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Cisco Vows to Consolidate Channel Programs

Cisco this week during an online Cisco Partner Summit revealed it will shrink the dozen channel programs it manages today down to one program over the next 12 to 18 months.

The one partner program will still have three tiers, but the focus of the program will be on integrators, service providers, advisors and developers, says Oliver Tuszik, senior vice president for the Global Partner Organization at Cisco.

Oliver Tuszik

That transition is meant to help partners transition to an as-a-service model where many of them will be asked to not only resell hardware and software provided by Cisco but also managed services.

Cisco like every other IT vendor is transitioning to an as-a-service model fueled mainly by recurring revenue generated via software. The company made it clear this week it wants partners to resell services provided by Cisco. For partners that have traditionally resold IT infrastructure, those services represent a potential new stream of revenue.

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However, for partners that invested in their own managed services there is room for potential significant conflict as Cisco continues to expand its services portfolio. In fact, Tuszik notes that Cisco in fiscal 2020 generated $5.3 billion in sales via partnerships with more than 2,700 managed service providers (MSPs). In some cases, it may make sense for MSPs to resell services provided by Cisco to reduce their capital costs. Each MSP will need to carefully evaluate the impact that decision may ultimately have on their profitability.

In the meantime, MSPs will soon have to accept the fact that there will soon be many more channel partners positioning themselves as MSPs regardless of whether they built those services themselves or are reselling services provided by an IT vendor such as Cisco.

In terms of types of partners, Cisco this week also made it clear it is primarily focused on recruiting software developers that will add their own intellectual property on top of Cisco services. At the same time, Cisco is also looking to reward advisors that essentially provide referrals for Cisco managed services.

Cisco also touted the completion of a Partner Experience Portal (PXP) that promises to make it easier to navigate both its channel programs and ever-increasing product portfolio. PXP is scheduled to go live at the end of November.

The company also pledged to once again address grey market sales and counterfeit products that Tuszik notes is now displacing $1.3 billion in revenue for Cisco and its partners.

“We will purge the bad actors,” says Tuszik.

Transforming one of the largest channels in the IT industry is not going to occur overnight. In the wake of the COVID-19 pandemic, however, it’s clear Cisco sees a need to accelerate a shift in its business model that was underway prior to the pandemic. The challenge now is accelerating that transition in a way that doesn’t wind up also causing a level of disruption among channel partners they can’t absorb during one of the sharpest economic downturns in modern history.

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