As Chief Strategist of the Worldwide Partner Organization, I often speak with partners about their value-add, differentiation, and profitability. Here are some thoughts on how the traditional partner differentiation model needs to evolve in the cloud market place.

Partner profitability has always been driven by the unique value that partners add to surround the offerings from their suppliers. This can be in the form of integration with other third-party products, their own pre- and post-sales services, or even custom service level agreements. The more unique this differentiation, the higher is the partner margin on the transaction; and the more relevant their proposed solution is for the customer, the higher is their probability of winning the order. It is not surprising to see two Cisco partners – one making 12% gross margin and the other making over 25% on similar transactions due to their differing value propositions. Both business models are valid as long as the partner is managing the overhead against the subject margin they are receiving.

Over the past decade, channel partners have typically created unique value propositions around the Customer Premise Equipment (CPE) they have been reselling to end customers. This proposition may include having the lowest price, providing fast delivery, conducting pre-delivery testing or configuration, on-site installation or integration, and many others. These CPE related on-premise value propositions are still relevant in the cloud builder role, but are often not applicable to a cloud services reselling role.

It is clear that the market is moving rapidly to cloud adoption based on new consumption models. According to UBM (United Business Media), 37% of all IT spend will be off-premise in 2013 and there will also be an 11% decline in CPE sales next year. Channel partners need to create new value propositions to differentiate themselves when they resell new cloud services instead of CPE to their customers. In some ways, this requires a return to basics: Read More »

Tags: Cisco, cloud, differentiation, partner, services

Need help building your professional services practice so you can increase profitability, accelerate your evolution to architectures, and differentiate? Then you won’t want to miss our upcoming live video broadcast for partners.

On Monday, April 18 at 10:30 a.m. PST, we’ll be hosting a live, free, interactive video chat on our Ustream channel with Bob Dimicco, Director of Cisco Services. During the live broadcast, we’ll be taking a closer look at the recent announcement made at Partner Summit 2011 and what it means for partners.

We will also cover the following topics:

• Why Services are THE key differentiator and profitability engine for Cisco partners.
• How partners can take advantage of the new set of services called Collaborative Professional Services
• Why Cisco has one of the most partner-centric services strategies in the IT industry.
• How Cisco will drive the next wave of service innovation through Cisco’s Smart Services.

And, most importantly, we’ll be answering YOUR Services questions live on the air during the broadcast.

Your participation is integral to the success of this broadcast! Here’s how you can participate:
Read More »

Tags: broadcast, Cisco, ciscops11, differentiation, live, partner summit, partners, profits, services, smart services, ustream