UPDATE: Cisco Rebuilds Channel Program Around Services

Hoping to help partners capitalize on emerging demand for networking and security services, today Cisco Systems used its annual partner conference to unveil significant changes to its channel program.

Company officials announced the modifications at a press conference on the opening day of its San Diego event. Cisco has designed the new program to take advantage of what it sees as a potential $44 billion services opportunity, which partners can take advantage of by expanding their depth and/or breadth of expertise.

"This has been in development almost two years," says Keith Goodwin, Cisco’s senior vice president of worldwide channels. "With all the intelligence moving into the network, the game is coming to us as a network provider, and therefore it’s coming to our partners as well."

In addition, Cisco is introducing new programs for partners that want to get into managed services and outsourcing.

For partners wanting to broaden their skills sets, Cisco is creating the Integrated Infrastructure Provider classification for partners who achieve minimum certifications in routing, switching, voice, wireless and security. Partners also can choose to get more expansive training in any one of these areas, but for now Cisco will try to encourage them to commit to either the breadth-or-depth approach.

"Customers more and more need a partner who can integrate all these technologies together, and this is one of the foundational elements we want our program to have going forward,” says Edison Peres, Cisco’s vice president of worldwide channels programs. "But they sometimes need from partners a level of depth, so we wanted to identify the ones that have that level of depth or breadth."

The company is retaining its Gold, Silver and Premium certification levels, but requiring newly benchmarked minimum skill-set levels for each. For example, a Gold partner must now achieve advanced specializations in each of five technologies. The company also is retaining the Express and Advanced specializations, but adding a new Master category for security and unified communications partners. The Master designation is available to all partners, regardless of their level.

“This is the opportunity for the specialized voice or data partners to brand themselves as a Master in those technologies,” Peres says. “We’ll be adding new Master categories over time.”

Partners will have two years to meet the new requirements.

"They get all the benefits of having the content available today, and we won’t penalize them for any certifications or specializations they’ve recently achieved,” Peres says.

Partners should plan to devote the first year to getting trained in Lifecycle Services, a new framework designed to educate partners on how to sell, install and administer services.

"Our business has become much more about building quality of service into networks, so it's important to put much more structure around services," says Karl Meulema, Cisco's vice president of services marketing for channels. "Regardless of whether partners decide to build out their business breadth or depth, Lifecycle Services will be a key foundational building block for the process."

E-Learning, an online training tool, is available now; Cisco will roll out an E-Consulting tool in June and an engagement-planning tool later this summer. The company also is immediately offering streamlined technical support to make it easier for partners to get peer-level help whenever they need it.

Meulema says partners who migrate to a more services-oriented business plan will find it paying off in numerous ways besides the higher profit margins that are behind much of the excitement around the new model.

"Services installations will allow partners to plan better because they'll have a clearer idea about when the projects will end," he says. "And they'll also be able to better identify where the risks are in a project, so they can bid more aggressively."

Mike Fong, CEO of Calence, a network solution provider in Tempe, Ariz., says he welcomes the new opportunities.

“I’m really excited about [the announcements] because they align with what Calence is all about in the marketplace,” Fong says. “Moving more to the services side allows us to be more of a strategic provider and get all the higher margins that go with that.”

Cisco will keep its existing incentive programs and discounts, and add new discounts for the advanced specializations as well as tiered rebates—beginning in February 2007—for its Value Incentive Program (VIP), depending on the partner's certification level. The VIP enhancements will be outlined in detail by Goodwin during his keynote address on Wednesday.