News Release

Cisco Launches Channel Program to Drive Incremental New Business and Channel Partner Profitability

Opportunity Incentive Program Rewards Channel Partners for Securing New Business, Protecting Their Presales Investment and Delivering Value
Feb 12, 2004

CISCO PARTNER SUMMIT 2004, HONOLULU, February 12, 2004 - As part of its continuous commitment to developing new programs that help increase channel partner profitability, Cisco Systems, Inc. (NASDAQ: CSCO), today announced a new channel partner incentive program that drives incremental new business. The Opportunity Incentive Program provides economic incentives to reward channel partners for the presales investment associated with securing opportunities in targeted market segments. This program incorporates deal registration which is designed to protect the presales investment and enable the channel partner to focus on value delivery to win the opportunity. The incentive is available to the channel partner who was first to close the opportunity.

"The Cisco value-based channel strategy has ignited an industry-wide transformation from volume-based to value-based channel partner programs," said Ken Presti, IDC. "The Opportunity Incentive Program further highlights the Cisco commitment to enable partners to compete on the value they deliver as opposed to the price they can offer. This is a fundamental shift in the way business is done."

"With more than 92 percent of our enterprise and commercial business going through our channel partners, it is imperative to our future growth that we create programs that improve partner profitability and drive mutual success," said Paul Mountford, senior vice president Worldwide Channels at Cisco Systems. "The Opportunity Incentive Program is based on a successful U.S.-based deal registration promotion, Cisco Security Agent, created to accelerate the adoption of Cisco intrusion prevention products. Building on the success of its security focused predecessor, the Opportunity Incentive Program is designed to allow Cisco and its channel partners to gain global market share in targeted markets."

Deal Registration Protects Presales Investment and Value

Identifying, developing and securing a new customer lengthens the sales cycle and increases the cost of sales, resulting in a significant impact on channel partner profitability, especially if the opportunity is eventually lost due to pricing issues. The Opportunity Incentive Program allows channel partners who actively identify new opportunities to benefit from an economic advantage because of the presales value they provide in creating these new opportunities. Channel partners can use this economic advantage—which will come in the form of additional discounts or a rebate, depending on sales theater—to showcase their value proposition, cover their presales investment and improve their profitability.

"The Cisco Security Agent program has positively affected our profitability and boosted incremental revenue," said, James Berbee, CEO, Berbee Information Networks Corporation. "The ability to register a deal enables us to focus our sales efforts on our value proposition—which is critical to our success. The Opportunity Incentive Program will enable us to reap rewards based on gaining new market opportunities for Cisco products and services. This will motivate our sales force to secure new customers."

Neutral Registration and Approval Process

In order to ensure success and high-quality program governance, Cisco Systems® is creating an online deal registration approval process for the Opportunity Incentive Program. The deal registration process is available to eligible partners and uses a proven deal registration methodology equipped with multiple checks and balances. In order to register new opportunities, channel partners must provide specific details including information about the decision maker, the budget and project specifications. Cisco will then approve the registration based on whether or not it truly is new incremental business. It should be neither in the Cisco sales forecast nor registered by another channel partner. Opportunities approved by Cisco will be valid for six months. A partner must close the approved opportunity within the six-month period in order to take advantage of the OIP incentive discount or rebate.

Global Foundation with Local Customization

The participation criteria and process through which a new business opportunity will be registered and approved is standard worldwide. However, each Cisco sales theater can customize the program initiatives by determining which key market segments they want to target with the Opportunity Incentive Program and what type of economic incentive they want to provide for the registering channel partner. All Opportunity Incentive Program initiatives will also specify the prerequisites by theater, including what type of certification or specialization the channel partner must have in order to participate.

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