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VARs to gain profits with new HP, Cisco channel programs

The battle between HP and Cisco heats up as these competitors change their channel strategies for 2012. The models differ, but both partners should gain profits.

HP and Cisco partners should have a more lucrative year now that these competitive companies have strengthened their channel partner programs.

Hewlett-Packard (HP) announced changes to its networking channel partner program in December that provides VARs with higher margins on hardware and fast-track certification options for networking engineers.

Days after HP announced its changes Cisco Systems launched a new “Service Rules of Engagement” plan that promises to help VARs. It also provides opportunities on the service side with its Partner Led strategy -- taking direct aim at HP’s army of in-house service staff.

It remains to be seen which strategy succeeds in the channel and how the new models play out in the customer environment, but VARs on both sides express optimism about the new policies.

HP strengthens channel incentives, training options
The 2012 HP PartnerOne changes target Cisco with an extension and expansion of the Catalyst for Change trade-in program, which gives partners 20% off of list prices for networking equipment and upgrades. This program has proved successful for VARs.

“Over the last two years, we have closed at least 100 incremental HP networking customer deals where we have swapped out competitive gear,” said Marc Sarazin, a representative with AdvizeX Technologies LLC, an IT service company based in Independence, Ohio.

The 2012 Catalyst for Change incentive also helps partners in other ways, said Carl Mazzanti, president of eMazzanti Technologies, a network solutions provider based in Hoboken, N.J.

“It may be not for nothing they want to get rid of all that old equipment just so they don’t have to do a warranty support call,” Mazzanti said. “From a partner’s perspective, it’s nice to make some extra margin in an area where normally there’s none. Not many sales guys are going to make the effort to sell a $1,000 switch to make $30.”

HP’s networking channel changes also include the partner designation of Advanced Networking Specialist, which moves some top-end partners toward greater specialization. Smaller partners selling HP networking equipment can now use the title HP Professional Specialist and gain some of the margin on the front- and back-end.

For partners, these changes translate into greater profits, according to John Convery, an executive vice president at Denali Advanced Integration in Redmond, Wash.

“The HP PartnerOne program drives behavior through compensation plans,” he said. “There is no better program to provide back-end and front-end margins.”

The HP ExpertOne program includes different elements that improve the partner certification process. One of these is the “Fast Track” certification process, which makes it easier for people who have achieved certification in competitor programs to get the same level of certification with HP.

“We heard from partners that they need training that complements their training from other vendors such as Cisco, Juniper and Cloud Foundry,” said Armughan Ahmad, HP’s vice president of Americas Channel Strategy and Alliance Sales.

The Fast Track aspect will help AdvizeX Technologies meet its growth goals in 2012. The firm plans to add six more geographies this year, Sarazin said. “It is critical as we hire these people to get them on board, leverage past certifications and get them through HP expert certifications,” he said.

Finally, HP’s Financial Service for Channel Partners program allows partners to lease new equipment for 18 months with a monthly payment of 1.5% of the total equipment cost. This allows partners to set up demos and labs to show customers the product set without having to make a big capital expenditure.

Cisco Service Rules of Engagement quells partner complaints
Cisco’s channel strategy differs from HP’s in that instead of financial incentives on the front end, the company promotes the service opportunities that it gives to partners, dubbed the Partner Led initiative. As Cisco points out in a blog post, HP asks partners to sell the HP services, whereas Cisco sees partners as an arm of its services team.

Cisco partners have criticized the company’s field teams for stepping on their territories and taking over their service opportunities. The new Cisco Service Rules of Engagement plan addresses those complaints.

“There was a tension with Cisco Partner Services and channel partners in the U.S.,” said Kent MacDonald, vice president of business development at Long View Systems, a Cisco VAR based in Canada. “Cisco Partner Services was doing higher end architecture changes and bundling it with product. The Cisco account management team needs to make sure that the partner is mentored, engaged and collaborated with rather than delivering and not have the partner at the table.”

The Rules of Engagement spell out how the Cisco field should act, how they should engage Cisco, and how the Cisco field team should engage with partners, MacDonald said.

“Now as we get up the food chain with the high-end accounts, Cisco is doing the sales lead and using the multiple partners based on the technologies being deployed,” said MacDonald.

Ultimately, the rules will help partners and Cisco collaborate and gives the partner community a chance to weigh in on the transaction with the end user, said Peter Marquis, vice president of the Cisco Practice at Black Box Network Services, a global communications systems integrator based in Lawrence, Pa.

“We are really working toward the same goal -- delivering innovative solutions with great technical support while growing market share,” Marquis said.

Let us know what you think about the story; email Leah Rosin, Site Editor, or follow us on Twitter.

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