August 25, 2004

When it comes to selling Cisco Systems' networking equipment, nothing is more important than its channel partners. Cisco has spent 20 years cultivating its network of value-added resellers, systems integrators and other independent companies that not only sell Cisco communications equipment but, more importantly, provide a vital link to the organizations and businesses that use Cisco's equipment to run their communications networks. Given the crucial role channel partners play in Cisco's supply chain, the company places the utmost importance on making sure channel partners succeed while providing the industry's finest networking services. Thanks to such commitment, Cisco's channel partner program has been recognized as one of the most progressive in the technology industry.

But building and maintaining relationships with thousands of highly qualified technology companies is no easy task. At Cisco, Paul Mountford, senior vice president of Worldwide Channels, oversees relations with the company's channel partners and works diligently to keep Cisco's supply chain healthy and its customers satisfied. News@Cisco recently spoke with Mountford about Cisco's channel partners and how the company ensures the well being of its extended sales force.

Who are Cisco's channel partners?

Paul Mountford: They are independent companies that sell our products. They fit into about six categories, such as value-added resellers or VARs, systems integrators, solution providers, distributors, service providers, and technology integrators. They cover the gamut of customers for us in terms of geography, customer size, and market categories. Some provide very detailed services, such as consultation and architecture while others simply resell our products to customers. All serve a vital role in our supply chain and employ different business models, which is what makes cultivating channel partner relationships a science as well as an art.

How important are channel partners to Cisco's success?

Paul Mountford: Cisco's channel partners are the life-blood of our sales channel. They account for roughly 90 percent of all our sales. They are particularly important for selling our products to small, mid-sized and larger regional companies, and they are especially important in our sales regions abroad, including Europe and Asia. Our channel partners bring a combination of technology and business expertise to our mutual customers. They are well positioned to use our products to offer services that meet our mutual customers' business needs. They offer horizontal market expertise, such as for networking security, and they provide vertical market expertise for such categories as financial services, government, and retail, among many others. Thanks to our certification processes, our customers can be confident our channel partners have the skills and experiences required to effectively implement our products. We have over 2,700 Gold, Silver and Premier channel partners with more than 20,000 channel partners who serve smaller businesses. With such an extensive and highly qualified sales force to aid us, Cisco can focus on what it does best: making quality networking hardware. With such capable partners, we are freed to put our resources into research and development rather than maintaining a massive in-house sales organization. In other words, our channel partners help us increase our productivity. It wasn't easy building our network of channel partners—we've been at it for twenty years—but we find they are the best way for us to reach our customers and give them the industry's best customer service.

How does Cisco help its channel partners?

Paul Mountford: Our goal is to help our channel partners succeed. It's that simple. As you can tell by the numbers, our channel partners are crucial to our success. So we have great incentive to help them as much as possible. They are our main conduits to our customers. As with our customers, we place an emphasis on listening to our partners and staying in tune to what they need. And by doing that we not only learn their needs but they continually teach us about the companies that use our products. Besides informal day-to-day communications, we run more formal events to meet with our channel partners and share ideas. These events include the Cisco Executive Exchanges, which are bi-annual, two-day events that serve as brainstorming sessions with our top channel partners in the United States. Our annual Partner Summit brings together more than 2,000 top-level executives from our global channel partner community to share ideas about how Cisco can be a better partner. And our Commercial Advisory Board is made up of channel partners that advise us on how we can better address our small and medium-sized business customers. We take pride in being selected as having the best channel partner program in the industry by both VARBusiness and CRN magazines. That tells us we are doing the right things to help our channel partners. But it is an ongoing process that requires constant focus. Our commitment to our channel partners is part of our company DNA. Channel partners have been a huge part of our company success and always will be.

What are some examples of the type of channel partner programs you have implemented recently?

Paul Mountford: In light of the downturn in the communications industry in 2001, we have taken many steps over the last couple of years to help our channel partners become more profitable. After the bubble burst, it became clear that our channel partners could not survive just by reselling our products. At the same time, new technologies such as security, IP telephony, wireless and storage were coming along that required more expertise. Success for our channel partners is now about value not volume. To help our channel partners bring value to our customers, we initiated several programs. First is the aptly named Value Incentive Program, which provides financial bonuses and support to our channel partners who build expertise in "advanced technologies," such as security or IP telephony. We also launched the development of a Solutions Incentive Program, which will reward our channel partners for building their businesses around holistic technology "solutions" rather than just product sales. We also started the Opportunity Incentive Program, which grants benefits to channel partners who generate new customer leads. And we have launched the SMB Select Partner program. It identifies and rewards Cisco channel partners that focus on selling to small and medium-sized businesses. In addition, we've further developed education programs to help our channel partners improve their skills and knowledge. For example, our Partner E-Learning Connection program has provided over $877 million in training to channel partners. Other support services, such as our Partner View Web site, improve partner productivity by creating easier access to the info they need from Cisco to run their companies. These are the programs we are doing today. But every day we are assessing how we can better help our channel partners. Over the last 20 years they have helped us become a leading technology company, and we are looking forward to working with them for even greater mutual success over the next 20 years.