Cisco Fires Back at HP, Talks Business Transformation

By Jessica Davis  |  Print this article Print

Cisco Systems told channel partners at its partner summit in San Francisco that the technology market is in transition as more companies look into cloud computing, virtualized data centers, video and IT-enabled collaboration. One analyst has predicted that 20 percent of businesses will own no IT assets by 2012. The message to partners comes as Cisco faces ever-growing competition from HP over a share of the virtualized data center market.

Even as HP was turning up the heat on Cisco Systems at its partner summit in Las Vegas, held April 26 to 28, Cisco was also acknowledging a new era of intense competition between the two companies during its own partner conference in San Francisco, held the same week.

"We know you had a choice this year of partner summits to attend," Keith Goodwin, senior vice president of Cisco's Worldwide Partner Organization, told Cisco's channel partners during his keynote address. "We appreciate you being here. You obviously made the right choice."

Goodwin painted a picture of a technology market in transition as more companies look to cloud computing, virtualized data centers, video and IT-enabled collaboration. He cited one analyst's prediction that 20 percent of businesses by 2012 will own no IT assets.

"One partner told me, 'My customers are more ready than I am and it scares the heck out of me,' but he didn't say heck," Goodwin said.

"We will own the game by leading this market transition together," he told partners. "We know how to do this. We've done it before."
To accomplish this, Cisco is looking for partners to further develop their services practices to encompass professional and business services, an area Cisco says will prove to be more profitable for partners.

Among the new initiatives for partners announced at the event:

  • The Teaming Incentive Program or TIP, which rewards partners with up to 5 points to encourage early sales engagement and reward them for investments in consulting and professional services capabilities. Cisco says this incentive program is the fourth pillar in its channel partner incentive program (the other three being the Value Incentive Program, the Opportunity Incentive Program and the Solution Incentive Program.)
  • The Global Partner Network, a program created to help channel partners identify their counterparts in other countries to enable better service for multinational customers. Partners designate themselves as either a "host" or an "agent" in an enhanced partner locator tool, letting other partners see that they are available to do deals in their home countries. For instance, a "host" partner in a multinational telepresence deal can quickly identify qualified partners in other countries to act as "agents" on the deal, completing transactions there with a full knowledge of local customs, laws and taxes.
  • Moving from Technology Specialties to Architecture Specialties, a change to Cisco's partner specialty program that is designed to "help channel partners develop integrated practices around borderless networks, collaboration and data center virtualization."

Cisco plans to "create a new curriculum specifically for business architectures," Goodwin said. That curriculum addition is driven by a fundamental change in where partners will focus as the market transitions to cloud computing and virtualized data centers, according to Cisco. Partners will evolve from break/fix to offering more services and business process consulting.

"We will be redoing all of our content, and investing to build new content to enable sales people and engineers around these architectures," Goodwin said. And Cisco unveiled a promotion for those at the partners summit available to Premier, Silver and Gold partners, in which Cisco will fund learning credits that pay for 75 percent of the cost of that curriculum for the next 45 days.

"Partners will need to evolve to take advantage of opportunities," said Edison Peres, senior vice president of Cisco's Worldwide Partner Organization, Go-to-Market Group.

"Thirty to 40 percent of partner revenue is services today, and 80 percent is break/fix," Peres said. "Partners will need to move into professional services." Cisco executives said these services deliver more value to customers, and provide more profitability to partners.

Cisco also said it is in the process of identifying 500 "Transformational Accounts" where Cisco will bring in partners to collaboratively sell and deliver services. Partners who participate in these accounts will need to achieve Cisco's newly created Services Specialization. And to make it worth the upfront investment, Cisco is neutralizing compensation for direct sales reps in those accounts.

Goodwin laid out three investment directives for partners:

  • Invest to enable your teams to position and deliver architectures.
  • Continue to differentiate around solutions and verticals.
  • Prepare for cloud-based services as a new business model.

"We are in a very different competitive environment than we've ever been in," Goodwin said. "I know you have some of our competitors knocking on your door every day. We are more committed than ever to investing in you and earning your investment and loyalty every day."

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com