Cisco is urging its partners to partner.
Yesterday at the Cisco Partner Summit in Honolulu, the company announced the launch of the Cisco Partner Exchange, a virtual networking program that will enable resellers to find each other by technical expertise or by offering, among other factors, to collaborate on customer projects.
While collaboration in the channel is growing, and many partners say it is a necessary development, others remain wary.
"Competitive overlap discourages partners from cooperating," said Robert Keblusek, senior vice president of business development at Cisco partner Sentinel Technologies Inc. in Downers Grove, Ill. "What they're promoting is good, but it's whether they can change some of that attitude over the next couple of years. Just because Cisco says 'go partner' doesn't mean all of a sudden they'll let their guard down."
At the summit, Cisco channel chief Keith Goodwin plugged channel collaboration as a way to drive sales and contribute to the 12% to 17% growth CEO John Chambers has called for.
Noting that it's not always easy for partners to work together when they are competitors, Cisco execs said channel collaboration will, however, result in more customers with bigger deals and deeper relationships. The idea is that not every reseller has competency in all of Cisco's practice areas, and resellers can therefore help each other to fill in the gaps.
In support of the partner exchange, Cisco executives cited statistics from a self-commissioned study of 1,300 customers and 500 channel partners in 12 countries that shows the benefits of partner collaboration.
According to the study, collaboration among Cisco partners makes up 31% of channel revenue and is growing by 15% annually. Channel collaboration enables 78% of responding resellers to win larger projects, 75% to acquire new customers and 74% to increase their revenue, the study showed. In addition, 78% of the respondents reported achieving greater technical differentiation, and 66% reported improved industry-specific expertise as a result of partnering.
Collaboration is not new to partners, but as Cisco's offerings diversify it seems to be occurring more commonly even among larger partners that have many core competencies.
"We have competency in every Cisco area, and we have dedicated resources to the core technologies as well as emerging technologies, so there are few areas that we need to partner in," Keblusek said. But, for example, Sentinel would collaborate in international telepresence services, building partnerships with companies that play in the Asia-Pacific region and in Europe. For smaller companies, services like unified communications that span across technologies often require partnerships, he added.
The problem that partners face when it comes to channel collaboration is knowing who to trust with exposure to clients and how to manage these relationships.
"We set ground rules," said Tim Hebert, CEO of Cisco partner Atrion Networking Corp. in Warwick, R.I., adding that the process is about "selecting and interviewing the right partners to work with." Hebert said the company specifically looks at the way potential partners service their clients and if they function with integrity.
Hebert is the chairman of a collaborative community of businesses called 1NService, through which an "intimate group" of companies share best practices and market strategies on an ongoing basis to deliver comprehensive technology solutions. All of the businesses in that group function on similar ethics and can trust each other, Hebert said. The Cisco exchange minimally addresses this kind of trust, he said. Like eBay, Cisco will give low marks to partners that do poor work and higher marks to those who do better, but that doesn't eliminate the need for partners to go in depth and get to know each other before jumping in.
Keblusek stressed the importance of forming contractual agreements that outline profit-sharing and noncompete arrangements. "We make sure we have a legal means to protect our investment and vice versa," Keblusek said. For partners who are just learning about collaboration, he said, there might be some anxiety involved with "just jumping on board with nothing in place."
Cisco's exchange network will live on the company's Web-based virtual environment, Cisco Partner Space, that enables virtual meetings, conferences and dialogue among Cisco's more than 8,000 partners.