12 Big Cisco Partner Trends: VARs Embracing MSP, Agent Models
Cisco is seeing 32% year-over-year MSP growth and a large uptick in traditional resellers selling Webex for a commission.
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Marketplaces are all the hype in the channel these days. Has the customer purchasing mindset shifted to favor direct marketplaces? Will vendors go there?
Cisco’s Andrew Sage gave a nuanced answer.
“We’re trying every new way that our customers are asking us to buy, and then we’re going to double down on the ones that are working right now,” he said.
However, he said the channel’s go-to-market motion has absolutely proven itself as a purchasing method that is working.
“The idea that we would get to millions of these customers somehow by putting up a clever website and selling direct to them is absolutely never going to happen. And everybody at Cisco knows that,” he said.
Sage said he is seeing many traditional Cisco resellers shift to handle more of the customer life cycle. Whereas they previously focused on upfront professional services, these partners are doing more and more in the management of the offerings they sell.
“In the past, a lot of the value of VAR to us, frankly, and to the customer, was introducing the logistics, the delivery, the installation, the cabling and the turn-up, and a lot of that value is not needed anymore,” Sage said. “It’s been replaced by an even bigger need. And that is to successfully activate the technology that customers buy. And then almost more importantly, to make sure that it gets adopted over the life cycle, so that the customer is using it successfully to get the outcome that they want.”
Ragusa-McBain said Cisco has seen 32% year-over-year growth in MSPs, compared to an industry standard of 23%. Moreover, she said she has seen 34% SMB growth.
“We’ve always been partner-focused at Cisco, so we’re really putting an emphasis on driving new relationships with these partners. That’s the great thing – we’ve always been a partner-led company and participant in that. Using our tagline, ‘bridge to possible,’ we have an opportunity to actually do that with managed service providers – now more than ever before …” she told Channel Futures.
“So we are moving in the right direction of not only gearing up, educating and driving awareness, but helping partners accelerate their own business practices.”
Ragusa-McBain said Cisco’s recent investments in its MSP portfolio reflect partner feedback. She said MSPs are clamoring for more simplicity.
“We understand that after 38 years and 237 acquisitions, Cisco might just be a bit complicated. Our heart is saying, how do we simplify things? How do we get people started and able to ramp up quickly? We are focused on creating the true partner journey,” she said.
Cisco has announced two partnerships with technology solutions brokerages (TSBs) in the last year.
Hogan said her collaboration partner sales team is seeing early wins and traction. Ever since early March, just after Cisco announced its partnership with Telrus, the company has reportedly seen a 120% increase across its metrics pipeline.
“We’re where we want it to be, and we’re excited about it. Telarus and Intelisys have remained amazing partners, and our existing Cisco partner community has been super-embracing of this new route as well,” Hogan told Channel Futures.
Sage said Cisco recently moved the responsibility for its small business customer segments into Sage’s partner sales organization. Sage, whose job includes distribution, will also include customers that spend ess than $200,000 with Cisco over a three-year period.
“They’re related but not the same. We’re not implying in any way that the only way we will sell to small businesses is through our distributors. But we moved it into the partner organization because we’re very convinced that’s the wheelhouse of the growth we’ve seen so far. We’ll be way closer in proximity to all of the key route-to-market functions, key marketing functions and key programs we’re going to need to drive,” he said.
Hogan said multiple traditional Cisco resellers called her when the vendor announced its agent model. These partners were enthused at the opportunity. The existing collaboration partner base numbers more than 3,000, and many of them viewed the agent model as a more profitable and easy way to transact with down-market customers.
She said new Webex business in this new model is “pretty evenly split” between new agent partners and traditional Cisco VARs.
“I think it was a little bit unexpected – the degree of success we would see with the existing VAR community. It wasn’t shareshift. It wasn’t our partner saying, ‘Hey, I’d like to transact this deal that I would have brought to Cisco regardless down this new route,’ but rather, truly net-new customers that these partners were bringing to Cisco saying, ‘Because of this new model, it now makes financial sense for us and makes sense for the sake of simplicity, to go transact with Cisco in this new way,'” Hogan said.
Hogan broke down customer demographics for agent-based Webex sales.
First she said the bulk of the wins featured the calling product line.
She said half of the wins represent net-new Cisco customers who previously were using a Webex competitor.
“And I’d say the other 50%, interestingly enough, are existing Cisco customers that had a relationship with an agent and are leveraging that agent to bring them into the future with WebEx calling. So moving off of a legacy Cisco calling platform onto Webex calling via an agent,” Hogan told Channel Futures.
