In a recent blog post, Andrew Sage, vice president of Americas distribution at Cisco, played up the vendor's relationship...
with its distributor partners, worldwide, as a win-win-win for all involved, i.e. Cisco partners, distributors and Cisco. It's no secret that in the past few years the role of distributor has been essential to help vendors find new partners, expand the skills of existing partners and off-load channel responsibility for smaller partner businesses. In other words, it's not feasible for many vendors to assume 100% of the care and feeding of all channel partners -- especially as the partners are expected to transform their businesses to address key emerging technology areas such as mobile and cloud.
As distribution continues to evolve from the traditional pick-pack-ship logistics role to one of enablement -- offering training, certification, demand generation, business building and marketing, for example, running awareness campaigns such as what Cisco's Sage has embarked on is vital for business growth.
In fact, he described the 190 distributors that Cisco does business with worldwide as "a channel for our channel" with the same goals as Cisco: to drive profitable growth and success in the market.
About 30% of Cisco Americas channel partner business goes through distribution, generating about $8 billion in revenue for the vendor, according to Sage. This partner segment is primarily represented by partner businesses that generate less than $25 million in annual revenue. However, Sage noted that half, or $4 million, of the distributor revenue is transacted with some of Cisco's largest partners, which turn to distributors primarily for their logistics capability but also for value-added services in areas such as software configuration, complex deployments and value-added skills, for example.
Taking a closer look at what's going on in Cisco's Americas distribution, Sage noted that distributors certify about 200 new Cisco partners in the Cisco Partner Program quarterly at the base level of the program known as Cisco Select Certification. Another 75 partners move up from Select to Premier partner status per quarter, also with the help of distributor partners. These figures have been tracked for the past six quarters.
Cisco is also looking to distributors to help evolve its channel partners' businesses to a hybrid business model. "All of our distributors have some program underway to help integrate cloud services into the overall Cisco portfolio," Sage said.
Dan Lockwood, president of Development Group Inc., a regional VAR and systems integrator based in Redding, Calif., admitted that he fell into Tech Data's Cisco Momentum program several years ago when, at that time, Comstor was his company's primary distributor.
Tech Data called on the VAR to introduce him to its Ignite community for next-generation partners. At the time, he had no reason to say no.
"Tech Data made a substantial investment in our mutual relationship -- training, certification, marketing, etc. -- in exchange for a revenue commitment from us to do more business with Tech Data and Cisco," he said.
After negotiating a deal with Tech Data, Development Group's first year in Ignite -- essentially, an onboarding group -- included training; credit support; and business consulting around finances, profitability and managing the supply chain.
"We did well our first year and recognized a real connection between our investment and the collaboration with Tech Data. It wasn't some nebulous thing," Lockwood said.
For the past two and a half years, taking part Tech Data's Momentum program, the VAR has repeatedly invested with Tech Data and Cisco, and the partner's business -- selling primarily Cisco systems -- has exploded with 100% year-over-year growth, according to Lockwood. Development Group's revenue grew from $2.1 million when the company was founded in 2009 to more than $22 million expected for 2014.
The Cisco partner also moved up into Tech Data's Charge community, an invitation-only program for highly engaged partners wanting to further expand their Cisco practice.
It was about three years ago that Tech Data beefed up its enablement strategy to help partners set up a Cisco practice by evaluating a partner's existing skills and demand generation ability and to lay out a customized roadmap for success, according to Angela Beltz, vice president of the Cisco solutions group at Tech Data.
Partners with ties to the Momentum program grow at double the rate of partners that don't participate in the program, she said. "We've completed about 3,000 account plans in three years with partners, and about 600 of those partners are highly engaged in the program, which is dynamic and evolves with their business," Beltz said.
Lockwood would like to believe that Development Group would have achieved the level of success it current enjoys even without Momentum. However, looking back he realizes how naïve he and his business partner were starting a business with technical experience and sales know-how but no business acumen.
"I can say with certainty that working with Tech Data absolutely helped us to avoid missteps, pitfalls and mistakes that we would have inevitably made due to our lack of experience," he said.
Cisco's Sage noted four programs that it runs in conjunction with its top four distributors in the U.S. that it wants Cisco partners to know about: Avnet's Propel partner program, Comstor's EDGE; Ingram Micro's Fly Higher partner program; and Tech Data's Cisco Momentum.
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