The year 2018 is already being defined as the year that vendors walk away from traditional routes to market, favouring the new and neglecting the old.
Application builders, developers, coders, independent software vendors (ISVs), born-in-the-cloud providers and start-ups - the long list goes on.
And while the recruitment of new partners remains high on the agenda of many a tech giant - think Amazon Web Services, Microsoft, Google Cloud, IBM and Oracle - bypassing the current channel is not an option.
Cisco, in the midst of sizeable internal and external transformation, is aiming to strike a balance between aggressively attacking new partners, while strengthening the core foundations of a long-standing ecosystem.
Perhaps reselling is a dying art, but there’s still life in resellers yet. Providing progression is made.
“We need partners to understand that profit will no longer come from reselling a technology, rather what they customise,” Cisco senior vice president of global partner organisation, Wendy Bahr, said.
“That could be vertically or around a solution but this must be a differentiator value on top of the technology that we make. It’s a 1+1 = 3 approach and that’s a pretty big step for a partner that has made a lot of money reselling products.”
Speaking to ARN on the ground at Cisco Live in Melbourne, Bahr acknowledged the channel’s strength around the delivery of managed services, but questioned the programming mentality of partners in the market.
“This is about taking something that is very sophisticated and layering on something that is necessary for your customer to meet their objectives,” Bahr explained.
As customers edge towards the consumption of intellectual property (IP), the channel must keep pace, fighting for differentiation in a market no longer defined by price.
By 2020, IP will define partner business models, becoming the dominant driver of revenue and profitability, according to IDC findings.
Yet as history shows, research documents and rousing keynotes are not enough to persuade partners to swap strategies and shift focus, for the channel is a creature of habit.
“The appetite to embrace this change is a challenge at times because partners always ask about the revenue, which is a fair question to ask,” Bahr said. “But we understand that programming is not just about acquiring a new skill-set.
“We require partners to acquire this new skill-set because then they can have different conversations with technology buyers, which will also open the door to services. This opportunity is far more relevant and sticky, and at greater margins.”
This isn’t a built it and they will come type mentality however, for Cisco is aware that traditional partners seldom down tools and transform at the request of a vendor.
But what is at play here is a conscious effort to bring the current channel along for the ride, through the realisation that the ecosystem of today can serve the customers of tomorrow.
While the requirement of net new partners always ranks as a high priority for vendors, providing a path for progress for current partners remains of crucial importance.
To assist partners in acquiring programming capabilities, Cisco is exploring the idea of changing the requirements of certification processes, chiefly the Cisco certified inter-networking engineer (CCIE), the highest accolade available for partners.
“One way we can help move this along is to change the curriculum when individuals re-cert for their CCIE,” Bahr added. “This can have much more of a requirement for programming, including Python, Java etc.
“The other is DevNet which is our coding environment. We attract developers and in a lot of instances those developers are net new ones but we really are starting to encourage our existing partners - especially our largest partners - to send people and get certifications.
“CCIEs will need to make the jump and this isn’t something that partners can opt out of because if they want to renew, they will go from command line interface to the programmable network with Python and Java models.”
At global, regional and local levels, plans are in place to help existing partners transition towards building applications, emphasising the importance of the current channel in realising market potential.
“Some partners already have application developers at hand,” Cisco vice president of partner organisation Asia Pacific and Japan, Vicki Batka, added. “I spoke with one partner in Korea and they had access to 1,000 developers but they didn’t realise the opportunity that they had.
“They didn’t think of it as a big deal but the fact is, they have a huge competitive edge.”
For Batka, the conversation again reverts back to the skill-set that the channel requires, and crucially, how partners are looking to specialise.
“The problem is most partners don’t know where to start,” Batka acknowledged. “The best approach is to forget about new customers and focus on your current customer base.
“What innovation type conversations are you having with your customers today? Are you still just turning up and saying time to refresh? Partners must now focus on innovation.”
Change of approach
While the current channel remains central to future market ambitions, Cisco is also actively chasing a smarter ecosystem of partners, capable of building IP and differentiating through application development.
Centred around programming and code, the tech giant is actively pursuing a new breed of partner, armed with the knowledge that traditional structures will fail to resonate.
“We’ve struggled with the expectation that to have any access to our portfolio, partners have to follow our traditional rules,” Bahr acknowledged. “And that’s a bad idea because they won’t.
“So we had to become flexible enough to not disadvantage those that have invested in Cisco. That’s our number one priority, don’t disadvantage partners who have been with us for a long time and made those investments. So we have to protect them.”
But at the same time, Bahr said the vendor can’t limit opportunities in new markets such as digital, applications, the Internet of Things (IoT) and smart technologies.
“We also have to open up a piece of the portfolio to partners that will never interact the traditional way,” Bahr added. “Those new partners can still represent Cisco and should they ever wish to expand further, then distribution can play a part.
“We want to attract new partners, see if they like us and if we like them. But it going to take a lot of different flavours to sort this cake out because it’s not a vanilla, one size fits all model.”
James Henderson attended Cisco Live as a guest of Cisco