BOSTON – Cisco Systems top two channel executives Bruce Klein, senior vice president of the Worldwide Partner Organization and Edison Peres, the worldwide channel chief for networking vendor expect an accelerated level of channel consolidation.
Both Klein and Peres said that the consolidation will be more about acquiring talent that obtaining new business opportunities.
Klein and Peres sat down with the press at the annual Partner Summit conference in Boston to talk about consolidation along with smart services, the Internet of Everything and something called channel booking neutrality.
The following is an edited transcript.
CDN Now: Will your new services strategy conflict with the professional services of channel partners?
Bruce Klein: It’s a services evolution. When we talk about Smart Net services; that’s a partner built model. It will be more analytic and it’s moving to a software model with Smart Services. We are building program for partners to take advantage of this. Analytics will bring proactive support and we need to take partners on that transition path. As they see what they can pull out of the network and create their own professional services that is based on information from the end user customer they will be incented to build more practices.
CDN Now: Recently a Canadian Cisco partner decided to merge with a Microsoft partner. Do you think we’ll see more of these strategic partnerships going forward?
Edison Peres: I anticipate accelerated consolidation of the channel. And, it will be unlike anything we have seen in the past. In the past, channel consolidation happened because of scale or territory. Today, I think its being driven by talent and a lot of partners are buying up professional services teams to fill out there profile because of this hybrid IT model.
CDN Now: Edison you described what the successful partner of the future looks like with the hybrid IT model. What will the future channel partner look like servicing the Internet of Everything opportunity?
E.P.: The Internet of Everything partner can be the same as that hybrid IT partner of the future where they are not focused on the horizontal technology and choose an industry or business issues to play in. They need to look at the entire food chain for that opportunity. The example of the corn being connected to the Internet resulting in a cola beverage down the road that’s what I mean by looking at the entire food chain. When it starts growing, partners will do that and we are pushing solution that way. Today they are thinking of a technology solution and we need to get them into thinking about industry-wide solution in the Internet of Everything.
CDN Now: How is the channel partner ecosystem expanding?
B.K.: We are seeing new partner types in the market such as APC/Schneider Electric. Companies like that are changing the entire business model and it’s all over IP. A company like that will be a major partner with us and the solution providers in deliver the Internet of Everything for manufacturing, healthcare, and retail. We are going to have a lot of different partners in the entire ecosystem.
CDN Now: Do you anticipate channel partners developing more apps?
B.K.: We are looking to expand the ISV program to position them with line of business managers within a region. The SaaS-types solutions need to optimized for our portfolio and to execute the Internet of Everything. We need a robust developer network and we are looking to make that world class. As we open up the network, it will create new companies that we don’t know yet and these partners will be creating apps.
CDN Now: Why are you changing you channel booking neutrality strategy?
B.K.: Channel booking neutrality is a problem we are trying to solve. When a two tier partner places an order through distribution the Cisco sales team did not get credit until the POS from distribution came in and only after shipping. If a direct partner placed an order the Cisco sales team got credit right at that time. So when forecasting orders they would not get credit for them and be forced to shift orders to a one-tier partner just to get their forecasts up. Cisco put together a channel booking neutrality plan where the rep would get the credit at the time of the order, but they could not use inventory at distribution and would have to wait to fill the order. Channel booking neutrality solved the crediting issue, but distribution could not use it. Cisco is developing new tools and processes in our operation to eliminate the channel booking neutrality for sales crediting and orders coming through two and single tiers. The sales team gets credit right away and through distribution where they can use the inventory to ship to the customer and everyone wins and administration life gets better.
