5 Surprising Statistics About Cisco's Channel Strategy

Looking Through The Numbers

Cisco prides itself on providing transparency to its solution providers by telling partners where Cisco's technology road map is heading and how to make as much money as possible selling its offerings.

Although the San Jose, Calif.-based networking giant's more than 60,000 channel partners might think they know everything about Cisco's go-to-market strategy, a new report by financial services firm UBS provides in-depth insight on some key statistics that solution provider should know -- such as how many global enterprise customers Cisco sells to directly and exactly how many people are trying to sell Cisco solutions today. Here are the five important takeaways from the UBS report.

1. Selling Directly To A Small Number Of Enterprises

Cisco has established a direct sales relationship with only 30 of its top global enterprise customers. The need to sell directly to these large organizations arises because the customers tend to buy leading-edge technologies, according to UBS. These 30 enterprises represent only a small portion of the network leader's $180 billion installed base.

2. Focus On Line-Of-Business Executives Is Sharply Increasing

Seventy percent of potential customers who visit Cisco's Executive Briefing Center in San Jose, Calif., are line-of-business executives. The 70 percent in 2016 is up from 30 percent two years ago, when the majority of visitors were from customers' IT organizations.

By selling to line-of-business leaders, partners become more profitable, as senior level executives are swayed more by the business value of a solution than the price, according to UBS.

3. 300,000 People Are Selling Cisco

The networking giant has a sales force of 17,000, while its more than 60,000 partners have about 280,000 employees. This means the total sales force selling Cisco solutions reaches nearly 300,000.

This bodes well for solution providers as software-defined networking, network function virtualization and services are becoming increasingly more important than simply selling hardware. Cisco has positioned its channel for the future by emphasizing technology expertise instead of sales volume classifying its partners by tier, says UBS.

4. 85 Percent Of Revenue Through The Channel

Although Cisco has said over the years that more than 80 percent of revenue comes through the channel, UBS pinpointed that figure to 85 percent of products and services revenue through partners.

This, again, is a win for Cisco partners as it shows that the vendor relies heavily on channel partners to operate, according to UBS. Cisco has said that the majority of its direct sales are in the service provider space.

5. Cisco's High Acquisition Rate = Risks

Cisco faces several risks similar to many other IT giants, including macro weakness affecting IT spending levels and increasing competition pressuring pricing and margins, according to UBS.

One possible issue that stands out for Cisco in the report is technology integration risks, given its recent and historic high acquisition rate. Since 2015, Cisco has unveiled plans to acquire 16 companies -- including Monday's announcement of its $293 million purchase of cloud-based security specialist CloudLock. Cisco has acquired about 185 companies over the past 22 years.