Cisco switches gears with its VIP channel program

BOSTON – Starting August 1 of this year, Cisco Systems (NASDAQ: CSCO) will open more products to its highly successful Value Incentive Program (VIP), among them switching and routing.

The VIP program was developed as part of Cisco’s partner profitability strategy announced in 2001 and is centred around its Advanced Technology portfolio.

Version 14 of VIP will be in play Aug. 31 and focus on partner investment in three key architectural platforms: collaboration, virtualization and the borderless network.

Even though Cisco is moving into a new area, the company will continue to support Advanced Technologies in VIP. The VIP program runs in six month periods, which is why it’s in its 14 iteration. Partners in the program get a rebate cheque on the amount of product they ship and Cisco issues the money six months after that. “This helps reduce the bleeding on the street,” said Surinder Brar, senior director worldwide channel strategy for Cisco Systems.

Since 2003, Cisco channel chiefs have issued more than $2.5 billion worth of cheques to channel partners through VIP rebates. In VIP, partners can earn 15 per cent margins on switching and five per cent on routing products. Storage, wide-area networking and TelePresence will also be part of VIP.

Greg Myers, vice-president of marketing for Tech Data Canada, said this move by Cisco makes the VIP program even more valuable. “Partners want an economic boost and have enjoyed VIP benefits for many years. Now on a day-to-day perspective the channel will get more benefits and revenue on switching and routing because it is more significant for them than the advanced technology play,” he said.

Jon Jensen, co-founder and president of Nexus IS, believes the expansion of VIP to be timely.

“Most of the partners in the channel pay their sales-people on profit. So they are driven to sell the products that are incentive-based because it means more dollars in their pockets,” Jensen said.

Brar said in the past the company fenced VIP in Advanced Technologies. “When you move to architecture, which has technology such as switching and routing, it all has to be part of the track. VIP expanded to architecture and we encourage partners to drive the transformations on architecture which will help the channel accelerate out of the recession,” he said.

Myers added that Advanced Technologies have matured and Cisco, along with the channel, now has to look at the broader set of products and push them into meaningful marketing strategies.

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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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