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Cisco: Channel partners can take five paths to profits

Cisco has outlined a profitability roadmap for its channel partners that must navigate Cisco's growing role in software and customers' digital transformation efforts.

At a time when Cisco is transforming into a software-centric focused business, the company is challenging Cisco channel partners to change the way they sell, know their customers' business imperatives and focus on the value of software.

Those moves are central to what Cisco is calling the five routes to partner profitability. Cisco rolled out the five routes in March at its Cisco Partner Connection Week 2017 event: Resale, Multi-partner, Provider, Designed-in and Platform. The routes aim to help partners spark high-level conversations with customers pursuing initiatives such as digital transformation.

With approximately 85% of Cisco's bookings generated by partners, Cisco wants its channel companies to introduce Cisco technology to customers responding to digital disruption. To do this, Cisco executives believe partners need a roadmap to help them unlock bigger and more profitable deals.

Nirav Sheth, vice president of architectures and engineering at Cisco's Global Partner Organization, suggested business imperatives such as optimizing the business environment or managing risk are increasingly aligned with technology.

Nirav Sheth, vice president of architectures and engineering, Cisco's Global Partner OrganizationNirav Sheth

"These imperatives are driven fundamentally by some kind of technology investment in infrastructure," Sheth said. "Part of the journey that we are on with our partners is to elevate the perspective and the conversation to help our partners understand that the IT investments we are making are absolutely serving a business need."

Routes to profitability

To clarify the five routes to profitability, Sheth explained where Cisco channel partners can find a role along each path.

Resale: Here, the traditional channel partner resells Cisco products, which could mean offering software, hardware or services. What partners are doing is essentially taking Cisco's suite of products, wrapping their services around that and reselling the technology to the customer.

It's important that we understand what our clients are asking for so that we can have those conversations about managing and transforming their ideas into value.
Matt Collinsdirector of product marketing-Cisco, Insight

Multi-partner: This is an opportunity for a traditional resale partner to join forces with a hardware provider such as Nvidia Corp., a graphics processing unit vendor, or an independent software vendor to expand the kind of solutions that can be delivered to a customer. In this model, Cisco wants to enable partners to go to market together to push Cisco's products early in an IT engagement. 

Provider: IT service providers or systems integrators are a partner segment that provides IT as a service. Cisco has strategic partnerships with many systems integration and consulting firms such as Infosys, Wipro, Ernst & Young, Accenture and Deloitte. These companies are involved in application development and networking transformation deals with Cisco customers, and those customers are looking to have the solution delivered to them as a service, Sheth said. In the provider category, strategic partners work closely with Cisco and validate their architectures based upon Cisco's solution stacks. He added that there are often opportunities for traditional resale partners to get involved with customers on projects of this kind.

Designed-in: Cisco views this path as having two tracks. From an internet of things (IoT) perspective, partnerships with vendors such as Siemens, Rockwell and Honeywell create opportunities for Cisco technology such as Cisco IOx for IoT environments to be designed into solution stacks.

The second track involves partnerships with companies such as Apple, where both companies are designing and developing technology together. Since Cisco is designing Apple iOS improvements into its network infrastructure, Cisco partners can help Apple customers prioritize their traffic and improve the overall experience as they operate their business applications with iOS devices running on Cisco's network infrastructure. Cisco also pointed to Cisco Spark, the company's collaboration offering, and iOS 10 as another technology integration opportunity for Cisco channel partners.

Rohit Mehra, vice president of network infrastructure, IDCRohit Mehra

Platform: As Cisco continues to focus on a software-centric portfolio of products -- Cisco Spark, Cisco Umbrella and CloudLock, to name a few --  the company is pursuing products that support cloud computing capabilities. Cisco said private, public or hybrid cloud models provide another area of growth for partners. Here, Cisco is hoping partners that historically might not have considered Cisco from a collaboration perspective will take another look.

One example is the recent announcement of Cisco Spark's availability in the Ingram Micro Cloud Marketplace. Sheth said the move will allow partners to take the company's assets, drive them at scale and do it in a way where the entire transaction is streamlined because the process is transacted with a cloud distributor.

Industry reaction

Cisco's routes-to-profitability channel effort coincides with the rise of the pay-as-you-go cloud subscription model and the company's software acquisitions -- AppDynamics Inc. and Viptela Inc., for example. The vendor is preparing Cisco channel partners for a software-centric model as its software strategy continues to unfold, suggested Rohit Mehra, vice president of network infrastructure at research firm IDC in Framingham, Mass.

"This is a multiyear transition that Cisco has embarked on," he said. "We in the industry realize that this transition will take at least five years as companies transform their business models to the software and subscription type businesses."

Matt Collins, director of product marketing-Cisco, InsightMatt Collins

Matt Collins, director of product marketing-Cisco at Insight, a Tempe,  Ariz., company that provides hardware, software and cloud offerings, said Cisco's five routes to profitability help partners frame the IT conversation for customers engaged in digital transformation projects. He also said Insight, a Cisco Gold Partner that has spent more than two decades reselling Cisco's products, is now looking forward to the company's software-centric focus, which is a paradigm shift for partners.  

"I don't think we've seen this much change ever before," Collins said. "It's important that we understand what our clients are asking for so that we can have those conversations about managing and transforming their ideas into value. If we can do that, if anybody can do that, they will be set up for success not just in the initial sale, but for the lifecycle of that solution."

One example Collins cited is Cisco's product integration strategy with Apple. He noted the partnership helps drive multi-partner solutions on enterprise accounts where joint customers of Apple and Cisco are working on different parts of a project alongside different line-of-business owners.

Collins also said Cisco's go-to-market strategy with Apple clears the way for channel partners of both companies to more easily sell IT solutions that provide faster communications on Apple technology supported by Cisco infrastructure. But he added partners can also identify clients that will benefit from the solution and better explain how the technology is positioned on the back end.

"Cisco has been really good with giving us the data and the analytics to say 'these are the clients that we feel partners should be able to go out and target with the solutions,'" Collins said. "Enabled with this information, partners can drive a go-to-market strategy around a multiple manufacturers' solution."

Next Steps

Learn more about Cisco's increasing focus on software

Find out how Cisco channel partners should rollout Cisco DNA

Read about Cisco's marketing approach for the data center

This was last published in August 2017

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