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Cisco to offer managed-services certifications and incentives starting in Q2 2007

Cisco plans major additions to its channel programs next year, with special certifications and incentives for managed services and outsourcing providers; will provide backend services VARs can private-label and resell.

Cisco Systems Inc. will launch two new major categories of partner certification next year as part of its ongoing effort to prod channel companies into markets it believes are growing, and make sure they're able to deliver the most sophisticated (and profitable) technology to those markets.

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The two new certifications -- one for partners that can provide managed services and the other for outsourcing providers -- are designed to help differentiate Cisco partners who have invested in the training and technology required to deliver high-quality networking services in specific markets, according to Surinder Brar, senior director of worldwide channels for Cisco.

The managed-service and outsourcing certifications -- likely branded as Cisco Certified Managed Services or something similar -- will come with a specific set of training and facilities requirements, and incentives to make the training and service-level requirements worthwhile, Brar said.

Those brands won't be exclusive, however. A Gold partner can certify as a Managed Services partner as well as holding a Master certification in unified communications, security or any of the other skills Cisco uses its channel incentives to promote.

"The incentives will be stackable, just as with our existing programs," Brar said. "If you're a partner selling product your margins will be low; as you get more specialized you get a better rebate in your technical area, including services."

The certifications and the support programs that surround them are designed to help partners develop the expertise, equipment and resources to provide network monitoring and other specific managed services as well as wholesale outsourcing services, Brar said.

The company announced its intention to create the new categories at its partner summit conference earlier this year, but has yet to announce any details, though it is already pilot-testing the programs with several partners.

In Phase I of the program, which is due to launch in March or April of 2007, Cisco will certify companies that can provide their own network operations centers (NOCs) and other infrastructure. But as time goes on, Cisco will make more of its own facilities and services available to certified services providers, Brar said.

Most contracts will be a mix of services, Brar said -- some provided exclusively by the partner, some by Cisco in conjunction with the partner and some exclusively by Cisco but resold by the partner.

Cisco may, for example, use its own NOCs and other facilities to provide services that VARs can white-label and resell.

"We've been trying to figure out managed services and have been blazing a trail in the Chicago area in the SMB space," according to Matt Briggs, director of sales for Single Path, a voice-over-IP/Unified Communications specialist Cisco named its Midwestern Regional SMB Partner of the Year for 2006. "SmartNet was a start on that," Briggs said of the existing onsite-maintenance and repair service that Cisco supplies and VARs resell

"We don't know if managed services through a NOC -- monitoring the net down to the IP endpoint 24-hours a day -- will be very sticky in the SMB space. But there is something in between that and SmartNet, where there's a Cisco service around SmartNet that we could private-label, that would save a lot of heartache in developing it," Briggs said.

There would be relatively little value in a service that Cisco provides and the only contribution of the VAR is to resell it, however, according to Riordan Maynard, CEO of TouchBase, an integrator that specializes in VoIP implementation for mid-size multinational companies in more than 75 countries.

"We would engage Cisco services on some of our accounts," Maynard said. "In some markets it would work very well, but we like to provide most of the services and the value ourselves. If you're just doing the sales or the fulfillment for someone else, that's not a business we're interested in. The value is in providing the service yourself."

The managed-services market is growing at close to 40% per year, according to a survey of 2,500 end-user companies that Cisco commissioned from Ovum Research Inc., which cited virtual private networking, Voice over IP, security and Metro Ethernet as the fastest-growing networking functions in the managed-services market.

Those functions match closely with the advanced technologies Cisco CEO John Chambers cited at an analyst conference last week as the companies drivers for growth over the next five to seven years.

"There is a lot of growth, and there is a lot of confusion in the marketplace over what is a managed service and what is outsourced," Brar said. Managed services -- in which a provider maintains a monitoring or other network service within its own infrastructure and makes that function available across the Internet to customers -- will primarily appeal to small- and medium-sized business (SMB) customers, Brar said.

Outsourcing -- in which a service provider takes over all the staff and equipment of a customer, takes those assets off the customer's books and provides a broad range of IT services in return -- appeals mainly to enterprise customers, Brar said.

Managed services will probably amount to no more than 10% to 15% of Cisco's overall revenue by that time, Brar said, while outsourcing will likely contribute less than 5%.

But both levels of service require sophisticated network operations centers, skill sets and facilities, however, and no existing certification exists that Cisco execs considered adequate to prove a provider's abilities to customers, Brar said.

Many Cisco partners are already providing managed or outsourced services, but the certifications will provide a standard set of requirements for specific technologies that customers can use to identify good potential partners.

The services certifications are the first major additions to Cisco's channel-certification programs since the last major revamp in 2001, Brar said. The introduction of Master certifications was a refinement of existing programs designed to give Gold partner-level discounts and financial incentives to partners who developed particular specialties but weren't able to provide the breadth of expertise required of a Gold partner, he said.

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