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Cisco Partner Summit 2013: Execs call on partners to transition to 'hybrid IT' model

Lynn Haber

BOSTON -- At the 17th annual Cisco Partner Summit 2013 held here today, company executives put the spotlight on three key things for partners: opportunities in the midmarket, the importance of the cloud,

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and the imperative to begin transitioning to a "hybrid IT" business model today.

With an estimated 2,000 global partners in attendance in person and over 6,000 virtual attendees, Cisco senior executives kicked off Tuesday's General Session by focusing on strategy and channel evolution and Cisco's role in helping its partners and customers succeed.

Touting the conference theme -- Today, Tomorrow, Together -- Cisco chairman and CEO John Chambers gave a spirited presentation that outlined how the vendor and its partners can win together, seizing opportunities and overcoming challenges.

"You can either be intimidated by new business models or lead," he said.

With that, the company leader outlined where he's putting his future bets, most notably on the Internet of Everything -- the company's term for connecting the unconnected in ways that haven't been done before. Chambers also discussed his focus on being the No. 1 company in the minds of its customers, a success that's achieved hand-in-hand with its partner community, he said.

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Chambers also called attention to Cisco's aggressive acquisition strategy -- 15 companies in the past 12 months, with the promise of an even more aggressive acquisition strategy going forward. Other big bets: strengthening the company's commercial, SMB and midmarket focus; services with partners; collaboration; and security.

Chambers claimed that the Internet of Everything represents a $14.4 trillion worldwide revenue opportunity over the next decade -- 32% of that in the U.S.

Bruce Klein, senior vice president of Cisco's worldwide partner organization, and Edison Peres, senior vice president of worldwide channels at Cisco, shared the stage with Chambers to talk about the partner ecosystem and channel evolution, respectively.

Klein talked about solutions -- hardware, software and services -- and said that they increase deal size anywhere from 2.5x to 7x and reduce the time to close deal by half. He also discussed expanding the company's ecosystem with the help of ISVs to deliver more solutions to new markets to increase partner profit.

The midmarket opportunity is top of mind for Cisco, with the company promising to double its investment in "Partner Led" resources, from $75 million last year to $150 million in fiscal year 2014 (most of which will go to Partner Plus members). The goal of the investment is to help partners capture a $55 billion market: $25 billion in product and $30 billion in services revenue by 2016.

"With Cisco capturing only 20% of the total midmarket share, there's plenty of opportunity for partners to grow market share," he said, citing 1.4 million potential midmarket customers.

Klein said that Cisco was committing to drive sales-qualified leads worth $1 billion to partners and to build out a portfolio made specifically for the midmarket.

Partners should expect to see improvements in enablement, specifically around role-based content and training that will be rolled out over the next 12 to 18 months. Toward that end, Klein also introduced dCloud, a cloud-based remote demo capability for partners.

Peres, for his part, addressed the issue of evolving business models toward hybrid IT, a model in which partners offer managed services, on-premises solutions, applications, and public and private cloud offerings wrapped around professional services in different consumption models.

Taking the conversation to the topic of cloud, he reviewed the company's two-year-old Cloud Partner Program, with its cloud builder, cloud services provider and cloud services reseller roles. At a minimum, partners should be cloud resellers, said Peres, telling the audience not to be afraid of it, to embrace it, drive it and make it a strategic piece of their business.

With that, he announced the Cisco Cloud Reseller Program, a new program that will complement what partners negotiate with cloud providers, as well as additional benefits from Cisco such as Cisco Powered branding, VIP rebates, the cloud go-to-market resource center and Cisco sales compensation.

To help partners transform their business, Cisco will offer a Cloud Business Transformation Playbook, a guide that examines business modeling, financials, sales structures and how to drive compensation. In conjunction with the guide, Cisco will offer workshops and video on demand.

Also announced are a new set of Business Transformation Certifications, two for account managers and one for systems engineers. "The goal of these certifications is not to deploy technology but to enable and identify cloud architectures and solutions and connect it to the long-term objectives of the customers' business needs," said Peres.

Dave Smith, founder and CEO of five-year-old TekScape, a reseller of Cisco advanced technology solutions and Premier Partner based in New York City, is particularly interested in Cisco's cloud focus and the $1 billion Cisco plans to invest in driving qualified leads to partner.

"A year from now, we expect to have our own private cloud in place to offer cloud services to customers," he said. "It will be a game changer for our business." Customers will demand it, he said.

According to Smith, the company is 60% to 70% complete in its transition to a hybrid IT model. "We lead with managed services, not products," he said.

Another Cisco partner, Presidio Inc., is undergoing changes related to the shift to a hybrid IT model, according to Everett Dyer, senior vice president and general manager for cloud and managed services for the York, N.Y.-based company. Dyer talked about issues arising as solution providers transition their sales teams toward a recurring revenue model. "Today most of the sales teams involved in IT are motivated by a one-time transaction of some sort. Compensation plans are built around that. And companies' revenue reporting is built around that," he said. "So when you move from that to a model where transactions are not one-time but recognized over months of the service, that changes the way companies can recognize revenue and therefore that puts some challenge to the way that you compensate salespeople for this."

Dyer also touched upon another theme discussed in the executive morning presentations at Cisco Partner Summit 2013: that of technology decisions shifting from the IT department to the line-of-business manager. "The technology product is typically sold to the IT department. But the services are now becoming more business-oriented, so business results are involved. The audience is not just IT but also business managers," he said. Dyer said Presidio, which has about 2,500 employees, is beginning to see this scenario play out in customer projects. "It's difficult to see it until it's actually occurred, but there's quite definitely a lot more involvement from the business unit managers. And there's a lot more sensitivity of the CIO and CFO toward business results as opposed to technology," he said.

Presidio is committed toward the future as laid out by Cisco, according to Dyer. "We're making massive investments in transitioning ourselves into [developing our] cloud and managed services capability. It's not the largest part of our business but it is the fastest-growing, and we're making the largest investments in and bets on," he said.

Additional reporting by Sue Troy.


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