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Newsletter Home > April, 2008
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Services, Collaboration: Key Themes of This Year's Cisco Summit
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As Cisco Systems kicks off its 12th annual Partner Summit, services and collaboration have emerged as the key watchwords.
Approximately 2,000 partners from more than 90 countries are expected to attend this year's event in Honolulu. And more than half of those attendees are C-level executives, according to Cisco.
Expect to hear a lot of details around services collaboration, as the new Smart Care program enters general availability in most geographic theaters. The program, which was initially announced at last year's summit in Las Vegas, is designed to help small and medium-sized businesses (SMBs) and mid-market customers simplify network maintenance through regular, proactive network assessments, remote software repairs and technical support.
Smart Care is based on a software client or a hardware-based network appliance that collects network performance data that is then forwarded to the contracted channel partner. That partner can then proactively address potential issues before they become emergencies, or recommend network upgrades. Partners are also encouraged to wrap their own services solutions into the equation.
The program has spent the last nine months in pilot phase with approximately 200 participating channel partners. "We've identified three key benefits," said Sherri Liebo, vice president of commercial services marketing at Cisco. "The partners are in fact wrapping their services around it and customers are willing to buy those services. Secondly they're finding a great deal more efficiency through the program. What used to require the work of engineers is now much more automated and efficient. They're also finding sales efficiency because they can do all this with one contract. They leave behind a set of challenges associated with selling services and maintenance together, and all of this is leading to greater customer loyalty. You start to see that stickiness with the end customer and this brings about increased customer loyalty."
Liebo added that 50% of the customers signed up are new customers from a Cisco services point-of-view. And 60% of the devices signed up for the service have never had services attached to them before. In 67% of the time, issues were discovered that required attention from the partner.
Prices are based on the number of Cisco devices being monitored and the types of technologies being carried by the network. The partner is then urged to add their own value proposition and adjust the end customer price accordingly.
In other news, Cisco's e-Consulting program is now being extended worldwide to channel partners who source product through distributors, after the earlier phase of the program was limited to direct VARs as part of proof-of-concept and testing.
The e-Consulting program enables partners to compare the performance of their businesses against that of generalized competitors in their region, and also receive recommendations for improvement.
In the past seven months, we've seen an average increase of 10% in the partners' services attach rate based on the recommendations that they're getting from this program," explained Raja Sundaram, director of service channels at Cisco. "We've also seen a 12% improvement on their service delivery and metrics based on such things as the RMA rate and closed cases."
Cisco is expecting to see 3,000 partners participating in the program in the not-too-distant future.
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A New Way to Manage Cisco Routers
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As Cisco finishes preparations for its 2008 Partner Summit in Hawaii, a Honolulu-based start-up is stepping forward with a new tool for configuring and managing Cisco routers.
Okay. I'm a channel guy and not a hard-core technologist like a lot of you readers out there. But I do know that time is money and efficiency is a major part of this company's pitch.
Action Packed Networks (www.actionpacked.com) spun-off this year from Referentia Systems, a military R&D company working for the Department of Defense. The company was commissioned to design an easier way to manage networks, ranging from IT to satellites and radio. The end result, according to company president Nelson Kanemoto, had commercial implications as well.
The commercial product is called "LiveAction." It's sold in a series of modules, such as QoS, and Netflow. "We call it LiveAction because it's an expert system for live networks," said Kanemoto. "You can see live flows going between routers, live flows within routers, and you can configure complex QoS policies on the fly – which is a very scary thing to do when you're using command lines."
The net effect is to substitute command line interface with GUI-based visualizations and controls. The current version of the product is designed solely around Cisco infrastructure, but Kanemoto expects to eventually add the products of other vendors.
Although Action Packed has built a standard three-level channel program, the product itself is still in evaluation stage with GA expected in early May. Starting price is under 10K for management of five devices.
The targeted market is primarily mid-to-enterprise. But it's difficult to say whether the best customer base will be found within traditional end customers, or among the channel partners who install, support, and maintain the networks. Kanemoto says they're ready for either eventuality.
"We think this is an option to be sold both to and through the channel," he said. "When selling it to the channel, it can help them with consulting services and managed services. We can improve their capabilities in designing, deploying and troubleshooting networks. For managed services, they can use this to help keep their customers' networks up. And on the sell-thru side, it's a very strong value proposition to the end users."
Nortel Wins Key Government Deal
A team led by Nortel Government Solutions has been selected to deploy one of the world's largest enterprise VoIP networks for the U.S. Social Security Administration under the 10-year, $300 million Telephone Systems Replacement Project (TSRP).
