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Cisco to Partners: Write the Rules. Own the Game

Cisco's Keith Goodwin tells how the company's partners and customers can prosper through upcoming market transitions and a shifting partner landscape

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Keith Goodwin, Senior Vice President of Worldwide Channels

Keith Goodwin, Senior Vice President of Worldwide Channels

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April 27, 2010

What a difference a year makes.

At last year's Cisco Partner Summit, the economy was in its worst shape since the Great Depression and partners had one thing on their mind: survival. But at this year's summit, taking place April 26 – 29 in San Francisco, partners face a much more upbeat outlook.

With most of the world in a state of economic recovery, the focus again is on growth and acceleration out of the downturn, Cisco executives say. More than that, they say a constellation of market transitions is lining up in the information technology universe that represents an unparalleled opportunity for Cisco, its partners and its customers. And the networking giant has chosen a fittingly intrepid theme to match the times: "Write the Rules. Own the Game."

For a preview of Cisco Partner Summit 2010, an overview of upcoming market transitions and a snapshot of how the company intends to help its partners and customers take advantage of the opportunities ahead, News@Cisco spoke with Keith Goodwin, senior vice president of Cisco's worldwide partner organization.

What is the significance of the summit theme, "Write the Rules. Own the Game"?

Keith Goodwin: It's a theme I personally chose. Initially, it stirred a little controversy. My leadership team was concerned it might come across as arrogant, but for me the intent is boldness. The theme is really "Write the rules. Own the game" with our partners. It speaks to the opportunity we have with our partners to lead several very significant market transitions. More precisely, it's about writing new rules for these market transitions, and owning the game by competing under these new rules, not the existing rules of the market.

Let me give an example. When we entered the voice world a few years ago, a lot of people were skeptical of our chances of success. But together with our partners we competed in that space not by playing under the existing rules of the voice marketplace, but by writing new rules associated with unified communications and ultimately collaboration. With the help of our partners, we are now No.1 in that space. It's a great example of not looking at these market transitions under existing rules but rather rewriting the rules.

What are these market transitions you're referring to?

Keith Goodwin: I've been around the information technology and communications industry for more than 30 years so I've seen a lot of significant changes, but never have I seen target="_blank"four significant transitions like we're experiencing today, all happening at the same time. They are collaboration, video, the virtualized data center and cloud-based services.

Collaboration is about using collaboration technologies (e.g., unified communications and WebEx) to drive productivity. It's a $34 billion market opportunity that we want to help our partners capitalize on. We identified collaboration as the next wave at Partner Summit three years ago. At that time, it was more inspirational. We didn't have the products to back it up then, but we do now. Last November alone, we introduced 61 new collaboration products.


Channel Fast Facts

  • At Cisco, more than 80 percent of revenue (products and services) flows through the channel … nearly $28 billion in FY09.
  • More than 280,000 partner employees around the world are dedicated to selling, deploying, and supporting Cisco technology (a 16:1 multiplier).
  • Cisco has over 60,000 channel partners around the world: ~12,000 Certified and ~48,000 Registered partners.
  • Since 2003 we have paid out more than $3B in VIP to partners.

The second transition is video. You can't really talk about collaboration these days without talking about video. It's a huge market within the collaboration space, but then there's also video in terms of digital media, video in terms of physical security and so on. We've been saying for years that video is the next killer app, and our partners get that. They see the market opportunity, and many of our existing partners are already Tandberg partners. They are really excited about the breadth that Tandberg will bring to our video portfolio.

In addition – and this is important to remember – video makes the deal bigger. Any time you're selling video to a customer, the deal gets bigger for the partner because the customer will need routing and switching in order to grow the network to support the video applications. So the partners see this great opportunity even if they're not directly selling video.

The third transition is data center and virtualization, or the virtualized data center. This is, again, a huge market opportunity for Cisco and in my mind it's the one that's most analogous to what we did in voice. Just as we rewrote the rules in the voice market to talk about unified communications, this is not about competing in the traditional data center space. It's not about selling servers. This is about writing the rules for the future virtualized data center. We're going to do that together with our partners, many of which have been selling into the data center for years with other vendors. They're really excited about our data center architecture with the Unified Computing System, and they've invested significantly over the last year and a half in training their people and getting ready for this opportunity.

"Even though we're the leader, we're not going to stay the leader by continuing to compete under today's rules. We're going to rewrite those rules with our partners."

