Cisco Fires Back at HP, Talks Business Transformation

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."