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Cisco learned the hard way that most partners eyeing the managed services game are not in a position to own and operate their own network operating center in order to do so.

When it first launched its Managed Services Channel Program in 2007, to much fanfare, Cisco’s primary requirement to gain certification was that partners had to own a NOC. Not just any NOC, but one stringently audited by Cisco, with standards to be met before a partner could gain entry into the program and access to coveted discounts on Cisco equipment. Those discounts remain unavailable to managed services-oriented Cisco partners outside the program.

Here’s where the reality check sets in: Two years since unveiling the program only 10 percent of Cisco’s resellers and solution providers are participating and certified. Main reason? The barrier to entry was simply too high. Even before the economy went south, most partners could not afford the capital expenditure, nor the ongoing operational costs associated with such a data center. It’s unclear why Cisco would believe otherwise, but they are quite aware of it now.

In a Channel Insider interview where Cisco officially launched a revamped version of the program, call it MSCP 2.0, Surinder Brar, Cisco’s senior director of programs and strategy, recounted his experiences over the past year traveling to partner roundtables and found that nearly every partner in the room would cite managed services as part of their business model.

“But almost none had their own NOC,” Brar said.

The updated program Cisco rolled out seeks to address the NOC issue by allowing partners without one to share another Cisco certified managed services partner’s NOC as their back-end, while white-labeling their services offerings on the front-end to the customer. This frees up access to the program to a broader set of partners, but in reality will it drive greater participation?

That remains to be seen. Lots of Cisco partners today already offer managed services outside the dominion of the official Cisco program. Many lease space in a third-party NOC while others offer very basic services such as remote monitoring that they handle in-house without a lot of investment in major datacenter equipment.

With this new program before them, those partners will have to ponder whether discounts on Cisco equipment are worth forgoing their old way of running their managed services business. Gaining entry means forging a new relationship with a Cisco MSCP certified partner with a willing NOC and hammering out the details of that business arrangement. It means joining Cisco’s program officially and meeting certain standards.

For some, the new program offers great incentive to join; for others, not so much. Which side of the equation do you fit on?