Cisco Partners Must Collaborate or Die
In the era of digitization, standing alone, selling products, and being a traditional box pusher just isn’t going to cut it.
With thousands of its channel partners gathered in Montreal this week for Cisco Partner Summit 2015, Cisco is promoting a "Be Bold" theme, urging community members to think differently about their role as partners and the way they deliver solutions to customers.
The digital transformation, pervasive across all industries, is driving the need for boldness. In almost every presentation I've attended at the event, I've heard about digitization and its disruptive effect on legacy businesses. From my perspective, the impact of digital transformation has yet to really be felt but will be over the next decade. Organizations that can become natively digital will leapfrog their competition; those that can't will struggle to survive.
The digitization trend is having a profound impact on Cisco's channel partners, as they need to evolve quickly as well. One of the bigger shifts across IT today is the need to sell business outcomes, which obviously requires selling solutions that have tangible business value.
"Selling outcomes" is one of those things everyone loves to talk about but very few can do effectively. As I've talked with partners (Cisco's and others), I've had some confess to me that while they can get sit-downs with the C-level audience and line-of-business managers, they really don't know what to say to them once in those meetings.
The ability to put solutions together and speak to a business audience is becoming a crucial skill for partners as more and more groups outside of IT are controlling IT budget. So how does a partner compete in this digital era of business? The answer is to collaborate with other types of partners and together deliver a complete solution that solves a business need.
The Cisco partner community comprises many different types of companies, including: service providers, consultants, systems integrators, intercloud partners, learning partners, distributors, technology partners, traditional channel partners, Internet of Things (IoT) suppliers, independent software vendors, and influencers.
Cisco showcased a number of recent solutions that involved four different types of partners. Most were IoT-related, and included non-typical tech partners such as Rockwell Automation and Sensity Systems. These aren't exactly household IT names, but they are now part of the Cisco partner ecosystem. To help facilitate collaboration, Cisco has built an online marketplace of partners that is searchable by vertical or solution. Partners can collaborate via the marketplace, as well.
Shifting to a collaborative sales model can benefit partners in many ways. The first benefit, and maybe most important, is financial. In his keynote, Bruce Klein, Cisco's SVP of the Worldwide Partner Organization, indicated that revenue for multi-partner deals can be 60% greater than it is for single-partner deals, with margins for the larger deals 70% higher than they are for the smaller ones. This shouldn't be a surprise since customers are typically always willing to pay up if a technology solution solves a real business problem.
Another benefit is customer-stickiness. In selling business outcomes, a company evolves from a reseller to a true business partner. Also, selling business outcomes leads to more relationships built at a higher level in the organization, which makes a harder challenge for a competitor to come in and undercut the business with a lower price. The customer isn't buying discrete, "best of breed" products but rather a business outcome.
Pluses for Cisco
Partner collaboration has a number of benefits to Cisco as well. The company's ability to put together industry solutions moves it closer to the goal of being the industry's #1 IT vendor. Also, its partners should be able to move a broader range of products at higher margins, improving both top and bottom lines for Cisco.
Increasing partner loyalty is another interesting element to consider. It seems every time I talk to a competitive vendor, I hear about an attempt poach Cisco partners. The number of partners is finite, after all, and with Cisco having such a high percentage of them Cisco partners are a logical group of companies to go after. The ability to tap into and collaborate with the broad partner ecosystem should create a much tighter bond between Cisco and its partner base, as jumping to a different vendor would mean the partner could lose access to many of those other ecosystem partners.
In the era of digitization, selling products and being a traditional box pusher just isn't going to cut it. Customers need IT solutions that can help transform their organizations -- meaning Cisco partners must focus on innovation to be successful.
However, no single partner can know everything about everything, particularly in this era of IoT in which we see more and more network-connected devices. The only way partners can be successful is to work with each other to deliver the complete package. Those that can do this will likely thrive, and grab share. Those that can't will go the way of the PBX reseller, and die.