Partners And Priorities: Cisco's Channel Chief Talks Exclusively To CRN

As Bruce Klein succeeded Keith Goodwin atop Cisco's Worldwide Partner Organization a few months ago, Cisco partners told CRN they wanted continuity and consistency: two hallmarks of what remains one of the industry's most highly regarded channel programs.

To hear Klein tell it, that's exactly what partners are going to get, along with a continued evolution that aligns Cisco's tens of thousands of solution providers and integrators with major Cisco priorities in cloud, data center, video and software-defined networking.

It's a big job for Klein, who most recently was Cisco's senior vice president, U.S. public sector. He's spent the past few months in "listening mode," meeting with Cisco partners at forums such as Cisco's Partner Executive Exchange (CPEE) to set strategy in the WWPO.

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Klein recently joined CRN Editor-at-Large Chad Berndtson for an exclusive interview on those priorities as the new calendar year got under way. Excerpts of the discussion follow.

CRN: You've been on the road for the last few months meeting partners and hearing their stories. What are your priorities for the Cisco channel this year?

Klein: Since taking the reins in August I've been on the road pretty much every week and I've attended a lot of CPEEs and SPEEs and spent a lot of time listening to the partners, yes. Our mission is to continue to evolve the program and help partners accelerate profitability and growth. That's the theme of our organization: building on that, and building on the best channel program out there.

That focus on profitability has to be key because understanding how they profit is how we build our programs and the way we're going to continue to approach technology leadership and innovation. We talk a lot about that and what's going on from a market perspective and the megatrends like cloud, video and mobility and what Cisco's role is going to be. Those discussions go really well with partners because they see how they can drive their relationship with Cisco and what they can provide to the end-user customers.

Within the channel program, there are a number of key initiatives we're working on. Around cloud, we've come to market with a cloud program, [and] the partners tell me we were one of the first to come up with a program that incents them to work with us. Many new partners started a relationship with us because we were the only ones that had a program for them. As the market starts shifting and moving to more cloud -- both public and private cloud -- it's how do we help our partners transition.

The second area is around services and how important services are to the profitability of our partners. We've done a lot of consolidating of services into one, channel-friendly program that has both back-end rebates and front-end discounts just like our product channel programs do. So it's the ability to integrate product and service and eventually software as one program.

The third area is distribution. Distribution, for us, is a tremendous asset -- we do about $13 billion annually in distribution, and that's grown significantly from about $9.6 billion a few years ago. So it's how do we look at where distribution helps from a back-office perspective but also helps improve ease of doing business.

A couple of the other areas we are working on are to create strategic partnerships that will provide value for the channel and capture market opportunities. The technology partner work we're doing with SAP around HANA, or how we're going after big data and data analytics, that's a distinct advantage. We look at areas like Vblock that have been big or the tremendous growth with NetApp with FlexPod. We're looking at how to enhance the relationships we have and also look at new ones that can give our channel partners more to sell and more ways to grow their business.

I was a field leader for so many years. So coming into this job, I have a different lens on how we at Cisco run a big, big partner organization and what's of value to the partners. There is definitely room to deepen our field engagement. Our field executives don't know or aren't aware of some of the investments our partners are making in Cisco and how important it is to develop that level of trust. So we're doing a lot of communication and training, and looking at partner preferrability and how to integrate account plans with our partners and making sure our [salespeople] know what's important to them. We have a Partner-Led model to go after that [midmarket] space. We think we'll bring a unique value and incentives for our partners to work with us and connect much closer in the field.

The last one I'll mention is around where we've got to get comfortable selling both to IT and also to line-of-business managers -- how to have those conversations. We're offering business training to partners and what they can take to the line-of-business manager around mobility, around video, and all of those areas.

NEXT: Is SDN A Big Topic For Cisco Partners?

CRN: What I've heard from partners in the past few months especially is a level of comfort that they didn't have 18 months ago when a lot of the restructuring effort was getting under way. They see a lot of consistency in Cisco again especially compared with companies that have seen a lot of turmoil this year, such as HP and Juniper. Is that what they're telling you?

