Cisco Systems' channel received some reassuring news at this month's Cisco Partner Summit 2002 conference in Orlando, with Cisco's recently appointed worldwide channels president showing empathy towards the plight of its resellers, recognising the need for greater profitability within the channel. The bad news is he's all but said a number of partners will have to go.
Paul Mountford, Cisco's vice president of worldwide channels, was recruited from the UK to head up Cisco's channel strategy. The result is that Mountford has committed to a complete organisational review of Cisco's channel.
The issues at hand are not new for Cisco's channel partners. A lot of partners are vying for the same business opportunities in a market that has failed to return to its previous levels, leaving margins pared down to the bone. Also at play is the high cost of ongoing training and Cisco specialisation accreditations, which has become unsustainable for some partners.
"The message [from the conference] was that there is a huge issue of profitability in the channel," said Stuart Hendry, managing director of Gold partner Logical Australia.
Logical is arguably Cisco's largest IP telephony specialised integrator in Australia. Hendry is optimistic about the impending changes to Cisco's channel but remains cautious about how these changes could affect Cisco's partners.
In essence, Cisco has a tough job in front of it. With the trend towards fewer partners and tougher accreditation processes for specialisations, the channel hopes the review will create greater rewards for resellers that make a commitment.
"Everything [Mountford] said made sense, but it's just like anything - the proof is in the pudding," said Nick Verykios, managing director of LAN Systems.
According to Verykios, the biggest problem arising from changes to Cisco's channel is recognising the role integrators play in deploying cutting-edge technology. "New technology can't be priced the same as old technology," he said.
While the channel applauds Cisco's decision to consult customers and resellers before any decision on its strategy is made, it poses a double-edged sword for partners concerned that the process will take too long. At Cisco's Networkers 2002 conference in March, Cisco Australia managing director Terry Walsh told a media panel that it was "one week away" from announcing its plan for its Direct-to-Gold partner program. Two months on and the "worst-kept secret in town", according to one distributor, is that the program is likely to be announced on September 1.
The delay has left some Australian partners asking, "where's the beef?"
Despite this, Mountford has acted quickly in establishing Cisco's Value Engagement Model. The strategy is designed to motivate Cisco salespeople to bring outside partners into deals earlier in the sales cycle, when their value-added services can be leveraged to improve customer satisfaction and generate additional streams of revenue.