Cisco Partners Worried About Attach-Rate Changes

The alteration comes as part of a broader change to the way Cisco measures and rewards partners for selling its SmartNet maintenance services in conjunction with products. Starting in August, Cisco is moving from a unit-based model that measures the percentage of products that are sold with maintenance to a dollar-based model that gives more weight to higher-priced products.

Solution providers said Cisco's decision to move to a dollar-based system is a huge step in the right direction that tackles many of their concerns by taking into account the value of service contracts instead of the number sold.

At issue, however, is the vendor's plan to reintroduce low-end items that were excluded under the old model, such as wireless access points, IP phones and entry-level switches. Partners said that no matter how hard they push services, some customers simply refuse to add maintenance for such items, preferring instead to buy a few extras to stock as spares.

Karl Meulema, vice president of services and channels at Cisco, San Jose, Calif., said the company is listening to partner feedback on the new attach-rate plan and is looking at potential modifications that it will present to a group of top partners next month. "We expect to make changes after the meeting in May," he said.

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Since Cisco's program rewards partners with higher SmartNet discounts for meeting certain attach-rate thresholds, a lower attach rate could result in the loss of several points out of a partner's maintenance margins for the following quarter.

"If Cisco [excludes those products] everything will be fine. If they don't, it's going to cause us a lot of pain because we sell a lot of those, and people don't want to buy maintenance on them," said Pat Scheckel, vice president of the Cisco practice at Berbee Information Networks, Madison, Wisc.

Word that Cisco will no longer allow exceptions for cases where maintenance and equipment are not sold at the same time also has partners concerned. Complex projects often take longer to implement than the 90-day window that Cisco's program effectively allows, and customers typically don't activate maintenance until a solution is live, said Tim Hebert, COO of Atrion Networking, Warwick, R.I.