Klein: That's very true. What I'm hearing is that we've done a good job being open with our partners, and that's an extension of our sales force. We've got more than 17,000 field sales and technical people inside Cisco, and 280,000 partner employees. We want them to feel like they're treated as an extension of our team and that we're very transparent and open. We don't hide anything. We're global and consistent with our partners. When we say we're going to do something, we do it.

What's important to them is the profitability piece -- how are we going to drive that with them. Services are always a hot topic, and they also talk about architecture and Smart Solutions, along with the competition and how to better compete with them.

CRN: How often is software-defined networking coming up, and what are partners asking you specifically?

Klein: It is starting to come up in conversation. Is it their No. 1? No. But does it always come up? Yes. What they want to know is what Cisco is doing around SDN and what will that mean to them as partners. They want more education.

It's so new; it's in the early stages and a lot is being talked about. The strategy Cisco is building goes beyond SDN and is looking at the application, and application-oriented networking, and putting programming down into the network and opening up APIs and exploring a number of areas where we have a strong story. What our job is right now is education: Here's what Cisco's strategy is going to be. This is probably not going to really take hold for another four to five years, though it's starting in the data center in a smaller way. But it is in its infancy and there's a lot of hype right now. We're in a perfect position to offer up something differentiated to the market. This is coming up, and we haven't really educated our partners yet.

CRN: So we can expect to see a lot more emphasis from the WWPO on SDN?

Klein: Yes, and from a company perspective, there's a big focus on our strategy there so, for me, from a transparency perspective, it's about making sure partners know what we're doing.

NEXT: Klein's WWPO Ascent

CRN: When the succession was announced over the summer, what I heard from a lot of partners was excitement because they knew you already -- especially the ones that have big public sector practices. One piece of criticism I did hear is that on paper, your previous roles have focused very much on the U.S., and now this is a global channel role. How do you respond to that?

Klein: Obviously, they want to make sure I'm not just U.S.-focused and that I understand global issues. So I think that the good news is that when I was doing global public sector work, a lot of it was focused on meeting with government executives outside the U.S. and helping the local Cisco teams.

Sixty percent of our public sector business comes from the U.S., so we had a lot of best practices to share when dealing with governments. I was able to get a good understanding of the geopolitical issues going on, not just here but also in EMEA or APJC. I think when I was meeting with partners at the various CPEEs and they saw I was able to have conversations around that with them, I think they felt comfortable that I wasn't just representing the U.S. and that I do understand what they're dealing with.

So it's more about meeting me and talking through their issues. I think they felt more comfortable getting to meet me versus what they read or saw in the bio.

CRN: You mentioned Cisco's ecosystem partnerships with SAP, Citrix, VCE and others. Given some of the big moves in the market, there's a lot greater potential for competition with companies Cisco also partners with, but John Chambers, Rob Lloyd and others have been clear with the Cisco sales team about how to compartmentalize when you partner and when you compete. But at the channel partner level, does this create a conflict at all?

Klein: There hasn't really been. The partners understand the dynamics going on in the marketplace and that everything's not black and white. Microsoft, we're going to compete hard in collaboration, but we're partnering with them closely in data center.

From a partner perspective, what they really want is transparency. They want to know what we are actually doing with those partners. So if we talk about partnering with Microsoft in the data center, what does that mean? What are we coming out with and what can they build their solutions around?

It's co-opetition. We're able to manage EMC partnering now as tightly as we did before. We have a diversity of relationships with partners and I don't see it [channel] partners bringing it up as an issue. We'll continue to manage our technology relationships to make sure they know what we're doing. We'll also continue to build Smart Solutions with more of a vertical wrapper that our partners can sell from.

CRN: You also mentioned distribution and Cisco's strength there. But with Cisco shifting its attention toward services and software and other high-touch priorities, are you still committed to saying that Cisco distributors will play a bigger role?

Klein: Yes. I mentioned that there's big opportunity for us in the midmarket space and how we're getting very focused on capturing more market share there with that selling motion. Distribution is going to be a huge player in that space. They're moving from the model of pick-pack-and-ship to doing integration work. So there's a great opportunity as we're working on bigger programs, for them to do that, and also work with distributed organizations such as a Lowe's or a Home Depot to perform integration work.

