Cisco Supports Channel Partners with Moves to Improve Profitability in Tough Economic Conditions
May 26, 2009
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Edison Peres, senior vice president, Go-To-Market Group, Worldwide Channels Marketing, Cisco
Maintaining profits is a tricky business for any company right now. But Cisco is aiming to make sure that its sales channel partners, at least, have as much help as possible.
Last November the company launched a series of measures designed to make it easier for the channel to increase sales and preserve margins, recognizing that partner organizations are weathering an economic storm which is putting pressure on profits and cash flow.
"We know our partners around the world are dealing with a tough economic environment and so we put a plan in place to meet the challenge head on," says Edison Peres, senior vice president, Worldwide Channels Go-To-Market Group at Cisco.
"'Navigate to Accelerate' covers four main areas that Cisco and its partners must address together: finance, the customer base, changing needs and the future. So what has been achieved over the last six months?
Financial support
On finance, arguably the most critical area as partners face tightening credit conditions, Cisco Capital has stepped in to provide a raft of new incentives and offers.
These include, for example, 90 days payment terms for Cisco Select Partners and three-month payment deferrals for customers in the United States and Canada. In Europe, partners that use Cisco Capital as part of their transaction get two percent of the funding value back as a rebate.
Partners are also being given training on how to sell financing as part of their offering to customers, with a WebEx-based training course called Changing the Conversation.
The moves are all designed to help take advantage of a predicted upswing in demand for IT leasing and financing.
IDC believes cautious finance officers will use financing and leasing to shift IT spending from their capital to operational expenditure budgets, and forecasts the global market for such products could reach USD$125.8 billion in 2011.
"We know our partners around the world are dealing with a tough economic environment and so we put a plan in place to meet the challenge head on."
In addition, Cisco is making things easier for partners by waiving the need for an annual Gold, Silver or Master accreditation audit in the 30 percent of cases where there have been no material changes in the partner's status.
Focusing on the customer base
"In these challenging economic times it makes sense to focus on servicing existing customers rather than prospecting for new ones," says Peres.
"With this in mind, Cisco is working hard to see if we can work with customers to replace some of the $23 billion in installed routing and switching equipment over five years old."
Cisco has just launched a global incentive program that will double or triple the margins a partner will make on core routing and switching technologies when they unearth a new opportunity.
In addition, Cisco is funding partners to do network assessments to identify the obsolete equipment in customer networks.
In Europe there is an initiative called Installed Base Lifecycle Management, which involves reviewing customer sales records to pinpoint those customers where support may be running out on old equipment.
Changing customer needs
Beyond the obvious and pressing areas of finance and customers, however, Cisco is also committed to helping the channel in a more long-term way, with increasing support for new ways of doing business.
Says Peres: "Partners are adapting to new consumption models, selling cost reduction and promoting productivity gains. Cisco is supporting this through the provision of managed services, WebEx and other software-as-a-service models, and collaboration solutions."
As part of this push, Cisco has introduced special training courses to help with managed services sales and deal with purchase objections from chief information officers, plus a new certification, that of WebEx Authorized Partner.
Partners are also being trained to implement 'five strategies for thriving in dynamic times', including, for example, saving to invest, unlocking employee potential, and getting closer to major customers.
And incentives under the Cisco Trade-in Accelerator Program have gone up 50 percent in Europe and Emerging Markets.
Looking ahead
Finally, and notwithstanding current economic uncertainty, Cisco is continuing to invest in the future for the channel, Peres says. "Talent is still an important area for us in the IT world.
"Partners need to make strategic investments in business solutions and in aligning with other partners. Cisco is supporting this through talent development and technology practices.
"There are a number of new technology opportunities in areas such as video and we want to help accelerate sales there, through things like the Cisco Industry Solutions Partner Network and peer-to-peer collaboration."
Underpinning all this is a belief that it is essential for the channel to maintain its focus on medium and long-term development, even in the midst of a downturn. "We are experiencing some challenging economic times," Peres admits.
"But it is important not just to shut your eyes and brace for the storm, but to focus on the future. If we can help our partners navigate the current economic storm while preparing them for an upturn, we are confident that together we will emerge even stronger."
Jason Deign is a freelance journalist located in Barcelona, Spain.
