How Cisco measures partner ‘value’, subjective in theory but customer-driven in practice
- 02 February, 2021 14:15
Oliver Tuszik (Cisco)
Often evangelised at channel conferences and endlessly referenced in partner communications, the importance of delivering ‘value’ at a customer level is not lost on an ecosystem continually required to evolve and transform.
But while the statement checks out in theory - a straightforward linkage between value and success on paper - the practice has always plagued vendors intent on walking the channel tightrope. One thing to demand value-based selling, another entirely to enforce or incentivise.
Traditionally, revenue has acted as the benchmark of success and the difference between metal plates, provider tiers and programmatic benefits. Yet as the market emerges post-pandemic, plans to measure partners based on value is picking up pace.
Whether Microsoft, VMware, HP or Amazon Web Services (AWS) - among many others - vendors are drawing up blueprints for partner advancement in the months and years ahead, anchored around customer value and success.
Often referenced as a gold standard for channel engagement, Cisco is no different amid plans to tackle an ideology that appears simple in practice, but subjective - and therefore potentially ambiguous - in theory.
“Value is defined by the customer,” outlined Oliver Tuszik, senior vice president of Global Partner Organisation at Cisco. “Partners must be relevant to be profitable because if they don’t generate value, they will not win with the customer and by the way, they will not win with Cisco.”
In a direct message to the ecosystem, Tuszik acknowledged that the vendor can find any partner to sell hardware and software offerings without challenge, the difficulty lies in aligning with providers capable of delivering enhanced experience levels during the entire customer lifecycle.
Or perhaps ensuring a global solution can be converted and consumed in local markets such as Indonesia, Australia or Japan, with a specific focus on as-a-service models.
Such high-level market philosophy provides the foundation for significant change at the technology giant, amid plans to consolidate more than a dozen separate partner programs into one single program during the next 12-18 months, forming part of a channel overhaul designed to simplify go-to-market engagement.
“If you’re a partner that isn’t a classic Cisco reseller but adding value, we’re trying to find a way to support you and bonus these types of companies,” explained Tuszik, when speaking to Channel Asia. “We’re trying to align and shift budgets into specific programs but we’ve also been doing this during the past three years in terms of assessing lifecycle incentives for managed services and ecosystem partners, for example.”
Unveiled during Partner Summit Digital in October 2020, the initiative - under the banner of New Cisco Partner Program - will provide opportunity for partners to differentiate across multiple areas of the vendor’s portfolio, from resell to managed services, as well as developer and advisory practices.
Representing the “biggest changes in over a decade”, the modernisation efforts are anchored around four key partner roles; Integrator, Provider, Developer and Advisor.
“Cisco is doing one thing differently to other vendors,” Tuszik added. “Because what you didn’t hear me say was, ‘here’s the final program, you will receive a letter, sign by tonight and you can migrate’. We have a clear understanding of what we want to achieve and a clear understanding of what value means and the partners we want to on-board. This migration process is not yet completed and will roll out during the next 12-18 months.”
Delving deeper, partners will be able to select one role - or all four - depending on specialisation levels and market priorities, shaped by Gold, Premier and Select ranking tiers. Crucially however, current Cisco partners “will not be asked to start over” upon launch of the new program, with the framework designed to reflect current ecosystem expertise.
“If you’re a Gold partner today, you’ll be a Gold partner in the future,” Tuszik confirmed. “We will keep the Gold partner standard which we have for system integrators and value-added resellers, these partners are not box shifters, they are strong companies with deep project integration capabilities.”
Going forward, plans are also in place to work with Gold partners housing managed services expertise to help create “highly standardised and scalable” offerings built on the Cisco portfolio. This will also include the rolling out of flexible consumption models and a shift away from measuring based on product bookings, rather lifecycle value, recurring revenue and subscription and renewals.
“Outsourcing a long time ago in the world of IBM was a partner taking an asset and the people and managing at the status quo for the next 50 years,” said Tuszik, delivered in slight jest perhaps but aligned to a common and consistent thread.
“We want to take 10 per cent on total deal volume after one year to ensure certain use cases are implemented and that partners have upgraded certain aspects to ensure the latest versions are running. Then partners get more and increase value to the customer to drive renewals.”
On the flip side however, Tuszik acknowledged the ongoing challenge related to legacy technologies, recognising that customers continue to run old software and system releases due to the longevity of Cisco products.
“They are such good quality and run for a long time,” he accepted. “But we don’t want to stop there and say this is still running, we want to present a new option and deliver a higher level of value.
“In some cases, the value might not even be recognised as a Cisco product. If partners have a contract to manage the entire data centre infrastructure and network, depending on the size, the value is in the channel removing complexity for the end-user and ensuring products are easy to consume.
“At least 2300 solutions are currently following this type of logic in the market today - whether large or small players - and this is especially the case with Meraki, security and SD-WAN solutions delivered as-a-service.”
With the change designed to provide agility for partners serving customers in different ways, the next key focus area for Tuszik and his team - locally, regionally and globally - is centred around ensuring adequate coverage across the four core pillars of Integrator, Provider, Developer and Advisor.
“You’re asking a question that we’re asking ourselves,” added Tuszik, in response to which pillar is currently the strongest and which requires the most improvement. “It’s clear what we’re investing in the provider segment through our MSP program but we do need to change some systematic approaches which is a high priority.”
Specific to software partners, Cisco is attempting to become attractive for both small and large specialists which utilise the vendor’s programmable platforms and APIs to build customer value.
“If you take a piece of Cisco hardware and develop a solution which can be rolled out in a hospital, this hardware product is now becoming a business solution capable of creating value,” Tuszik stated. “Most Gold partners are currently doing this through software development practices and they are supported through rebates.”
But then comes the million-dollar question, how can Cisco pay partners without any Cisco bookings?
“How can you pay a partner who has had a positive influence in a deal?” he asked. “This focus started out in Asia Pacific following strong engagement with consulting companies when we realised that we didn’t have a solid operational model.
“Consultants want to be neutral but they also want to work with Cisco and currently, we need to manage at least 2-3 partners, perhaps a consultant, a software developer and a reseller. Through one deal, we need to pay three partners meaning one might get less than before.”
Tuszik was also quick to stress that such changes were not motivated by a desire to recruit consultants, rather streamline ways of working.
“We’re already working with them but it’s a manual, complex and unsatisfying approach,” he said. “We have a huge amount of special programs but we’re realising that these special programs make our model complex.
“We can’t talk about agility and speed for the future then design programs which require a PhD to navigate. Making this less complex is much more powerful because we want to become more attractive for these newer types of partners. But let’s be clear, not competitive, simply new. Our target is not to increase the type of partners in general but to increase value generated for customers.”
Given that consulting giants such as Deloitte, EY, KPMG and PwC fail to recognise the linear supply chain from which vendors, distributors and resellers operate and originate, it’s no surprise that Cisco is charting a new path to prioritise enhancing engagement levels. Because after all, the accounting giants - and many other new-breed type partners - control the customer conversation in vast areas of the market.
“This is exactly the reason why we’re separating this,” Tuszik said. “What is great for a system integrator completely doesn’t work for a consultant. But look, and this is a very important element, we have created a model for 25 years which has without doubt been the gold standard for the industry and we don’t change that overnight.
“Partners might find a vendor with a higher rebate or spiff during the next quarter but we are reliable and the channel knows that when they invest in Cisco, it’s a safe bet. We need to find the right speed to protect what we have but on the other side, ramp up certain capabilities very fast.”