Solution providers also going deeper on vertical practices, executives say
Those who know Cisco in general, and its partner organization in particular, know that the company measures everything, so it’s no surprise that this kind of information would be at the fingertips of people like Edison Peres, worldwide channel chief, and Keith Goodwin, senior vice president of the company’s partner organization. The executives, whom I caught at last week’s Cisco Partner Velocity event in Las Vegas, said solution providers aren’t just doing more services than ever before. They’re also doing higher-value services.
Peres reported that when Cisco started taking annual measurements of partner profitability, the majority of partner services offerings were in the support and break-fix categories. Fast forward to today, and services make up 40 to 45 per cent of partner profitability, with a much higher level of focus on consulting and professional services.
The good news, Peres said, is that customers are expecting more services from solutions providers, and better still – they’re more willing than ever to pay for those partner services.
“Partners’ services businesses are at the forefront, differentiating and driving profitability,” he said.
The company has seen those services revenues grow steadily over the last five years, since it started talking to partners about the need to invest in service and support capabilities, Goodwin said.
At the same time, as customers are calling for more services in networking deployments, Goodwin said he’s often facing the natural question in the channel: is Cisco going to get into the services business itself in a big way. Goodwin reiterated the company’s stance that it’s not interested in going that direction and will instead help solution providers ramp their own services offerings around its wares. Goodwin described it as a significant differentiation for Cisco in the channel, and one that the company is going to trumpet loud and often.
“We’ve really been aggressive here in reassuring partners that our strategy for services is a partner-centric strategy,” Goodwin said. “Our customers are expecting to a great deal more from Cisco, and we’re going to scale that service business with our partners.”
At the same time, Peres noted that in recent meeting with partners, he’s seeing a great deal more vertical specialization amongst solution providers. A few years ago, he said, any given group of partners would include 20 to 30 per cent with defined vertical practices. Today, he said, vertical focuses are becoming much more ubiquitous – the figure is more like 70 or 80 per cent.
Another finding from the executives’ travels around the world talking to partners: Goodwin described solution providers as “order of magnitude” more optimistic about the macro-economic situation than the headlines in the business pages would suggest.
But while everyone seems to blame everyone else for the situation (European partners pin the blame on the struggling U.S. economy, while American solution providers believe that solving the problems of Greece, Italy, et al will improve things across the board), nobody seems to want to talk about it too loudly.
“Partners don’t want to talk about it out loud in case it hits their pipeline,” observed Peres.
“They keep hearing about it, but they haven’t really seen it themselves, and they don’t want it to be a self-fulfilling prophesy,” Goodwin suggested.