Sage said Cisco’s SMB business is growing at a 35% clip.
“It’s disproportionately contributing to Cisco’s global growth. Almost all the new customers we get in a quarter come to us through small and midsize customers,” Sage told Channel Futures.
In addition, Sage said SMBs are adopting software more quickly than any other customer size. That ties in well with Cisco’s goal of being a software and services company.
Sage said SMBs are facing an unprecedented opportunity to buy and harness enterprise technology.
“Everything used to be complicated. You’d get servers and licenses, and people would come on site to connect stuff,” Sage said. “Most small businesses couldn’t engage in that. Now they can because they can just go to the cloud, and they can fire up an application that has real business value almost overnight. So they’re stampeding to these SaaS applications.”
At the same time, these customers will need help optimizing their environments for these technologies.
“First of all we like to say, ‘No network, no cloud,’ so the network infrastructure that they have and the security that they have has got to be right,” Sage said.
Sage said Cisco has embraced these sustainability efforts in part because partners have been asking for them. He said almost half of the partner base was already engaging in a circular economy or life cycle practice.
“We want to get our partners more involved in this because they’re telling us that they want to be more,” he said.
Cisco last week rolled out new initiatives around sustainability.
First the company honored four U.S. partners for placing at the top of its Digital Sustainability Challenge: Davra, KLA Laboratories, Rockwell Automation and Schneider Electric.
In addition, Cisco has made its global sustainability awards program open until April 30.
Cisco is also offering partners a “takeback incentives.” The promotion rewards partners who land a deal in which they offer to ultimately take back the equipment they sell to the customer for recycling purposes.
Cisco will offer an incremental discount for partners that return the equipment to the vendor.
“Instead of making it, using it and throwing it out, you make it, you use it, you bring it back, you see if you can do something else with it. You try that, and if that works, great. If it doesn’t then you at least recycle old components; don’t put it in a landfill,” he said.
Partners usually can earn up to a 7% extra discount on resale, according to Sage.
“They’ll use some of that to pass to the customer to say, ‘Hey, if you upgrade, I’ll give you [some] more discounts; just give me the stuff back,'” he said.
Cisco last week rolled out new initiatives around sustainability.
First the company honored four U.S. partners for placing at the top of its Digital Sustainability Challenge: Davra, KLA Laboratories, Rockwell Automation and Schneider Electric.
In addition, Cisco has made its global sustainability awards program open until April 30.
Cisco is also offering partners a “takeback incentives.” The promotion rewards partners who land a deal in which they offer to ultimately take back the equipment they sell to the customer for recycling purposes.
Cisco will offer an incremental discount for partners that return the equipment to the vendor.
“Instead of making it, using it and throwing it out, you make it, you use it, you bring it back, you see if you can do something else with it. You try that, and if that works, great. If it doesn’t then you at least recycle old components; don’t put it in a landfill,” he said.
Partners usually can earn up to a 7% extra discount on resale, according to Sage.
“They’ll use some of that to pass to the customer to say, ‘Hey, if you upgrade, I’ll give you [some] more discounts; just give me the stuff back,'” he said.
Long-time Cisco resellers are embracing both the MSP model and the commission-based agent model.
Those are two of the insights Channel Futures learned last week in conversations with leading Cisco channel partner leaders. They shared numbers on how they see their partner base growing and adapting.
Cisco’s Andrew Sage
For example, Andrew Sage, vice president of global distribution sales, spoke about Cisco’s growth in the SMB segment, where partners are playing a crucial role. He also shared Cisco’s recent initiatives to reward partners and their customers for sustainable practices.
Michelle Ragusa-McBain, provider elevate leader for the global partner organization, spoke to the rapid growth Cisco is seeing with MSPs.
Cisco’s Michelle McBain
Kristyn Hogan, vice president of global collaboration partner sales, shared data on how embracing the agent partner model has driven business for Cisco. Cisco announced a partnership with Intelisys last summer to sell Webex, and in March announced a similar agreement with Telarus. Hogan said Cisco initially rolled out the commission-based model in order to appeal to a new set of partners and a new set of down-market customers. However, she said existing Cisco partners and larger customers have also embraced the offering.
Cisco’s Kristyn Hogan
These leaders spoke to Channel Futures at last week’s Channel Partners Conference & Expo. Scroll through the images above to see 12 key partner trends from Cisco channel leaders.
Channel Futures senior news editor Allison Francis contributed to this story.
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