With Cisco Systems' move into the SMB space, the growing popularity of social networking in the enterprise and a host of acquisitions, it's been a busy year for the networking vendor's channel partners. At the company's recent C-Scape press and analyst conference in San Jose, vice-president of worldwide channels, Edison Peres, sat down with ITBusiness.ca to discuss the way ahead.
Q: One of the key messages at C-Scape has been that Cisco sees the lines of the user experience in a consumer context and an enterprise context blurring. How do you see this impacting the channel?
Edison Peres (EP): Today, if you think of yourself as a consumer, going on the Web and using Facebook and all these collaborative tools, these kinds of tools have not been available to you in the enterprise. The demand for these capabilities in the enterprise is a dynamic that's changing the enterprise world. The enterprise, which is used to having a very controlled environment, can no longer control that environment because of the open nature of the Internet. Therefore, there's a lot of changes that have to happen within the enterprise to allow it the opportunity to control itself, yet still give the same user experience people are getting in the outside world.
Given this trend, the partners that bring solutions to the enterprise world are now going to have to bring solutions that are more than just technology. Our channel partners were in the world of bringing unified communications or security or networking products to the marketplace. Now partners need to bring solutions and these Web 2.0 capabilities to the enterprise. The skill level and the capability of the partner to deliver those capabilities and bring them into the enterprise is going to have to evolve. The way they sell technology has to become more solutions oriented.
On the commercial/consumer level, there is a blurring at the high level of Linksys and at the lower level of the Cisco product line in the SMB space, where you're starting to see Linksys products move through the VARs and the Cisco product line being pulled down into the consumer world. That is happening, and part of our strategy has been to allow that overlap. A great example is the Linksys Connected Office and the Cisco UC500.
Q: And you're also trying to create more links at the partner level between the Linksys partners and the Cisco partner base?
EP: Yes, and probably more the over way around because Linksys traditionally had a retail product base and not partners per se, while Cisco has VARs, low-end partners, and small Mom and Pop VARs. We've developed an organisation within Linksys to sell the Linksys product line into the Cisco partners. They have an opportunity to have more of a lower end offering. These two solutions do overlap, but that overlap isn't bad.One is more of a value buy, the other is more of a consumer mentality. We took our database and made the Cisco and Linksys partner database the same, so we can leverage each other when necessary. We're not worried about competing with Linksys.
Q: You've recently announced a re-branding of a number of previously more standalone brands, such as Linksys, Ironport and Webex, to make them more Cisco-ish while still maintaining their separate brands. How long do you maintain that differentiation, particularly at the partner level? Does the differentiation stay with the brand, or become more based on the customer segment?
EP: When we do an acquisition we make a conscious decision. (Some) we integrate overnight and the company we bought gets lost in the Cisco brand.Some acquisitions like Linksys, because they're in a new market, actually have a stronger brand in the consumer marketplace than Cisco...we didn't want to lose that. The first think we did was co-brand it with Cisco - Linksys, a division of Cisco. Eventually, that might go away and stay with the Cisco brand as we train the market to understand Cisco is now in the consumer space. I wouldn't doubt over time you'll start to see a weaning. From a marketing standpoint it's very costly to maintain multiple brands in the market. What you want to do is evolve it. We've had numerous conversations internally on what is the proper brand for the consumer market. In that market it's a different value proposition. People are looking for more of a commodity-price sensitivity, while on the Cisco side it's more service oriented, support oriented. We've maintained the distinction of those two value propositions and therefore maintained the two brands, but you're going to start to see co-branding and eventually maybe one brand.
Ironport is still a different business model. In all of our back offices and everything we do to support a services/software kind of business, it's very different from our own infrastructure so we're going to keep that separate until eventually that infrastructure can be integrated as part of Cisco.
Q: And will the partner programs evolve at the same pace you evolve the brands?
