Newsletter Home > Cisco Partner Summit Special Edition

• Cisco Hosts Partners in Boston
• On The Other Hand - Presence vs. Telepresence

UCS Channel Program | Managed Services | Financial | TelePresence | VIP

Cisco Systems hosted its annual Worldwide Partner Summit during the first week of June. Approximately 1,400 partners attended the three day event in Boston to get a first hand view of forthcoming changes to the channel program as well as other major strategic adjustments. In the aftermath of the company's Unified Computing System (UCS) announcement, there were plenty of questions and concerns floating among the attendees, especially since Cisco's push into the server market lands it squarely at-odds with HP, a former technology ally of Cisco.

"Expect us to get a little bit edgier about the competition," warned executive vice president Rob Lloyd. "We've been taking too many punches in the competitive landscape and not punching back. We'll help you with the proposition on why we're better than Procurve" [the networking division of HP].

It has been several years since Cisco faced such formidable competition, and the company clearly intends to amp up its rhetoric, especially in the wake of comments made by HP and Microsoft executives during a keynote speech at Interop last month that clearly signaled a higher level of competition than the two companies had previously shared.

Cisco is targeting three multi-billion dollar architectural plays: Collaboration, which is estimated by Cisco as a $34 billion market opportunity will be largely addressed through the company's unified communications, telepresence, and contact center offerings. Virtualization & data center incorporates the Unified Computing System (UCS) products plus storage and represents a market opportunity of about $20 billion, according to Cisco.

"Virtualization is one of the richest opportunities I've seen in a long time," said Mark Hilz, president of INX, Inc., a Gold partner in the Dallas suburbs.. "It's an enormous transformation in the data center."

The third targeted architectural play is based on something Cisco calls, "the borderless network; described as a $40 billion opportunity around access to the same depth of information/data anywhere, whether that be in the office, in the home, or in the coffee shop down the street. This architecture is largely, though not exclusively, based on wireless and remote connectivity. Other key inflection points identified at the Summit include cloud computing, video, and security.

UCS Channel Program
Cisco used Partner Summit 2009 as a platform to launch new products for its UCS family, channel program enhancements to support UCS sales, and new certifications for data center management. The product piece, which has been covered at length in the trade press and throughout the Blogosphere, involves the new C-Series rack mount servers which are scheduled to become available by the end of 2009. Cisco has been quite busy on the data center front, releasing six significant data center roll-outs over the last 18 months.

From a channel standpoint, Cisco's UCS efforts have been exclusively focused on partners with experience in networking, storage, virtualization, and servers; areas which many of their legacy networking partners can already bring to the table. To that end, Cisco is launching an Authorized Partner Program for the C-Series products. Partners with server experience who also hold Data Center Network Infrastructure (DCNI) specializations will be eligible to participate.

Cisco also announced the establishment of a new Data Center Channel Solutions Program, designed to test and validate reference solution designs that incorporate offerings from other vendors, including EMC, Microsoft, NetApp, Red Hat, and VMware.

Cisco's Value Incentive Program (VIP) has also been adjusted to provide incentives for the sale of the data center products, as well as for storage.

In terms of channel certification at the individual career level, Cisco has established two new certifications: The Data Center Architect and a Data Center Engineer, the curriculum for which will be a combination of online and classroom-based training. Both will become available in August.

Managed Services
As managed services help to move IT from capital expenditures to operating expenditures with higher margins, Cisco is also rolling out a revised program to support the MSP business model, effective August 31st.

"Less than 10% of the partners are using the [current] managed service channel program, explained senior vice president Keith Goodwin. "Barriers to entry are too high, and it has been difficult to work with, and difficult to make money. So this programs is being revamped. There will be no pre-submitted bill of materials, all products will be eligible, and it will no longer necessary to have a full NOC."

The related training track will also include a Master of Managed Services with deep expertise in network operations centers and related architecture.

Financial
As part of its own economic stimulus package for the channel, Cisco Capital extended partner financing terms from 60 days to 90 days on all terms for a six month period that began June 1st and runs through the end of November. "We were looking at what we could do to help partners through the downturn," said Maryann von Seggern, director of Cisco Capital. "This helps to provide partners with the working capital they need to get through these difficult economic times." She added that recent research shows that the use of financing in the sale of Cisco products increases the average deal size by 30%, thereby increasing the effects of the planned stimulus. Nonetheless, only 10% of the partners were actively offering it to their customers, according to the same research.

In an announcement separate from the extended credit terms, senior vice president Keith Goodwin also told the audience that Cisco will adopt "Channel Booking Neutrality" in Q2 of Fiscal 2010. This means that Cisco sales personnel will have their revenue recognized at the same time, regardless of whether the contract comes through distributors or through direct channels. Goodwin explained that this adjustment will eliminate the unintended incentive for Cisco sales people to send contracts towards DVARs in order to shorten the sales cycle and hopefully get the contract in place before the close of the quarter.