The project includes a centrally-managed contact center solution with carrier-class unified messaging and interactive voice response (IVR) capable of supporting 55,000 field office agents. The SSA also expects its new VoIP network to help consolidate monthly public network service charges, decrease operating and maintenance costs, and establish a platform for future services.
The schedule calls for replacement of existing telephone systems in 205 of the SSA's nearly 1,600 field offices in the first year and another 500 per year after that. The contract also includes network integration operation, maintenance, user support and training.
The new SSA VoIP network will feature Nortel's Communication Server 1000 switching, Media Processing Server 500 IVR, unified messaging solution with Unified Messaging 2000 core platform and CallPilot, and IP Phone 1100 Series handsets.
The Nortel Government Solutions team includes General Dynamics, Black Box Network Services, Shared Technologies, York Telecom, High Wire Networks, NetIQ, NETCOM Technologies and Pal-Tech.
Deployment was delayed pending resolution of a competing bidder protest.
Tech Data Rolls Out New Services Initiative for SMB Partners
Tech Data unveiled a new suite of IP communications services that resellers can add to their networking and telephony solutions for SMBs looking to adopt VoIP but unable to meet the infrastructure and staff costs necessary to support their own solution. The services are offered through alliances with Cbeyond Inc., Telovations Inc., and XO Communications,
The program is initially being marketed to Cisco resellers. Specific services include Cbeyond's integrated package of local and long-distance voice, high-speed Internet and mobile services suitable for the Cisco Small Business Communications System (SBCS); Telovation's offerings around managed voice solutions for all-IP Cisco networks; and XO's converged voice and data services, suitable to support Cisco's Unified Communications Manager Express.
Avaya Launches Special Financing for Unified Communications
Avaya Financial Services has announced a new program that offers special financing packages to North American SMBs purchasing Avaya MultiVantage Express, Communication Manager software on S8000-series servers, Avaya Distributed Office, and Avaya IP Office 500.
Two financing options are available: a 36-month finance lease at 2.99 percent or a 60-month FMV (fair market value) true lease at zero percent, through which customers can choose to either own the equipment or lease the equipment via monthly payments. Avaya says the terms are especially advantageous for companies who plan to keep their equipment at the end of the lease term. The promotion, which is available through Avaya certified channel partners and Avaya's direct sales force, expires June 30th and can be combined with other Avaya discount programs and promotions.
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On The Other Hand - Cisco Services: Proceed with Caution
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By: Ken Presti
Cisco Systems is embarking on major initiatives in the services space. Over the next two years, the company plans to introduce a number of changes to its services program geared towards establishing tighter alignment with the global channel program and increasing their ability to detect, analyze, and address any problems that might emerge on the network.
The word "collaboration" factors heavily into the Cisco message. But Cisco needs to proceed carefully here -- even more so than most vendors that take an active role in service delivery.
Several years ago, the Cisco channel program underwent a series of adjustments aimed at addressing collapsing channel margins caused, in part, by service providers willing to forgo product margins in order to capture recurring services revenues. This led to a Cisco focus on value as the primary underpinning for partner compensation.
Partners were told point-blank that if they did not build their businesses around a strong in-house services capability, Cisco would be unable to rescue them if their businesses faltered. In other words, there was no point in complaining about product margins. Product margins would belong to the vendor. Service margins would belong to channel partners. Services also became a primary way for Cisco channel partners to differentiate themselves against their competition.
Many of them followed Cisco's advice.
The word "collaboration" can be a lot less warm and fuzzy than it appears. On the one hand, Cisco intends to help its partners raise their services capabilities. On the other hand, no one is really sure how Cisco's collaboration will impact those profit margins that the channel built their businesses around. Undoubtedly, Cisco intends to share in the financial opportunity. To what extent remains to be seen.
Cisco executives say they have no directive to dramatically grow services revenues. But Cisco is also in a precarious position. The law of large numbers will continually make it more difficult for Cisco to maintain the growth rates demanded by Wall Street. If those numbers falter, the stock price will undoubtedly take a hit. It's also hard to imagine that the company might be able to take more cost out of a model. Budget-cutting has already reached the point where even important business travel is closely scrutinized, if not outright forbidden.
So the emphasis is on continuing to cut costs while continuing to grow. Not exactly an enviable long-term situation. Therefore, it will only be a matter of time before the channel's lunch starts looking pretty tasty. Whether Cisco will be able to resist that temptation remains an open question. Surely they recognize the channel's role in maintaining their routes to market, but desperation can do strange things to people.
It's also true that Cisco has established such strength in the networking sector that partners may consider themselves to be without real alternatives. But such a misstep by Cisco would open the door to any number of competitors seeking to take a quantum leap at the channel.
Note to Cisco: Be careful.
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