliminary conversations on the compensation change have begun internally but details have not yet been worked out. Currently, Cisco's compensation for cloud services is "channel-neutral" and has been for several years, Peres said.

San Jose, Calif.-based Cisco last week updated its Cloud and Managed Services Program to add Intercloud to the mix with new roles geared toward cloud providers. Cisco has more than 60 Intercloud partners in more than 350 data centers across 50 countries since launching its cloud platform a year ago.

CMSP 2.0 also is giving partners more choices of Cisco cloud architectures, new hybrid IT opportunities around Intercloud technologies like Intercloud Fabric and ACI, and a new Cisco Powered Virtual Managed Services category, the company said. Cisco also simplified eligibility requirements for CMSP and loosened the audit requirement from once per year to once every three years.

Robert Keblusek, senior vice president of business development at Sentinel Technologies, a Downers Grove, Ill.-based Cisco partner, said extra financial incentives for Cisco's sales team will encourage change throughout the partner community.

"The way you start to make that change is financial incentives; it can be that simple," said Keblusek. "They've come up with a very nice, relatively easy compensation model for the sales team that I would say, in its current form, works, but getting the sales team to really focus on [cloud and services] vs. the traditional product sales model is going to take some encouragement. Your sales model is going to have to adapt to change."

Partners said they also view the sales compensation change as a possible glimpse into the future of how Robbins will run Cisco as CEO.

"He's a very partner-centric individual, and I'm really encouraged," said Keblusek.