Cisco Unveils Solution Incentive Program for Channel Partners

April 4, 2005

The power of networking is through applications. And Cisco Systems wants its channel partners to make it as easy as possible for businesses and organizations to harness that power to meet their needs and solve their problems. With that in mind, this month Cisco announced the Solution Incentive Program. The Solution Incentive Program, or SIP, offers financial incentives to Cisco channel partners who sell Cisco networking equipment packaged with an application as a solution to a specific business problem. Channel partners can either create the application on their own or in collaboration with a vendor from Cisco's ecosystem of software developers. The idea is to mate the unique intelligence of the Cisco IP-based converged network infrastructure with applications designed for the specific needs of a wide-range of businesses and organizations. News@Cisco spoke with Cisco's Edison Peres, vice president of Core and Advanced Technologies for Worldwide Channels, about the new Solution Incentive Program and how it will help bring Cisco's channel partners greater profits while increasing the value of IP networking for businesses and organizations.

What is the Solution Incentive Program?

Edison Peres: Cisco designed the Solution Incentive Program to inspire our channel partners to work with our ecosystem of application developers to get exciting and highly effective business tools in front of our customers. Instead of simply encouraging our channel partners to sell equipment, we want them to sell our equipment packaged as a solution to a business problem, with the networking equipment supporting the capabilities of individual applications. We are not an applications company, so we created SIP as a way to get our expansive channel partner sales force focused on ways to sell applications in conjunction with our networking equipment, software and services.

What was the inspiration for SIP?

Edison Peres: Cisco has created a network unlike any other vendor, but businesses and organizations can appreciate the capability of our network only through applications. It is much like the case with personal computers. People use them because of the applications they can run: word processing programs, spreadsheets, email, multimedia, and all the other possibilities. It's the same for networks. No one really cares what the guts of a network are. They only get interested when they see what they can do with those networks. That's what makes them valuable. We saw that with the creation of the Mosaic browser and the World Wide Web. All of a sudden, people could easily use the Internet to search for information and communicate. So, in short, the Solution Incentive Program aims to get as many great networking applications as possible in front of our customers. Especially these days, business executives are not going to buy network equipment just to have the latest and greatest. They will buy networking equipment if it clearly helps them cut costs, raise productivity, or do something with their business that they cannot do any other way. But those things only happen through applications that use the power of a converged, IP-based, intelligent networking infrastructure.

Can you give some examples of the types of applications channel partners would package with your network gear?

Edison Peres: One example for a vertical market application would be a billing tool for law firms. Lawyers need to track their time with each customer. Usually, they have to write down this information on "cheat sheets" and then input that into a computer system. That manual process, of course, eats up a fair amount of time. But by tapping into the power of a converged IP network, law firms now can use an XML-based application that ties into a law firm's Cisco IP phone system. When a customer calls or a lawyer calls a client, the phone number automatically links to the customer database and logs the call time. That's a fairly simple application, but one that is highly effective and only possible with a converged network infrastructure. Another example of the types of applications sold under SIP is the inventory management systems retailers and manufacturers are using with our wireless networks. Employees can roam to where the inventory is without losing connection to the network or having to re-enter paper-based data. There's also a growing array of telemedicine applications using the power of converged voice, video and data networks to bring medical care to remote regions, helping improve health of people throughout the world. These are just a few of the possibilities.

The idea is to make the network have business or community relevance. But that can only happen through applications that are designed to address specific issues. Each company or industry does business in a different way, and our network can meet each one of those needs. We don't believe there is a single killer application. We're just at the beginning of what converged networks can do. By promoting the development and use of applications specifically designed to take advantage of this new way of networking, we hope to accelerate its adoption.

How does the Solution Incentive Program complement Cisco's other channel partner incentive programs?

Edison Peres: SIP is the third part of our three-prong channel partner incentive strategy. We launched our first program, the Value Incentive Program (VIP), two years ago. We designed it to aid and encourage Cisco channel partners to invest in and sell our advanced services technologies, namely IP Communications and security. VIP has been very well received by our channel partners since it is helping them transition to selling the kinds of networking technologies their customers are most interested in. In fact, the VIP program has grown 75 percent over the last year.

The second program, the Opportunities Incentive Program (OIP), is a way to reward partners who bring in new customers. After the end of the dotcom era and resulting market contraction, we were all looking for new customers. At the same time, advances in technology started opening up IP networking to a much wider array of organizations, not just the largest corporations. But it costs two to five times more to get a new customer than to retain existing ones. So the OIP was another way to make it affordable for our channel partners to aggressively seek new business. Currently, OIP has more than 8,000 deals registered, worth more than $1 billion in sales.

And so SIP follows the same logic as the other programs. It acknowledges that there's an investment and a cost associated with changing business models and adding new capabilities. As with all of our channel partner incentive programs, SIP aims to help channel partners become more profitable while also serving networking customers better.

How does the Solution Incentive Program work?

Edison Peres: Channel partners interested in enrolling in the program need to submit a business plan and other information about their organizations to demonstrate they have the resources and capabilities necessary for selling applications combined with networking gear. If approved for SIP, channel partners receive compensation that varies depending on the complexity of the networking application package they provide a customer. There are other terms and aspects to the program, but this is the basic idea.

Other than the financial bonuses, how else can the Solution Incentive Program benefit Cisco channel partners?

Edison Peres: We believe that by selling packaged networking applications channel partners will be able to develop closer relationships with their customers, in the process opening up more sales opportunities. If a channel partner sells networking application packages, customers are more likely to look to them as a trusted advisor rather than as just another vendor. After all, applications solve a specific problem for an organization. Just selling networking gear still leaves it up to the customer to figure out what to do with that equipment. But if you solve a problem, customers will view you as having much more value. Also, specific application expertise will help channel partners differentiate themselves from competitors by offering complete solutions to business problems that no one else can address.