EP: It's not as much an issue of brand as it is value proposition. The Cisco program requires a lot of training and support, having technical certified people as part of your partnership with Cisco. The Linksys program doesn't require that as much. So, what we've done is said a partner who is a Cisco partner can get access automatically to a Linksys product. But what we don't want to do is put extra burden on a Linksys-only partner, because their technical needs aren't as great as a Cisco one. And then, of course, when you're doing discounts I don't want to use the same discount methodology we use on the Cisco product as Linksys. That's more of a consumer, lower-margin, high-volume oriented selling model that the high-touch, high-value Cisco model. They really are very different, and we don't want one partner program to do both because they accomplish different things.
Q: Speaking more broadly, looking at some of the technology trends you've been discussing and where Cisco wants to go as a company, do you see the partner of the future becoming more specialised or should they be looking to broaden their expertise?
EP: Our partner program over the past couple of years has evolved to allow what we call specialist partners as well as broad, integrated partners, and we added incentives like the VIP program to support their decision to be a boutique or specialised partner. We also redefined our partner program at the Gold level to show they're capable, through specialisation and training, in multiple technologies. What we're finding is those that are becoming specialised are actually by definition finding themselves become broader. The Cisco platform allows you to participate in so many different markets that most partners are finding it's like a candy store. A lot of the partners that were self-identified as specialists are now finding benefit in becoming broader. It plays into the Cisco value proposition, but it also plays into their ability to grow faster, because there are more markets to play in.
We're going to maintain the focus allowing partners to become specialised, but I do believe the next phase is more natural groupings of technologies. It's a new concept we're calling Places In The Network. We're finding we used to train people around a specific technology, like security or wireless, but in the future we're going to need to train them around the campus environment, or around the datacentre, and the multiple technologies in the datacentre. We're going to evolve to help support partners in growing into logical groupings of technologies. It'll be around how customers buy, particularly in the enterprise, which are places in the network. I buy solutions for my datacentre, I buy solutions for my branch deployment, I buy solutions for my campus environment.
Q: Looking ahead to 2008, what are the top priorities for Cisco from a channel perspective?
EP: One is continuing to increase our coverage in the commercial and SMB marketplace. By 2008 we'll have over 5000 partners signed-up for Select Certification. We've introduced a lot of new products, and I think we have a good offering in that space.
Another major focus for us is increasing the partner's capability to move from just selling technology to selling solution and customer experience. A lot of partners today say they sell solutions but really it's a technology solution (they're selling). If you look at Web 2.0 it's end-user collaboration, so a partner now needs to move from a technology-selling orientation to an end-user, customer solution orientation. I think having partners understand how the Web 2.0 world allows them to sell different solutions, customize the solutions to meet customer needs, and develop new business models for customers because this new technology allows them to work differently with their customers (is important). Third, I'd say it's helping partners evolve to having a rich services business. A lot of times our hardware resellers think of services as the installation of the technology. But the idea of professional services is talking and working with the customers, solving their problems, and developing customised solutions using the technology. I think the really successful partners are going to bring this world of Web 2.0 collaboration to the enterprise with a rich services practice.Another priority for us will be helping partners improve their profitability and their relevance to the marketplace by improving their ability to provide those kinds of services.
Q:Any final thoughts?
EP: Partners have always been important to Cisco and have always been important to the marketplace. On the one hand we have software-as-a-service (SaaS) which is looking more direct, and some people would ask if the partner is becoming less relevant, and therefore is SaaS more of a direct play for manufacturers?
I actually look at it and say while SaaS might have those elements partners are actually, I believe, becoming more relevant to this next phase. Why? Well, Web 2.0 is going to be made up of multiple vendor solutions - Microsoft with Cisco, or IBM/Lotus with Cisco. Cisco isn't going to do all that integration, that's going to be done by the partner. While the partner has always played an integrator role, a lot of partners were exclusive to a manufacturer and basically only sold Cisco and so on. Now the partner is being expected to integrate Cisco with other players, like Microsoft. It will make partners more relevant, and I think that relevancy is going to turn into more profit for them.
We're going to have to give even more support to partners because the world is becoming more complex. We can't look at it as just product and distribution, we've got a lot of value in that middle so we've basically got to create partners. It's not like we can just go sign one up. What we're doing is so different that partners need to be created. There's a lot of development required on the Cisco side to be able to do that.