News Release

Cisco Launches New Initiatives to Help Channel Partners Succeed

Launches New, eAgent Pricing Structure, SMB Technology Solutions, Channel Leasing Options, Solution Selling Training Courses, Marketing Productivity Tool and Partnering Metric
Apr 17, 2003

CISCO PARTNER SUMMIT, LAS VEGAS, April 17, 2003 - Cisco Systems, Inc., the worldwide leader in networking for the Internet, today introduced several new initiatives as part of its continuing commitment to help Cisco® channel partners build sustainable business models, driving increased productivity, profitability and return-on-investment.

"Channel partner success is my number one concern. With more than ninety percent of our business flowing through the channel, we are committed to their success," said Paul Mountford, vice president Worldwide Channels at Cisco Systems. "At last year's Partner Summit we made some fundamental changes to our engagement philosophy and now we are launching the programs and initiatives that build on that foundation."

eAgent Program Adopts "Channel Neutral" Pricing Structure

In August 2001, Cisco introduced eAgent, a program that allows enrolled US channel partners to receive compensation for acting as Cisco sales agents. Today, Cisco is enhancing eAgent compensation with a completely "neutral" pricing structure, which means that the more than 100 channel partners currently enrolled in the program will no longer be charged an administrative fee for using eAgent. This revised channel partner compensation coupled with new financing solutions, such net 60 payment terms to end customers available from resale and/or finance and leasing partners, results in significant margin opportunity increase for Cisco channel partners.

"We are very excited about the new pricing structure of Cisco's eAgent program," said Jeffrey Hitchman, vice president, Vendor Alliances at NextiraOne, a Cisco Gold Certified Partner. "Our original goal was to derive at least 50-percent of our annual Cisco revenue through eAgent and because of this new pricing structure we are looking to increase that number to 70-percent."

Growing with Technology Solutions For SMB

To further its commitment in helping channel partners successfully penetrate the SMB market, Cisco is announcing new Growing with Technology Solutions, designed to allow SMB customers to experience the value of a full service end-to-end network. The solutions comprise robust modular product lines with the latest technologies and intelligent features, including core network foundation (routing and switching), security, IP communications and mobility.

"Channel partners are critical to our success in the SMB market, and we are committed to providing them with the tools, training and resources to build the intelligent network solutions that enable our mutual customers to increase their productivity and accelerate their ROI," said Peter Alexander, vice president, Commercial Marketing at Cisco Systems.

New Comprehensive Channel Financing Options

Providing channel partners with innovative, flexible financial services is essential to enabling Cisco to deliver on its commitment to help channel partners build sustainable business models. By enabling Cisco channel partners to offer customers competitive leasing options as well as secure higher and longer-term credit lines, Cisco Systems Capital®, a wholly owned subsidiary of Cisco Systems, is providing a key competitive advantage. Cisco Systems Capital offers Cisco channel partners a comprehensive set of long-term leasing options, including IP-Communications, Bundled Services and Demo Lab Equipment as well as short-term leasing options, offered through leading third-party finance or leasing partners, including Distribution, Accounts Receivable Financing and Accounts Receivable Purchase.

"Together, Cisco and Cisco Systems Capital provide the channel end-to-end solutions that can enhance channel liquidity and accelerate product adoption to Cisco end-customers," said David Rogan General Manager, Cisco Systems Capital.

Purchasing demonstration lab equipment is one of the largest investments Cisco channel partners must make in order to achieve and maintain their certification and specializations. Therefore, in an effort to help increase the return-on-investment of its channel partners, Cisco in collaboration with Cisco Systems Capital, is implementing a Demo Lab Equipment leasing program, in the second half of FY 03. This new program allows channel partners to select a leasing option to procure not-for-resale demonstration lab equipment at an aggressive rate for 24-months. When compared to current lab/demo purchasing options, the new leasing program can save Cisco Gold Certified channel partners as much as 40 percent per year.

E-Learning Solution Selling Courses for Channel Partners

In today's market environment success is dependent on how well channel partners sell solutions that address each customer's business needs. In an effort to help its channel partners deliver more value and become the trusted business adviser with whom customers want to develop long-term relationships, Cisco launched Sales Training for Exceptional Performance (STEP). This training program teaches channel partners about the fundamentals and principles of selling solutions. The first three STEP courses, Consultative Selling, Selling Value and Territory Management, are available today free of charge via the Partner E-Learning Connection, where since January 2000, Cisco has delivered more than $500 million in free training to its channel partners.

Marketing Productivity Tool

In an effort to generate awareness and establish a competitive edge, channel partners spend valuable time and resources creating marketing collateral, from advertisements to direct mailers. As part of its continuing effort to increase productivity and shorten the sales cycle, Cisco has launched Collateral Builder, a fully automated marketing tool that enables channel partners to easily create customized material, including solution selling campaigns, trade show booth builder, e-mail blasts, and an array of other templates without the associated design costs.

"The Collateral Builder tool is especially valuable for creating print and electronic advertising," said Chris Cook, Marketing Director, Chickasaw Telecom, a Cisco Silver Certified channel partner. "Cisco had already completed the hard part, the design, copy and layout. It's like having your very own advertising agency on call, but without the high cost. Collateral Builder is a snap to use. You simply follow the onscreen prompts and enter any information that is specific to your company. The Collateral Builder does the rest."

Partnering Metric

In order to quantify sustainable success, Cisco must be able to effectively measure the return-on-investment for its channel partners based on productivity tools, training, programs and other initiatives. To do this, Cisco has selected to use the ROIC (return-on-invested-capital) business success metric. This proven business metric will enable Cisco to quantify the impact its programs and initiatives have on ROIC. The model is applicable to all channel partners regardless of their business model and can be used to measure the impact of a range of initiatives ranging from eAgent to managed services. Channel partners can use the ROIC formula to select the initiatives that will have the maximum benefit on their financial success. In addition, Cisco can use this model to evaluate the financial health of channel partners and make recommendations to what actions will have the most significant ROIC impact.