Services star at Cisco summit

Cisco has made services a key plank of its 2010 partner strategy in its effort to corner four growing markets; collaboration, video, cloud-based services and the virtualised data centre.

"These market transitions will define the next internet," Keith Goodwin, senior vice president of Cisco's worldwide partner organisation told a packed house at the Moscone Convention Centre in San Francisco.

Goodwin said his company intended to dominate these markets despite its late entry into some, such as server hardware. Goodwin pointed to sceptics who 12 years ago said Cisco would not be able to succeed when it entered the voice market. Cisco now claims to be number one in enterprise voice, web conferencing and unified messaging sales.

Goodwin advised resellers to reposition sales and technical teams to position and deliver architectures; to differentiate offers around verticals and solutions; and "to be ready" for cloud-based services as a future business model.

Cisco announced plans to phase in specialisations based on architectures that would underpin services sales, rather than just products.

The vendor was creating a curriculum specifically for business and technical architects, and said it would help fund training. Cisco announced it would provide 20 days training over a five month period for premium partners, who would pay 25 percent of the cost. 

"Services are critical to partner profitability," said Goodwin, who admitted that the company's services strategy hadn't been clear until now. "Customers need more services around architecture and solutions."

"Partners need to evolve" by focusing on services, added Edison Peres, senior vice president of the worldwide partner organisation's go-to-market group. The shift to services will impact top-line revenue and bottom-line profitability, said Peres. 

The type of service was going to change too. While 30-40 percent of resellers' revenue comes from services, 80 percent of those services were installation and break-fix, said Peres. 

In the future services will bring in as much as 60 percent of revenue, but it will be professional services such as architecture design.

"We know that a lot of customers will be buying a lot of their IT as a service," said Peres. Customers will increasingly use hybrid models that draw on on-premises and off-premises technology and will rely on resellers to integrate them.

Cisco warned resellers that the revenue mix would change not just from hardware to services but to recurring revenues spread over several years and higher cost of pre-sales. 

Cisco also unveiled another step to its incentive program designed to protect partners who had invested in pre-sales with a customer. The Teaming Incentive Program brings a reseller into a Cisco-led deal during the qualification phase. This allows the reseller to introduce other technologies into the sale.

A partner identified through the program would receive an extra five points of margin to fend off last-minute "drive-by" tenders by competing Cisco partners.

Cisco established a global partner network program that helps resellers support customers with offices overseas. The program allows resellers with multinational customers to contract other Cisco resellers for installation and maintenance services in countries where remote offices are based.