Cisco’s Edison Peres: Putting Partners on the Profitability Path

Just about every vendor executive today is fond of lecturing solution providers about profitability and the need to evolve their business models, but few companies actually put any skin in the game to help make that happen.

That’s what makes Edison Peres, vice president for advanced and core technologies for Cisco Systems, stand out in 2006. Rather than just talk about the problem, Peres helped propel Cisco to actually do something about solution provider profitability and the vibrancy of the channel as a whole by championing two Cisco programs that will set the tenor for the company’s channel operations in 2007 and beyond.

The first of those programs is a Master Security certification that allows solution providers specializing in this area to get the same level of pricing as a Cisco Gold partner. In addition, partners carrying this certification will gain higher levels of visibility with the Cisco sales staff and benefit from Cisco end-user marketing efforts around this program.

Cisco extended the program to the unified communications space and plans to add several other technology categories in 2007. What’s significant about that is for the first time Cisco is helping to level the pricing playing field between smaller solution providers that specialize in a given area and larger solution providers that get significant pricing advantages based on the volume of the products they sell.

That pricing strategy, says Peres, reflects Cisco’s overall channel approach.

“We keep saying that in order to be successful long term you have to either be an integrated partner that acts like a general contractor or a real specialist in one area,” he said. “That’s what we believe solution providers need to do to build a sustainable, profitable business over time.”

Cisco, once widely derided for destroying profitability in the channel by over-distributing its products, is now taking a more focused approach to product rollout in the channel thanks to an Authorized Technology Provider Program covering 16 technologies in which solution providers have to be invited to participate.

This limits the number of solution providers selling those products and services, which naturally keeps margins in those areas relatively high. The most high-profile member of the ATP program is the new TelePresence videoconferencing products that Cisco rolled out earlier this year, but two other new additions include an IP-based radio communications offering for first responders and a raft of new physical security offerings.

“What’s surprised me most about the channel in 2006 is how malleable the companies in it are,” said Peres. “They have an appetite to learn and evolve, and it amazes me how quickly they evolve.”

As goes Cisco, a major stable of the channel, so do many other vendors with their channel programs. So what’s in vogue in 2006 at Cisco is likely to become an element of other vendor channel programs in 2007.