— Keith Goodwin, senior vice president, Cisco Worldwide Partner Organization

The fourth transition is all about the cloud and cloud-based services, which are really built on the virtualized data center and the network. The partners are already seeing the demand from their customers for services emanating from the cloud. There's clearly the short-term opportunity for us together with our partners to build a private cloud for our customers, and we ultimately think the demand will be for a kind of hybrid model. But it's really the services that come from the cloud that represent the longer-term opportunity for our partners. To take advantage of that opportunity, partners will have to build their services practices, expanding from selling basic support services to advanced consulting services to managed services and ultimately applications and "X as a service." However, this service model represents dramatic new business models as well, so we'll be talking to our partners about those implications.

Those are the four major transitions, and at the center of all these is what we call the "borderless network."

Please elaborate on the partner opportunity represented by borderless networks?

Keith Goodwin: Over the years, together with our partners, we've written the rules for networking with routing and switching, and eventually the convergence over Internet protocol (IP). Now it's time to rewrite those rules because, even though we're the leader, we're not going to stay the leader by continuing to compete under today's rules. We're going to rewrite those rules around the borderless network. I recently traded my old cell phone for an iPhone, and the ability to participate in a Cisco WebEx meeting at the push of a button or to get my forecast in real time on the go is really what the borderless network is all about – being able to access any content anywhere, at any time. The business benefits are huge.

The borderless network is what really differentiates our view of these four market transitions. There are others who will be competing around these transitions, but our vision of how the transitions will play out has the network at the center of it all. It's a network-centric vision. And our partners are in the perfect position with us to make the vision a reality by leading these market transitions, because they've been on the network-centric journey with us and helped us to build the network as the platform over the years.

How is Cisco helping partners take advantage of these market transitions?

Keith Goodwin: Each one of these transitions represents a multibillion-dollar opportunity for Cisco and our partners. But beyond that, our focus is to deliver business value around these transitions. In other words, it's about connecting the technology to business processes and business transformation. One of the linchpins there is architectures, so as we go to market around these transitions we will take an architectural approach. That is, we'll focus on enabling the partners to position the Cisco architectures associated with the market transitions, and then connect them to business process and business transformation that delivers value to the customers. We will focus our partners' specializations and certifications, as well as our own marketing programs, not on technologies but on these architectures.

What about customers? How is Cisco helping them take advantage of these market transitions?

Keith Goodwin: At the end of the day, for Cisco and our partners to realize our goal of accelerating our growth together in the marketplace and rewriting the rules for these market transitions, it's about delivering value to the customers. That's why it's so critically important for us to be able to relate what we're doing to the business issue we're trying to address. That could be enabling a customer to cut costs by acquiring a capability as a service versus doing it in-house, which the cloud vision implies, or it could be using collaboration to touch customers in a new way to increase top-line growth. Delivering value to customers is what ultimately will allow us to take advantage of the opportunity while also differentiating us from our competitors.

In its 25-year history, Cisco has had many successful partnerships. How do you see the partner game changing today?

Keith Goodwin: That's a really relevant question because the partner environment of the future will be different from that of today, as will the successful partner business model. Partners are going to have to evolve. New business models will be required as we realize some of these market transitions. For example, as partners build cloud-based services or take cloud-based services to market, these services have a different business model than product. For the partners, it's not just about how they grow top line, but how they make money delivering services to customers. Or if a typical partner's mix today is 70 percent hardware and 30 percent software and services, what happens when that mix splits in the future? What are the implications to their business model?

These are major concerns for partners. One of them captured it well at a recent partner forum where we talked about the implications of cloud-based services. He said his customers were ready to get these services from him and that he knew he needed to deliver, but that it scared the heck out of him. His comment resonated with all the partners in the room because they're all fearful about not just embracing the opportunities but about figuring out how to make money on them.

So one of the things we have to do with our partners is separate a bit of the hype from the reality and look at this over time. We're going to try to articulate what the short-term opportunities are for the partners so that they can invest and take advantage of those, but also talk with them about how we think it's going to play out over the long term. One of the things that's critical in these market transitions is timing. You don't want to be behind a transition, because then you lose the opportunity to get the acceleration you can get from it. But you don't want to be too far in front of it either because if you put the investment out there and you can't get a return on it, then there are significant negative consequences, especially if you're a smaller partner.

Part of our role as a trusted advisor to the partners is to help them think through that transition, getting them to invest, learn and experience, and helping them to transform over time. There's a bit of a trust factor there as well, just as there was with the collaboration transition. We were out there in front of it three years ago when people still didn't get it and were wondering how social media and Web 2.0 would transfer to the business environment. We said, 'Trust us, it is going to play out.' So they did, and we led it.

 
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