Cisco Extends Channel Partner Financing, Expands Benefits

Networking equipment vendor's latest deals aim to ensure channel partners have "working capital to weather the storm."

Cisco Systems Inc. will extend 90-day financing terms to channel partners for the next six months, a move that solidifies its standing among a growing number of IT vendors offering monetary assistance to resellers during the economic downturn.

The company announced at its recent Cisco Partner Summit that it would add 30 days to the current 60-day financing terms, fortify its rebate program and ease the requirements for entry into its managed services channel program. Company officials publicly referred to the package of additional benefits as “our stimulus package for you, the partners.”

In the past few months, a number of IT vendors have helped partners with working capital, offering assistance either by making more credit available, as when IBM Corp. offered $2B in additional financing in May, or by altering terms as have Dell Computer Corp., Hewlett-Packard Co., Lenovo and others. By contrast, Microsoft Corp. recently tightened its financing terms by requiring that its software and/or services constitute at least 35 percent of the customer’s total financed amount.

Edison Peres, Cisco vice president of worldwide channels, called the extended financing offer the “key area of support partners have requested,” a sentiment that quickly was echoed by some channel partners.

“For those partners that are under extended terms--those that are on 60 days--we are moving them to 90 days for the next six months,” Peres said. “Our goal is to help partners ensure that they have the working capital to weather the storm.”

Peres said that Cisco will expand its financing program, including the 90-day terms, to channel partners in Asia Pacific and Europe.

He said that the financing option adds to previous updates and enhancements Cisco has made to its Navigate to Accelerate program, a broad economic stimulus agenda the vendor introduced late last year to help its channel partners cope with the declining economy.

Extended financing provides more leverage

Jon Jensen, co-founder of Nexus IS, a Valencia, Calif.-based Cisco gold partner since 2004, called the extended financing terms “probably the most important” of the additional incentives offered by the vendor.

“We have always taken advantage of Cisco’s 60-day payment terms through that program,” Jensen said. He noted that the additional 30 days has the “effect of three times leverage over what most companies get in this market today.”

An executive at BlueWater Communications Group, a New York-based Cisco gold partner, also praised the extended financial terms. “The 90-day terms absolutely will afford us additional working capital,” said Adrian Liddiard, BlueWater chief operating officer. “It’s a good initiative. Our only reservation is that it doesn’t find its way to the street [through lower prices].”

In addition to the expanded financing, Cisco widened the scope of its rebate program. Previously, incentives were concentrated on advanced technologies such as unified communications, data center, security and wireless but now have been redirected to reward partners for architectural plays around collaboration, virtualization and borderless network. Partners will receive rebates for selling routing, switching, storage networking, wide-area optimization and emerging technologies surrounding one of those architectures.

The vendor also relaxed the barriers to entry for its managed services channel program. Beginning at the end of August, the program will allow partner-to-partner collaboration so two partners can work together to deliver a managed service using one network operations center.

Smaller resellers no longer will be required to invest in a network operations center to offer managed services. Cisco also is granting a single discount based on partner level attained in the managed services program for all products sold not just by specific service.

Liddiard said that BlueWater currently is not part of Cisco’s managed services channel program but expects to enlist under the revised requirements. “We were about to apply under the old program,” he said. “The new program will be a lot easier and simpler process to follow.”

He added that BlueWater “expects more rebates” with the expansion of technology now included in Cisco’s rebate program. “Cisco has always been good about ensuring that rebates don’t hit the street and are reserved for the partner community,” he said.

TAGS: Microsoft,virtualization,Dell,channel partners,channel

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