Cisco Honors Channel Expertise
Feb. 25, 2000 (Computer Reseller News - CMP via COMTEX) -- Cisco
Systems has a simple formula for success: Don't pick the wrong enemy,
pick the right friends. In case you haven't noticed, most PC vendors
have hit hard times. This comes after years of dubbing Dell the
bogeyman and now emulating the Dell direct model.
Sure, they've tried to play a game of semantics with the channel.
Compaq, for one, has said it will take more of its business direct but
will include the channel as part of the equation whenever possible. In
other words, be direct but not be direct.
Many OEMs are even taking the next step of investing in or buying
their distribution or integration partners. While this may signal that
vendors covet the channel's expertise, it also creates potential
conflicts with OEMs' remaining channel partners. Cisco Chief Executive
and President John Chambers said he will buy 20 to 25 companies this
year, but he won't invest in his channels because of this conflict
issue.
Cisco has never tried to look or act direct. It has cast its fate
with the channel, and the channel and Cisco have benefited handsomely.
In Las Vegas last week, Cisco executives told some 2,100 worldwide
solution providers at its Partner Summit 2000 that 80 percent of its
business went through the channel last year, up from 50 percent in
1997. With fiscal 1999 revenue totaling just more than $12 billion,
that's a fivefold increase in channel-related sales since 1997.
What's more, Cisco has no intention of scrapping its winning formula.
Rick Justice, senior vice president of worldwide field operations at
the vendor, told solution providers he has no intention of hiring an
army of people to deliver Cisco solutions because "we wouldn't be any
good at it. We'll rely on you instead."
That is because Justice and other Cisco executives understand the new
e-commerce alchemy. Vendors must create devices that collectively must
be sold as systems by a channel that turns them into solutions.
Cisco is so attuned to this tenet that its fastest-growing partner
segment is consultants. Their number grew in the past year to 9,000
from 500. That's 9,000 partners who may not sell Cisco products but
influence the sale by recommending Cisco as part of the solution.
Cisco's highest-profile consultant, KPMG Consulting, predicts it will
influence some $500-million in Cisco product sales this year.
So why do these consultants want to partner with a hardware vendor
when direct remuneration from the OEM is not part of the equation?
Many vendors offering the channel products rather than solutions are
struggling to answer that question. But not Cisco. Chambers has his
sights set on turning Cisco into a $50 billion company within the next
five years. And as ambitious as that goal may be, he says the services
opportunities solution providers wrap around Cisco systems are "two to
three times" greater than product sales.
Cisco gets it. Let's hope more vendors follow Cisco's lead.
Tell me what you think.
Call me at (715) 282-6561 or send e-mail to czarley@cmp.com.
crn.com
-0-
By: Craig Zarley
Copyright 2000 CMP Media Inc.
*** end of story *** |
