The changes, announced at the annual Partners Summit here this week, will be the company’s most significant since it introduced a value-based plan in 2001.
The enhancements include a new Masters specification, which is an attempt to make the channel program fair to all partners.
In the past, Cisco gold partners attained more benefits and margins than the company’s silver and premier partners because they held all certifications.
Cisco realized some partners are either boutique outfits or want to specialize – in security, for example. Through the new Masters specialization these deep partners will be able to attain the same level of rewards as gold partners.
“It’s a level playing field for a Master security partner and a gold partner,” said Andrew Sage, Cisco’s senior director of worldwide channels marketing.
T.C. Doyle, a channel analyst at Amazon Consulting, said Cisco has created a level playing field with this new plan.
While Doyle believes the overall plan will be encouraging to the channel, he added that Cisco will still need to work out a way to respect the value of the upper tier. “The gold tier does not want to be undermined. They have made boat-loads of investments and there could be some partners who push back,” he said.
Sage said Cisco wants its partners to consider depth and breath, or both. “It’s a simple case of asking partners what they want to do. Will I be an integrated infrastructure provider and give the minimum set of routing, switching, wireless, security and voice to (customers)?
“And, we will ask some partners to go deep and be specialized in one area or multiple areas such as voice and security. These are the boutique partners who have skills in one area and are not interested in doing a lot of things,” Sage said.
Cisco used to want partners to sell routing and switching, then security.
“Now,” said Sage, “as a networking partner you are selling routing, switching, voice, contact centres, and storage networking. This is the addressable market and it will grow because of intelligent information networks. Partners must be able to get into more of this market.”
According to IDC, routing and switching is going to be a US$25 billion market globally this year. Tack on storage, security, wireless and voice, and that market balloons to a US$42 billion opportunity for the channel in 2006.
This lucrative market also poses a problem for most partners, Sage said, because upcoming systems involve complex technology.
“Partners will need breath of skills to provide fully integrated networks,” he said. “These are skills that are broad. They will need lifecycle services skills, also, to provide the services and support on the life of the equipment.”
So Cisco’s channel team created a set of changes that would incent partners to invest in building intelligent information networks.
Cisco’s base tiered partner structure will remain the same, with gold, silver and premier partners. However, VARs will have two years to achieve a minimum set of capabilities for routing, switching, voice, wireless and security.
The new Masters specification will be added to Express and Advanced specifications. Express is the basic level, while Advanced is the integrated infrastructure level.
Lifecycle services will also be a mandatory part of the each specialization.
“Premiers have to get the Express specification,” said Sage. “The same goes for silvers, except they have to have any two Advanced specifications. Gold partners have to have all Advanced specifications, which are routing, switching, security, wireless, and voice. Any partner can make the investment and be a Master.”
Masters will get the highest level of VIP rebate and reward,” he added.