Cisco meanwhile continues its Core Accelerator Program, providing 15% rebates on switches and 5% on routers. A limited lifetime warranty has also been put into place.

TelePresence
While Cisco's TelePresence product line started out as a primarily direct sales play, this impressive technology for virtual meetings has begun moving into the channel through a special invitation-only program that currently has approximately 80 participating partners.

With a sufficient number of installs to develop repeatable processes, Cisco now wishes to expand the number of participating partners. They are particularly looking for channels who can sell the single-screen units with a list price of $84K, as opposed to the triple screen version priced at $299K. (both prices are exclusive of carrier fees). The current emphasis is on U.S. sales with a worldwide initiative kicking off next year.

"Sales are usually from the top down," explained Cisco marketing director Erica Schroeder. "CEOs experience it and recognize its potential. Then it's a matter of showing the ROI and figuring out where to put the units."

Mark Hilz of INX is one of the early adopters within the channel. He agreed with the importance of selling Telepresence to highly-ranked executives in the client organization. "It's a more intimate way of meeting people than on the telephone," he said. "It improves communications and leads to more people having face to face meetings, using this technology. Above that, it reduces wear and tear on executives by reducing the need to travel."

On a different level, it is fair to question how well TelePresence, or any other electronic medium can match the business value of face-to-face meetings. Some power users contend that TelePresence is, in fact, an adequate substitute for getting on an airplane, saying that they quickly lose track of whether earlier meetings were in-person or digital. Others say that while TelePresence does have an important place, certain business customs cannot be so easily digitized.

"It doesn't really eliminate flights outright, but it does reduce the number," said Don Bialik, CEO of Long View, a Calgary-based Gold partner. In the past, a major deal might have taken six airline flights from start-to-finish. But now you can do it in two. You still have to go have dinner with the customer and spend time getting to know them, but some of the trips can be replaced with TelePresence."

VIP
A number of changes to the Value Incentive Program (VIP) were also announced. The program, which for several years has provided partners with rebates on the sale of specified products, is now moving away from its focus on advanced technologies (UC, security, etc.) and will now begin to provide incentives to partners focusing on architectural plays being driven by Cisco. Over time, those architectures will include collaboration (UC, Telepresence, contact center), virtualization (data center, storage, UCS), and the "borderless network", as defined above.

In addition, routing and switching products will also be moved into the VIP program, which has paid partners an estimated $2.5 billion since the inception of the program.

On The Other Hand - Presence vs. Telepresence

 By: Ken Presti

While this year's Cisco Partner summit had no shortage of news and information, I was probably most intrigued by increased channel involvement in Telepresence; a leading indicator that this way-cool technology is at least approaching the chasm. But my questions went beyond the ability to conduct life-like meetings from multiple locations worldwide, and beyond the implications to the channel partners and the incentives and programs that support them. Because the thing I really want to know is how much business life as we know it today will change, pending widespread deployment of these systems.

It's long been my experience that, despite the necessary investment in money and time, there is no substitute for being there in the physical sense. I've often been able to get by using the telephone, but there's a huge difference between that voice call and standing there face-to-face with your client.

Will Telepresence become an adequate replacement for physical presence? Opinions vary widely. As someone who has used that technology maybe a dozen times, I believe the two are not quite the same. I thought about somebody that I've met personally and on Telepresence multiple times. I then asked myself, "When you meet with this person on TelePresence, do you feel like you've actually seen her?" Just as if we were sitting face-to-face, we'll spend the first few minutes getting caught up on her kids and whether my beagle is fully house-trained yet. But the bottom line is, no, I don't feel like I've seen her. It feels to me like I've experienced her through the video link that TelePresence ultimately is.

Power users tend to disagree. They tell me they lose track of whether their meetings took place in the same room or over the wire. One even recounted a time when she caught a glimpse of a colleague on the screen, mentally registered him as physically present, and then showed up at his office later that day, unaware that he was a thousand miles away. So maybe the line becomes blurred over time.

I do agree that Telepresence will become increasingly prevalent as time goes on. Using it can save time and air fare, and in some cases, people will be able to get by well enough without being there – especially in circumstances where all of the participants are virtual. But in situations where some people are virtual and other people are physically present, those individuals who are merely electronically present will be at a disadvantage. And this is especially true at larger events where a sufficient number of people are physically present, and thus able to better engage in the other contexts of business communication; informal time walking through the hall, shared meals, etc.

I think Don Bialik of Longview Systems, a Gold partner in Canada, hit the nail on the head when he said that Telepresence does not eliminate the need to travel; it eliminates the need to travel quite so often. "At some point," he said, "you still need to go have dinner with your customers and find out who they are as people.

This new technology will find its way. Like many new developments, it will be strenuously used by its most avid proponents, at both the vendor and customer level. These people will then become the first to discover its inherent limitations, as well as its benefits. During the interim, I would no doubt reduce my travel budget, yet leave much of it intact.

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