Cisco’s channel in transition

Published: October 12th, 2010

Keith Goodwin’s move to realign Cisco Systems’s channel team was more than just shuffling the deck in an organization known industry-wide as having one of the more progressive channel programs.

To recap, the Goodwin developed a three-to-five year strategy based on three pillars: innovating Cisco’s (Nasdaq: CSCO) channel model, building a global transformational partnership and to drive the SMB. To support this long range plan, Goodwin promoted Edison Peres to the roll of channel chief or senior vice president of worldwide channels. Wendy Bahr, who worked closely with Canadian channel chief Donna Wittmann, moves from US and Canada lead to the new role of senior vice president of global and transformational partnerships.

Those were the two biggest personnel moves, but Goodwin also introduced Dave O’Callaghan as the lead on commercial sales as Vice President, Worldwide Commercial Sales and Jim Sherriff was hired to replace Bahr, but according to Goodwin he also has a night job in helping Cisco’s channel team scale and optimize the processes to better support partner growth. In plain English, Sherriff has to make Cisco easier to deal with when it comes to channel partners.

What is making this all happen? Well, it is the onset of the borderless networking trend. Cisco prides itself on capturing market transition at least three-years ahead. Goodwin told CDN that the company believes there are multi-billion dollar opportunities to be had in new virtualized data centre architectures, unified communications, collaboration and video solutions for specific vertical markets, new business in emerging countries and in the new As-A-Service consumption models being adopted by customers.

Another factor is the SMB. Under the guidance of Canadian-born executive Andrew Sage, Cisco has made significant inroads in this territory, but has not yet reached its company-wide goals in the SMB. Sage will now report to O’Callaghan to build on its growth through solution providers.

Recently CDN I had an opportunity to ask Goodwin about his new long term plan and channel direction. The following is an edited transcript.

CDN Now: How much better off will channel partners be now than before you made these changes?

Keith Goodwin: For existing channel partners this is a re-affirmation on how important they are for us. We are doubling down in investment. We are putting a stake in the ground on innovation to better support partners in the evolution their business so they can embrace the new opportunities and the new challenges that come with that. Our new focus will be on how do we enable those partners in this evolution. We are going to incent those partners and build programs to embrace the cloud. The cloud is very much an opportunity, but it has business model implications to the partner base and with that focus Edison Peres, as the new channel chief, his team will look at the new consumption models to pinpoint where the benefits are to the partners. Partner investment at Cisco has grown significantly in last few years and certifications have grown in spite of down turn in the economy.

CDN Now: Are these changes market driven or are you developing a new approach in dealing with your channel partners?

K.G.: It goes back to being market driven and it’s very much about cisco’s success in leading an industry around networking. From there our focus is on leading the market transitions for example, convergence around IP, VoIP and unified communications. Those are all about identifying a market in transition and then leading it rather than reacting to it. What drives us is our intent to lead these market transitions and align partners to these markets in transition and adding more bottom-line margin to it and growth.

CDN Now: One of your team’s three key focuses is “Build new global transformational partnerships” can you give me an example of a common global transformational partnership that you hope to see?

K.G.: In the small business segment the one thing we know is SMBs are the first to jump on any new consumption models such as cloud computing and cloud-based services. SMB is the growth driver in the short term and we need to put together a partnership and we call it constellation partnerships to allow the channel partners to address these SMB opportunities. We’ve identified large service providers who, in our industry, are trying to own the cloud asset and partners along with a set of ISVs or solutions partners who can create solutions for the cloud and put them together with traditional Cisco channel partner and take those solutions to market for the SMB segment. So this type of constellation partnership creates the right value solution for the cloud and this is what Wendy Bahr and her team are focusing on.

CDN Now: How much authority will the regional channel chiefs have in tweaking the new strategy?

K.G.: We have spent a lot of time on that one and we have come up with a percentage and when I talk it through with the regions I think they understand that 100 per cent of the plan is the best cost effective way, but in the field it never works out that way so you do need to tune your channel plans to the local uniqueness of the market places. So we have come up with a ratio of 70 per cent from the common structure of the program and 30 per cent localized. This creates a play where regional leaders can drive growth and be more effective with the partners.

CDN Now: What changes will be made to the Value Incentive Program (VIP)?

K.G.: The VIP program is our foundation program for partners and the business model we built around VIP is so fundamental to the partners that we will not change it. As VIP evolves with new routes we try to rev it up every six months and continue to evaluate it whenever a new market is established. One example we announced about a year and half ago was on architecture instead of products. So we evolved the VIP to be current with the priorities of the market. VIP is not designed for every partner and so we introduced the PDF and tuned that for partners who go after the SMB space. More enhancements are coming to that program so that we can build on our new SMB plans.


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