Chambers Rallies Cisco Partners Following Long Year Of Restructuring

Cisco CEO and Chairman John Chambers told thousands of Cisco partners Tuesday that the networking titan's massive restructuring effort was paying off with a tighter focus, better systems and processes, and more investment in partner programs. Cisco is the best partner a solution provider can have, Chambers asserted, because the company spots market transitions and enables partners to capitalize on them better than any other.

Chambers' keynote kicked off this year's Cisco Partner Summit, where among other major moves, Cisco is launching a new program specific to services opportunities -- ideally, partners stand to make $5 in services for every $1 in Cisco product, Chambers noted -- and also expanding its Partner-Led strategy for SMB and midmarket accounts.

Chambers' message to about 4,000 attendees representing 90 countries in person -- and another 7,000 virtual attendees -- was that Cisco is a leaner, fitter organization that would continue to lead market transitions. To be a leader, the company has no choice but to outgun its competitors and be ahead of the curve in every way it can, he said.

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Cisco's major rivals -- Chambers called out Juniper and HP by name -- aren't as tough as they were a year ago, he said, but it's crucial for Cisco to continue to reinvent itself and embrace "mega trends" like cloud, mobility and video.

"Companies fail almost always because they became overconfident, lost their healthy paranoia and didn't listen [to customers]," Chambers said.

The speech included many familiar Chambers touchpoints, including the framing of video as "the next voice," and the discussion of Cisco's track record identifying -- and profiting from -- market transitions as they happen.

NEXT: Cisco Heading Into 2012

Heading into 2012, Chambers said, the most important market transitions are addressed by end-to-end strategic partnerships focused on business transformation. He made frequent allusions to Cisco's restructuring and how it's making Cisco easier with which to do business.

"We must change -- not transition, but change," he said. "We got fat, we added a lot of layers, and when you get fat in a corporation, you know what happens."

Companies that are average don't make it, Chambers said, and companies that are above average as competitors only ride that for three to five years. There's always a new technology, new competitor and new strategy to understand, said Chambers, noting that 87 percent of the Fortune 500 companies that were on the list when Chambers became Cisco's CEO in 1995 are no longer there.

Cisco survived its restructuring largely unscathed, Chambers said.

"We did not lose share or spend in any major enterprise or service provider [account] in the world," he declared.

Cisco trimmed $1 billion operating expenses and re-aligned 23,000 employees, Chambers said. Gary Moore, Cisco's chief operating officer, added that thanks to Cisco's restructuring efforts, sales quotes are now turning 35 percent faster and overall order bookings are now 50 percent faster than before.

Among other briefly-touched-on topics, Chambers also called out the software-defined networking (SDN) trend -- a technology area in which Cisco is rumored to be working on new products -- but didn't expound much beyond that it was an important new focus for Cisco.

Overall, Chambers said Cisco will also continue to invest in its cloud strategy and how it addresses solution providers as part of its year-old Cisco Cloud Partner Program.

"Cloud is the most network-centric technology ever," he said.

Keith Goodwin, senior vice president, worldwide partner organization, and other executives detailed additional changes Cisco plans to make this year.

Wendy Bahr, senior vice president, global and transformational partner organization, said from the stage that Cisco will launch a VXI Accelerator Framework that organizes various sales and marketing tools, co-branding resources and incentives into what Bahr called "an open and nonproprietary solution set built on Cisco architectures." VXI, or Virtualization Experience Infrastructure, is Cisco's platform for virtual desktop.

Edison Peres, senior vice president, worldwide channels, added that Cisco is also changing the way it designs value-based partner programs and will now incorporate the criteria investors use when evaluating solution providers they want to acquire.

Many investors are taking long looks at major companies in the Cisco channel, Peres noted, and they look primarily at operating profit, growth potential, sustainability and business risk when eyeing potential targets. Cisco will fine-tune its channel programs to reflect a lot of those priorities, Peres explained.

NEXT: Cisco Partners Weigh In On Chambers Message

Top-ranked Cisco solution providers attending the Partner Summit say Cisco is doing a good job following through on its promise to be simpler and more streamlined as a business partner.

"The tools they've been rolling out to remove the repetitive input, the number of places to look things up, the access to info, it's all better," said Bruce Flitcroft, CEO and senior principal of Alliant Technologies, a Morristown, N.J.-based solution provider. "Ordering and delivering is also streamlined, and that was pretty bad a year ago. It's not perfect, but it's much better than it was."

Flitcroft said Alliant overall gets better information from Cisco -- contextual information about customers versus merely information about transactions or maintenance renewals.

"It's in the platforms, and we can capture that data in real-time into our platforms," he said. "These moves take time. Cisco's proven it's dedicated to them."

Mont Phelps, president and CEO of NWN Corp., a Waltham, Mass.-based solution provider, said NWN has seen less time needed for transactions and bookings on Cisco deals, and that the various programs -- from channel incentives to registering for services opportunities -- weren't nearly as complex.

"They've reduced the number of programs so it's not so complex we have to figure out what we should be using," he said. "It's still early, but it seems like they're actually trying to deliver on what they said they'd do."

Phelps and other solution providers praised Cisco for eliminating and consolidating many of its existing partner audits -- processes that often take time and investment on the part of partners to show their Cisco relationships are up to snuff.

"We had all these different surveys we had to go through -- multiple audits that sound like they're going to be a much simpler process moving forward," added Dan Holt, senior vice president and general manager, managed services, for Computer Services Inc. (CSI), a Paducah, Ky.-based solution provider. "That's going to leave time for more important things like innovation and revenue generation -- and selling more Cisco stuff which we know they want."

"They're making all the programs more consistent," said Tony Berg, director, data center at World Wide Technology, a St. Louis-based solution provider. "The way you manage deals in the programs, you don't have to spend as much time figuring out how to stack them or look at, 'hey, this one will make me more money than that one.' They've made some big strides in that area and we see that every day."

Jeff Sessions, senior vice president of sales and marketing at Red River, a Claremont, N.H.-based solution provider, said Cisco's simplified approach is allowing more time for engagement with vertical-focused partners. Red River sells primarily to federal government customers.

"Operationally, there are definitely some areas that need to be improved, but they're listening," Sessions said. "On the sales engagement model, they're attempting to do a lot with the architectural approach, and they are engaging in the partner side in federal a lot more. We are seeing a lot more traction here."

Ray Apy, president and CEO of Annese, a Herkimer, N.Y.-based solution provider, said Cisco's changes were beginning to take root with partners but that it would take a while to see their effects.

"Cisco's a big company," he said. "It takes a long time to turn an aircraft carrier."