Cisco is transitioning its services strategy

Cisco Systems (NASDAQ: CSCO) is putting its services business in the hands of its channel partners.

The networking giant plans to deliver its next generation of smart services*, including Smart Net and Smart Care, collaboratively through the channel.

Sherri Leibo, vice-president of marketing and services at Cisco, believes the network is changing again and will accommodate more business critical applications, leading to a greater dependency on Cisco’s channel.

“It’s imperative that the channel and Cisco work together. The one thing we see with customers, large or (small), they’re all under pressure to drive efficiencies. Servicing those networks is part of risk sharing and we need to make sure we’re more proactive,” Leibo said.

Cisco has been working with partners over the last nine months on the next version of Smart Care. During that time, Cisco found that more than 50 per cent of the customers signed by partners were new. Also, partners saw a 60 per cent up-tick in new services opportunities that were found through Smart Care. With Smart Care, partners were able to sell more hardware by 15 per cent.

Cisco E-consulting, which was announced last year at the Partner Summit in Las Vegas, will also play an important role in this effort. Last year, E-consulting supported just under 1,000 certified or specialized partners. These partners experienced close to a 10 per cent improvement in attach rate and a 12 per cent improvement in services delivery, equating to approximately $157,000 per partner captured in increased services revenue.

Raja Sundaram, director of business development, channel operations for Cisco, said that at the 2008 Partner Summit, which starts tomorrow, the company will expand this program to enable more than 4,000 partners to use it, including Tier 2 partners.

Leibo said Cisco believes it they can deliver services better with E-consulting because it provides targeted recommendations.

“Partners take that and it helps them change business processes in service delivery, and gives them a better dialogue with their investment plans inside the organization,” she said.

One of the key differences with Smart Care is that it’s not on the Cisco price list, unlike Smart Net. Smart Net is sold like a product and Cisco expects the partner to add on its own services to Smart Net.

“One can clearly see where they need to make investments and we’ll give them the opportunity to be efficient. The second thing is they can understand who to leverage and redeploy the resources (if necessary). The business model is to collaborate with Cisco for profit, so from that standpoint when we are clearly articulating that Cisco services is not designed to compete directly with them,” Sundaram said.

*Sidebar: Smart Services is an industry term and it relates to many industries. For example, Smart Services is used by John Deere Tractor to enable farmers to make better decisions on fertilizer. A GPS built into the tractor can analyze soil and inform the farmer what kind of fertilizer to use and can even inform the local feed store what fertilizer to supply for the farmers in his area.

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Jim Love, Chief Content Officer, IT World Canada

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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