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Cisco invests $75 million into Partner Led channel strategy

Despite cutbacks at the company, Cisco says investment in its channel is still crucial

Despite major financial and staffing cutbacks at the networking giant, Cisco Systems Inc. (NASDAQ: CSCO) will be investing $75 million into its new midmarket and SMB channel program, according to Andrew Sage, vice-president of worldwide Partner Led.

“Partner Led is very much a part of what we’re calling the ‘new Cisco’,” he said. The strategy was part of a restructuring of Cisco’s channel program in July. It was also part of an overall effort to simplify how the company works and how it conducts business, a message touted by CEO John Chambers and other high-level executives at Cisco Live in Las Vegas that month.

Related story: Cisco makes channel changes as it tries to reinvent itself

“The reduction in expense across the whole company is to realign the macro expense structures,” Sage said. “But along with that comes the need to make sure we are investing in the places that have the biggest impact on Cisco and our partners.”

New initiatives for Partner Led

The $75 million investment for Cisco’s fiscal year 2010, which began in August, will go into several specific initiatives for partners. Partner Led is one of two go-to-market strategies for the company. The other, Customer Led, is for partners working on dealers with large enterprises, where the channel still plays and important role, but Cisco itself will likely consult on the deal first. Then, based on either the customer’s preference or other factors, a partner will fulfill the deal. “We’re going to ask partners to lead those sales engagements,” with Partner Led, he said.

Partner Led is again divided into Partner Led Named for the midmarket– or about 1,000 employees– and Partner Led Velocity for SMB customers. The midmarket and SMB space represents $7 billion of business globally for the company. In Canada, the midmarket and SMB really lead the business landscape, Sage said. “Partner Led is really purpose-built for that.” 

For partners focusing on the midmarket, the company is introducing a market development funds (MDF) program. “If you’re a partner selling into our midmarket customers, then we’re going to put a percentage of your sales into an account.” Then, the partner can invest that back into training. “(It’s) really an MDF program designed to drive growth,” he said.

Cisco will also invest into its Fast Track 2 program for the Partner Velocity segment, essentially a product list that includes “simplified pricing and also the offers and promotions that help partners to quote a Cisco solution very simply.”

“One of the major investments we’re going to make is in something we call a partner relationship management system (PRM),” he said, part of the Partner 360 program. The PRM system will allow Cisco’s team to share data and customer opportunities with partners.

Cisco will also invest more heavily in the pilot Technology Solutions Network, a team of pre-sales engineers who can consult with partners on sales deals. The program will begin in early November. Much of this program was based on complaints from partners that they needed to know early on which partner Cisco was planning to work with and how to fulfill a deal, Sage said.

Currently, 80 per cent of Cisco’s business goes through the channel. “That hasn’t changed for a long time and that will not change. That remains the strategy,” Sage said. “They (customers) also want that experience that only a partner can deliver…including managed services.”

So far, updates to Partner Led have had good feedback from partners, Sage said. “The partners were really the ones that helped us to define the strategy. We expect them to like what they see because it reflects what they told us.”

The right execs make all the difference

Marketing will also gain a piece of the $75 million investment pie under Amanda Jobbins, the company’s new vice-president of partner marketing, who will be outlining more of her plans in the coming months, according to Sage.

Donna Wittmann, former vice-president for the Canadian channel at Cisco, will now lead Partner Led Named. “Donna has a unique set of experiences,” Sage said. “She’s got great experiences outside of Cisco. At Cisco, she was a thought leader in driving both channels and partner organization.”

Related story: Cisco Canada makes a switch in channel leadership

Much of Cisco’s channel focus actually came from John Chambers, who made it a “partner-centric” company, Sage said. “His contribution to where we’re at with our channel…has been critical.”

“I’m not sure that I’ve ever considered what Cisco would be like without John Chambers,” Sage said when asked about rumours the long-time CEO may leave the company due to restructuring or will retire. “I have full confidence that his strategy.”