NEXT: Cisco's Midmarket, Public Sector Priorities

CRN: Talk about the midmarket strategy. Cisco recently acquired Meraki, which is expected to be a big part of that.

Klein: We can't talk a lot about Meraki yet, but within our Partner-Led space, we're driving and executing the Partner Plus program, a series of incentives and customer intelligence [offers] to help our partners go after this midmarket space. We've also had our territory managers begin to jointly look at sales funnels with our partner sales teams to better manage the life cycle of a lead, and we're also doing a lot more with marketing to provide leads to our partners.

This is a really comprehensive program we'll be executing throughout FY13. Within that are solutions. Meraki has a midmarket solution. Our collaboration unit has a totally focused midmarket solution. Our Borderless Networks businesses have a totally focused midmarket solution. There is a big overall opportunity to significantly grow our midmarket business.

CRN: On the competitive front, has the mix of competitors changed at all, particularly in the past year?

Klein: No, it's pretty much the same people you've heard -- the same names. Sometimes we do see one getting more aggressive but with Cisco in so many different areas there are a lot of the same names.

CRN: Fiscal cliff has dominated the public sector discussion but what about specific spending priorities? What's the climate like in public sector?

Klein: On the SLED side, we're seeing pretty strong growth, actually, especially as they make market transitions like wireless and mobility. On the fed side, there is [continued contract spending] until March, so there's not this huge budget crunch yet. Opportunities spending in some of the bigger programs has slowed, but the current contracts are still there and a lot's going to depend on what we see for compromise in January and what's going to happen to the budget. But the fed partners and the SLED partners are not seeing a dramatic business decline.

CRN: Is a lot of the priority for these customers still around consolidation and efficiency technologies like VDI?

Klein: On the federal side, yes. That's what's great about what we offer with partners because a lot of what we do helps them consolidate networks and look at these opportunities. A lot of agencies are thinking about cloud and doing that. The data center change is big because the government agencies have a big installed base of competitive products, and we're starting to make huge traction with Nexus and UCS. That's an untapped area to grow the business.

CRN: You'd call it a lot more competitive wins for Cisco in public sector data center deals?

Klein: Yes, absolutely.

NEXT: Cisco Partner Consolidation, Klein's WWPO Team

CRN: We're continuing to see an enormous amount of consolidation among Cisco partners who see buying other companies or buddying up as the best way to grab the breadth of architecture opportunity promoted by Cisco. Do you expect it to keep happening?

Klein: In some cases, I think the ability to buy versus build is easier. I'm also seeing globalization; they want to expand globally. So we are seeing that, in companies like Presidio buying BlueWater -- becoming quite large partners with Cisco with tremendous advantage in scope and scale.

CRN: You'll still have partners that can't or won't expand this way. Will smaller, specialized partners become less relevant to Cisco going forward?

Klein: No, I think there's room for both the broader partners that cover lots of technologies and the boutique partners. Customers are still buying in terms of a collaboration environment or a data center refresh so there are opportunities for all those types of partners.

CRN: Another thing that came up a lot this past year was Cisco helping partners improve their valuations and make themselves more attractive in this M&A climate. Is that still a priority for the WWPO?

Klein: Getting return on Cisco is still a priority, and that plays into the whole focus on profitability. If they make a big investment in Cisco, what is their return on Cisco? We are continuing to look at that in its entirety as we build the model.

CRN: There have obviously been personnel changes other than you in the WWPO, with Wendy Bahr moving back over and Jim Sherriff moving out and the others. Are you happy with your team now and do you expect more changes?

Klein: First of all, I'm blessed and honored to lead this team. I'm impressed with the work we do. We're continuing to firm things up and one area we're looking is marketing. [Since Amanda Jobbins left], Karen Walker has been working with us, and we're interviewing right now for a partner marketing leader. Hopefully we will have one announced before the end of January.

CRN: Are you looking at both internal and external candidates?

Klein: Yes.

CRN: No other major holes to fill?

Klein: We've consolidated our Cisco Sales Associate Program, and we also had a number of resources working on cloud so we decided to consolidate that under one leader, Bob Gault, who now has both managed services and cloud. He's our single throat to choke there, if you will. But right now we're all about executing. We have a great team in place.