Cisco Exec Touts Steps to Keep Partner Base Stable During Downturn

Over the last year, technology vendors with a prominent channel presence have tried to implement ways to help their partners weather the economic recession, either with advice and training or more tangibles such as financing and credit.

Cisco’s no different. The networking leader put into place a number of programs and initiatives to keep its core partner ecosystem stable. In a recent interview with Channel Insider, Edison Peres, senior vice president for Worldwide Channels GTM at Cisco, said the programs are doing their job.

“Bottom line is that we’ve seen few of our partners fail,” Peres said. “We’ve seen some consolidate, but not fail.”

One of the more interesting measures Cisco took was to play the role of matchmaker, connecting partners looking to sell their ailing businesses with healthier partners in the market to buy. Peres said the informal back-office program, which he dubbed Storm Tracker, helped ensure that partner businesses didn’t end up in the hands of solution providers more aligned with networking rivals such as Juniper or HP ProCurve.

“We wanted to put these partners in the friendly hands so as not to lose the capacity for Cisco,” he said.

Cisco also increased credit and extended financing terms to 90 days’ zero interest from 30 days, and also tried to stimulate end-user purchasing with zero interest financing. The company invested in skills training for both sales and technical staff inside partner organizations as well. The basic message to partners was to shore up their cash flow and credit, focus on serving existing customers because acquiring net-new is tough and expensive during a downturn, evolve their business around customers’ changing needs—including a shift to managed IT services or software as a service to accommodate the op-ex versus cap-ex trend—and keep investing.

Looking ahead, Peres says he’s seeing signs of a recovery, albeit slow, and that Cisco's expectations of the channel are going to return to high growth and profitability. He singled out Cisco’s managed services partners, which are growing at double the rate of other Cisco partners, and those partners willing to make significant investments in new certifications and specializations across the Cisco platform. That latter group, he said, has been able to maintain decent levels of profitability during the downturn.