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Cisco Redefines How to Create Real Partner Value with “Return on Cisco” Model

Beth Vanni – Vice President

It’s always unique and endearing when an IT executive can forgo discussion of their technology and market trends and really speak to their partners’ interests, from the heart.  Edison Perez, Cisco SVP of Partners & Alliances, never fails to deliver in that area.

In his keynote speech here at the 16th annual Cisco Partner Summit, Perez continued this partnering thought leadership by redefining how the network giant will attempt to address what’s important to a solution provider’s growth and success.  Dubbed their  “Return on Cisco” measurement model, Perez described a combining of his company’s own value proposition to partners with what traditional financial investors look for when infusing capital.  He described Cisco’s appreciation for creating a sustained and robust value proposition to their channel partners but also helping them address the growth and funding challenges they experience in their local capital markets.

The four areas of the “Investor’s View” that Cisco is trying to more holistically address, include:

  • Operating profit
  • Growth potential
  • Minimized business risk
  • General sustainability

Where Cisco used to be focused on its partners’ health as measured by transactional revenue and gross margins, they evolved several years ago to encouraging partners to measure return on invested capital (ROIC).  That was a bit of a heady financial metric for many partners, designed mostly for CFOs and Controllers.  So, this next evolution to a more traditional investor view should make Cisco’s business development assistance more approachable and accountable to a larger community of partners.

The real question on this new partner value equation is how Cisco will measure itself on its contribution to partners’ increased operating profit, top-line growth, business risk levels and sustainability.  Certainly any Cisco Gold and Silver partner today would tell you they get measured on enough things already.  So, it will be interesting to see how they work the Return on Cisco model into their annual partner satisfaction and/or profitability studies and give themselves a grade.

So, why is Cisco pushing this model now with its partners, as it comes off strong economic and marketshare growth rebounds?   My guess is that it helps them anticipate more business model transformation among their traditional infrastructure VARs, which they desperately need right now as they continue to urge their partners to stretch into selling their architectures and building cloud services.  Plus, it perpetuates their partner-centric approach, which will continue to differentiate Cisco.

Will this new philosophy help Cisco achieve its goals with partners?  Tell us what you think?

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