Cisco to scrap silver tier in next channel program

Edison Peres at Cisco Partner Summit 2013

global channel chief .

LAS VEGAS – Cisco will phase out its Silver partner tier, will change requirements for its Gold partners, and will completely redo its program as part of a series of changes to its partner program over the next two years, the giant announced at its annual Partner Summit here.

Cisco global channel chief Edison Peres announced the changes here, and stressed that the company understands that change is both necessary, and not always popular.

Peres said all for the changes are centered around creating “the partner of the future,” a solution provider who has deeply embraced the company’s mantra of hybrid IT, who is as effective selling to line of business customers as the IT department, and who can expand more deeply into services. The changes also support further partner profitability by providing opportunities to differentiate, he said.

Perhaps the most jarring change is the elimination of the Silver partner tier over the next 24 months. Currently, the company has about 300 Silver partners worldwide, and Peres said for most, the tier is a stepping stone. For partners with narrow and deep , it’s a step en route to a Master , and for broader partners touching more Cisco technologies, it’s a step en route to Gold partner status. Peres said that partner feedback was that “the value proposition and brand strength” of Silver was not very strong, and that “we want to work with you to transition you to Gold, or to move you up into Master.”

Things are hardly staying the same for Gold partners, in the meantime. Peres said that with the program launch over the next 24 months, the company will require Gold partners to represent four “hybrid IT” type of solutions, which include cloud-based offerings. The company will test that Gold partners are “actively selling” cloud and solutions, particularly those based on Cisco Powered Clouds.

“We’re not saying you have to be a cloud provider, but we’re saying you have to be a good reseller of these products,” he said.

Cisco will also require Gold partners to have at least one Business Value Practitioner-certified individual on staff. That new certification category is focused on selling business outcomes, and selling to line of business customers rather than IT. For partners who sign up in the next six to 12 months, Peres announced a promo that will see Cisco pay 80 per cent of the testing and training requirements to meet this new requirement.

 

All of the changes move things that Cisco advance things for which Cisco has been incenting partners over the last few years into the “must have” category, essentially a stick designed to bring along the last third or so of partners who have not responded to Cisco’s carrots in a timely fashion.

“I’m confident that most of our Gold partners will meet these requirements with ease,” Peres said..

Peres also introduced plans to make it easier for Cisco partners to work with the vendor globally without having large in country presence around the world, and the company will stop enforcing a specific customer satisfaction level as a condition of Gold partnership. Peres said the company will still monitor customer satisfaction, and will hold partners accountable, but is responding to partner feedback that it making a specific customer sat number make-or-break for program status is unfair. Peres also said that the need to strictly enforce customer satisfaction levels is not as great now that the company’s metrics consistently show that through-partner customer satisfaction is nearly the same as customer satisfaction with Cisco direct engagements. This was not the case in years gone by, and the delta in customer satisfaction was the big reason Cisco was so strict on it as a program requirement in the past.

On the specialization front, Peres said under the new program the company will move to a more flexible and modular approach, that will follow the college model and include must-have core courses as well as a series of “elective” qualifications that will help partners drive differentiation within the specializations. The company will also add more software and services content into its specialization training and requirements.

Peres also announced two new Master-level specializations, around enterprise networking and data centre technology, both of which will be introduced in the next six months, and introduced five new solution specializations around , , desktop , enterprise , and Teleheath, which will bring with them the promise for additional incremental revenues for partners.

Turning to the company’s incentives programs, Peres acknowledged that VIP can contribute up to 50 per cent of partner profitability, and said the company doesn’t take change to the program lightly, but that it needs to simplify. So with the launch of VIP 24 in August, Peres said Cisco will move to reduce the 15,000 SKUs currently covered under VIP, and to pay more for “more relevant” products under VIP. Cisco will also move towards creating incentive for selling software lifecycle, including activation and renewal, through VIP, and will focus on the importance of hybrid IT in VIP 24, Peres said.

Rounding out the changes coming to the partner program, Peres turned to the company’s up-front incentive programs, including SIP, OIP, TIP, and others. With a long list of various deal registration programs, Peres lamented that “some of these programs aren’t getting the take rate we think they deserve,” and saying again that it needs to simplify.

In this case, Peres said the company will bring all of its deal registration programs together under a single umbrella, a move that will make it easier for Cisco recognize everything a partner does in one place. It will still provide incentives in all the same areas in deal registration, Peres said, but will now do so through a single program, and will increase margin lift for solution selling from five points to eight points of incremental margin.

While the changes seem sweeping and cover a lot of territory, Peres stressed that the company feels they are vital to ensuring partners are pointed towards the opportunities the company sees emerging today and becoming mainstream tomorrow.

“We’re all going to be better off if we make these changes together, and we’ll see the opportunities,” Peres told partners. “My goal has always been to partner with you to build a sustainable profitable business, and it’s working. We don’t want to go back on that. We want to accelerate that going forward.”

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