Partner: New Cisco Incentives Support Shift to Software, Opex Models

CISCO PARTNER SUMMIT — A newly merged program for Cisco incentives for partners – dubbed the biggest change in more than a decade – will give relief to distributors, VARs, MSPs and other partners who are linking arms with the vendor to pivot toward more as-a-service, software-based sales.

Cisco has created a "single, simplified" incentive, named the Cisco Partner Incentive which rewards three particular targets: new logos, up-sell and cross-sell. The program will start in the second half of 2024 and gradually encompass elements of VIP, Lifecycle Incentives and CSPP programs for Cisco incentives. Three tracks in the program cover non-recurring deals, recurring offers and customer value.

Cisco's Mark Surplus

"The Cisco Partner Incentive is the biggest change we've made to partner incentives in more than a decade and is the capstone on the Cisco Partner Program evolution started in 2020," said Marc Surplus, vice president of partner strategy and programs at Cisco.

Rebates can come from a variety of actions, including widening an existing customer's subscription spend. The Cisco partner incentives accompany internal incentives Cisco recently added for its sales teams to drive growth in targeted accounts in conjunction with the channel.

Cisco announced the changes at its Partner Summit in Miami Beach Wednesday.

Aligning Cisco Incentives with Partner Investments

Kristin Hill, ScanSource vice president of supplier services, praised the merger of the three Cisco partner incentive programs.

ScanSource's Kristin Hill

"Managing three separate profitability programs is cumbersome. It usually requires multiple humans to do so. So they're taking out some of that complexity for us," Hill told Channel Futures.

Moreover, she said the merger rewards partners who tackle the multi-architecture solutions Cisco is encouraging partners to sell.

"With the programs all [formerly] being disparate, I reward you for this over here and this over here," Hill said, "Well, if you sell both, you should get more rewards. By merging those programs together, it's going to do that."

Furthermore, she said the incentive changes help Cisco take on the heavy lift of building recurring revenue and software practices. ScanSource, the South Carolina-based hybrid distributor, has made significant operational and SGNA investments into new types of solutions, according to Hill. With the portfolio requiring a significant resource allocation, Hill said companies like ScanSource are evaluating the new solutions it can add and where it can "ultimately generate the most profit?'

"Cisco is finally merging those two worlds of, 'Sell my stuff but sell it profitably,' and it's taken them quite some time to get there. So we're really happy to hear about that this year," she said.

Hill said Cisco incentives update comes as other vendors waver on their commitment to the indirect sales channel.

"As we move into this digital transformation era and things are moving into software, more and more suppliers are leaving the channel behind or eroding channel margins," she said. "Cisco is being very vocal and very aggressive in staying committed to the channel, and we want to hear that as channel partners."

Specializations

Cisco announced that it will as many as six new solutions specializations in the upcoming nine months. Those are:

"In broadening Cisco's suite of Solution Specializations, we are helping our partners differentiate in the market and demonstrate their expertise in the technologies and solutions sought by customers," Surplus said.

In addition, Cisco restyled its Small Business specialization as the Small and Medium Business (SMB) specialization. That reflects in some respects the sweet spot Cisco partner leaders have described in their SMB practice:

PXP Updates

Cisco also unveiled several enhancements to its Partner Experience Platform (PXP), which allows to partners to access data about

The updates include Growth Finder, a tool that reveals insights on partners can cross-sell and upsell on existing accounts. In addition, a "Distributor Partner View" lets resellers authorize their distributors to temporarily access their portfolio and provide benchmarking.

"The idea in PXP is that if we show you what you should sell, you'll try to sell it. And if they can identify which solutions your customers should map to, that will give you more at bats as a partner with your customers," Kristin Hill said.

Andrew Sage, who leads both SMB and distribution sales for Cisco, said the tool allows distributors to operate more strategically with the VARs Cisco has tapped as their "focus partners." While most resellers do not sell exclusively through one distributor, Cisco asks distributors to "own the development" of particular partners, Sage said.

Cisco's Andrew Sage

"For those focused partners, the distributors make more margin from us. And they're in a way a little bit protected from other distributors snatching those partners away and have a little bit of space that they can operate within to develop the practice of that partner, think more strategically and use tools like [Distributor Partner View]," Sage told Channel Futures.

Security Opportunities

Multiple partners shared with Channel Futures that they see big upside in cybersecurity sales with Cisco. The vendor on Tuesday unveiled new security suites for user protection, cloud protection and breach protection. It also doubled its VIP rebate for those particular areas of the portfolio.

Hill said ScanSource grew its Cisco security bookings 66% in fiscal year 2022 (ended June 30, 2022), and added another 26% of security bookings growth in fiscal year 2023.

"Cisco is the only end to end solution portfolio out there in security and we've seen phenomenal growth," she said.

Neil Anderson, area vice president for WWT's cloud and infrastructure solutions, said he sees tremendous opportunity with the Cisco cybersecurity portfolio.

"The recently announced Cisco Secure Access SSE Solution, the XDR solution, and others are going to put Cisco in a very unique place in the industry for cyber," Anderson told Channel Futures.

SMB-serving partners have spoken about the need for simplified, outcome-focused messaging about cybersecurity. Logicalis chief technology officer Toby Alcock said even Logicalis' clients in the lower enterprise need that simplicity.

Logicalis' Toby Alcock

"Everyone's saying, 'I don't have budget to hire 100 security people... and even if I did, I couldn't find them. So I need it to be simpler, because our job isn't to be running IT and [securing the company]. It's running mines in Brazil, or it's manufacturing in the USA or getting on with the actual job of the company for their shareholders. And that's a big shift for IT in general," Alcock told Channel Futures.

Splunk Buy Highlights FSO Push

Cisco leaders did what they could to keep partners informed on the company's $28 billion acquisition of Splunk, with the transaction still subject to closing conditions. Splunk president and CEO Gary Steele, appearing in a keynote session with Cisco CEO Chuck Robbins, said he expects the deal to wrap by December 24

Steele added that he and the Splunk team view Cisco's partner community as an advantage

Splunk's Gary Steele

"We believe that there's no way we can deliver all those services. We absolutely need this partner community. There's so much opportunity where customers say to us, 'We need your help. We need to help to drive the value and adoption of your critical capability.' So all the partner community represents a critical opportunity for us," Steele said on stage.

Cisco applications leader Liz Centoni on Tuesday said she hopes partner-led big logo deals in the area of full-stack observability (FSO) will expand well beyond from 35% in the upcoming years. Anderson said he sees "high potential" in that area for WWT.

WWT's Neil Anderson

"The combination of ThousandEyes, AppDynamics and now Splunk will give customers unprecedented access to observability for both network and security teams," Anderson said.

Savings, Visibility and Innovation

Channel Futures caught up with Complete Communications, a technology advisory firm that works in Cisco's elite Digital Solutions Integrator (DSI) program. The Utah-based firm helps Cisco SD-WAN clients assess the underlying carriers that compose their wide area networks and to optimize performance and save them money.

Complete Communications president and CEO Blake Darling said his firm is showing clients ways to fund many of the technology investments Cisco has been sharing on the main stage.

Complete Communications' Blake Darling

"There's a huge opportunity for customers to save dollars if they have proper visibility, and we provide that proper visibility for free to the customer to make educated, non-siloed purchasing decisions," Darling told Channel Futures.

Bridgepointe's Scott Kinka

That fits well with what Bridgepointe chief strategy officer Scott Kinka told Channel Futures last month: that business aren't looking to cut costs, but rather to free up money for new investments.

“What the market is telling you is, find me the money to do the fun stuff. That’s the IT cost management job,” Kinka said.