Cisco's Upgrade Bid

The new Foundation Advantage for Partners program combines Cisco&'s existing customer equipment trade-in program with new elements, including an equipment trade-in program for competitive gear, the extension of back-end trade-in rebates for partners and a new network discovery tool to help partners identify upgrade opportunities.

“This is an integrated program that enables and rewards partners for upgrading the installed base,” said John Growdon, director of routing and switching, technology sales and programs, for worldwide channels at Cisco, San Jose, Calif.

The combination of customer demands for improved functionality, the rising popularity of technologies such as VoIP and wireless, fundamental shifts in network architecture to incorporate security and the aging population of Y2K-era networking equipment make for a ripe market opportunity, Growdon said. Cisco estimates that upgrade opportunity to be about $20 billion in North America.

To help its channel push technology upgrades, Cisco has built a multipronged program that includes end-user incentives, partner rebates and partner tools.

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Cisco&'s efforts are helping partners formalize their plans to go after product upgrades and create demand for new equipment among their customer base, said David Woodward, vice president of network solutions at Calence, a Tempe, Ariz.-based partner, Cisco&'s existing Technology Migration Program, an initiative that provides trade-in credits on old Cisco gear, is being supplemented by the new Cisco Competitive Equipment Exchange, a program that gives customers credit for trading in network infrastructure from other vendors, such as 3Com, Hewlett-Packard and Juniper Networks.

The new program represents Cisco&'s first trade-in program for competitive networking gear in at least four years, Growdon said. In cases where customers are upgrading a significant portion of their network from competitive gear to Cisco equipment, they can typically receive an additional 8 percent to 15 percent discount off list price, he said.

Cisco&'s end-user trade-in incentives help give customers a nudge to upgrade now rather than waiting a year or two, VARs said.

“In many cases, if it&'s a Cisco shop, it really is a no-brainer because it isn&'t whether it&'s a good program for them; the question is do they want to [upgrade] now or later. It makes it an easier sale,” said Tim Carney, CEO of NetworkGuys, a security partner in Fremont, Calif.

In addition, uncovering upgrade opportunities typically carries prospects for professional services as well, Carney said. “At least on the security side, some of these new products will take some level of expertise to implement.”

Cisco&'s trade-in programs are available via registered and certified partners. VARs must work with the Cisco channel sales team to determine the value of trade-ins.

Cisco also is extending its Trade-In Accelerator Program (TAP), a six-month program launched in April at the Cisco Partner Summit that provides back-end rebates to partners on trade-ins. The program, open to certified partners, provides 15 percent rebates on the value of gear that is traded in. Dubbed TAP II, the program extension is retroactive to Nov. 1.

Calence was one of the partners that lobbied for TAP to continue, Woodward said. The additional financial incentives encourage Calence to comb its customer base for new sales opportunities. In one instance, an unsolicited proposal led to a deal that included $3 million in product sales and $300,000 in consulting services, he said.

Cisco decided to extend TAP following the success of the initial program rollout. During that time, Cisco saw a 30 percent increase in revenue gained from trade-ins compared with a year ago, Growdon said. “More trade-ins are occurring, and that&'s partly because our channel partners are driving it.”

As for the old equipment, Growdon said it could follow one of several paths: It could be refurbished and resold either through Cisco or its partners, used by Cisco for support needs or philanthropic endeavors, or recycled.

Another element of the Foundation Advantage for Partners program is the launch of the Cisco Discovery Tool, an automated network inventory tool that finds Cisco and non-Cisco devices. For Cisco gear, the tool also can track revisions of its Internetwork Operating System (IOS), product age and whether or not a product has been discontinued.

“Really, it&'s identifying new sales opportunities in that customer&'s [network] and also gives more intimacy and knowledge of what&'s in a customer&'s environment,” Growdon said.