Cisco to partners: Get smart with collaborative services

Cisco will encourage partners to find revenue in services in addition to smart solutions and hardware at next week's partner summit.

At the Cisco Partner Summit in Honolulu next week, company execs will rally partners around selling collaborative services rather than just focusing on network gear sales.

In turn, partners will look to hear how Cisco Systems Inc. will hold a lead against major players like Microsoft in crucial battleground applications, including unified communications (UC).

Cisco's overall strategy these days is to shift attention to smart solutions that will require further network build-out and supporting services, which mean ongoing revenue. Cisco will spend much of the next year trying to stay ahead of the curve in offerings including Web 2.0, collaborative solutions, unified communications and telepresence. All of these provide opportunity for long-term service contracts.

As part of that shift, Cisco will use the summit to announce the expansion of its Smart Care Service from a small pool of partners in a pilot program to a larger pool of partners -- expected to grow to about 1,000 in 2009. Smart Care services enable partners to monitor and manage the network and its applications on either a software client or network appliance on the customer site, transferring the data to a Cisco-hosted server and then back to the partner. The service is mostly used for small and medium-sized businesses (SMBs).

Cisco's pitch is to show partners how they can use Smart Care to bank on their intellectual property -- their unique knowledge of what their clients need. Partners should be able to wrap customized services for their clients into the Smart Care offering by using the information gathered in addition to their knowledge of the customers' specific business model needs.

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"As we see more applications being added on top of the network, the network has become mission-critical," said Sherri Liebo, vice president of commercial services marketing at Cisco. Companies can't afford to be reactive to network problems, and Smart Care enables partners to offer "proactive" services -- verifying network performance, for example, on an ongoing basis, she said.

In turn, increasingly reliable networks will boost hardware sales, which is good for Cisco and Cisco partners alike. "Then customers are more inclined to put more applications on top of [the network], like voice," Liebo said.

In the nine months Smart Care has been piloted, Liebo said partners have identified new service opportunities -- with 60% of customer equipment being uncovered by service contracts. In addition, 60% of the customers that went through a network security assessment had previously undetected vulnerabilities.

Cisco partners pushed to grow collaborative services, telepresence, UC

Cisco will also announce the expansion of a service meant to help partners self-evaluate and identify their own weaknesses so they can improve. The E-Consulting initiative will now include more than 3,000 partners -- up from an initial group of just under 1,000 specialized VARs. The service measures Cisco partners' sales and delivery processes and then measures them against those of their direct competitors. Cisco then provides recommendations so partners can rethink their tactics.

The expansion of E-Consulting came at the request of partners, said Raja Sundaram, director of services channels at Cisco. Sundaram said Cisco had written a playbook of methodologies for delivering technology and services along the entire lifecycle. "Partners came back and said, 'You are giving me information by segment. How can I get this personalized? I don't know how I am doing against other partners,'" Sundaram said.

Of the first group of E-Consulting participants, partners experienced a 10% improvement in customer attach rate and a 12% improvement in service delivery, equaling nearly $160,000 per partner in increased services revenue, Sundaram said.

While partners are interested in learning the services business model, they also want to be sure Cisco is staying ahead in technology.

"What Cisco has is so far advanced from what they are thinking about at Microsoft. However, Microsoft comes from a user experience perspective. They don't come from a perspective of equipment experience, which only IT people care about," said Gia McNutt, CEO of SOS, a Loomis, Calif.-based Cisco Premier partner, adding that she would like to hear Cisco talk about a commitment to consistent user interfaces for unified communications applications. "There isn't anybody I talk to who doesn't think Microsoft will get there. So I want to know that Cisco will evolve fast enough to head that threat off."

Mark Slaga, chief technology officer of Cisco partner Dimension Data Americas -- a division of South Africa-based Dimension Data -- said the company's biggest growth in "raw dollars" this year will be in unified communications, with the second-highest increase coming from core network refresh, followed by security built into the network.

As for percentage growth, Slaga sees telepresence and data center solutions playing big. Most of those offerings, he said, require "a good mix of hardware and software" and provide great service opportunities. It's that mix that he would like to hear more about at the summit.

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