Renovated Cisco Managed Services Program Eyes Doubled Membership

Networking equipment vendor hopes eased barriers for admission will bring influx of partners at entry level.

September 11, 2009

D.H. Kass

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Cisco Systems Inc. said that substantially eased barriers for admission to its managed services channel program will bring an influx of partners at the entry level that could double membership in the next year.

Last week the vendor launched a redesign of its two-year-old partner program for managed services, the first such overhaul since its inception.

The core change to the program eliminates a hurdle that company officials believe kept the number of participants at a modest level. Now, instead of requiring small- and mid-sized solution providers to maintain their own network operating center--at an initial set up cost of at least $10 million--the vendor is permitting those partners to deploy managed services using the NOC of a larger MSP in a collaborative effort called a “white label” agreement.

Cisco, which last June offered a peek into the new framework at its annual partner meeting, also has stratified the MSCP program into three tiers, adding to the Advanced and Master ranks an entry level called Express. Partners without a NOC must collaborate with those at the higher levels.

Prior to the renovation, some 70 members engaged in the program, 60 percent of which qualified as certified service providers, including a handful of large global players.

However, it is the remaining 40 percent of the program’s participants--comprised of system integrators and traditional VARs--who are the beneficiaries of the program’s principal modifications and where the vendor mainly is looking to grow its roster.

“Two-thirds of our partners sell managed services but only 10 percent were enrolled in the MSCP program,” said Todd Roth, Cisco director of operations, worldwide channels. “The program was based on service designations and was too complex to digest and execute. We don’t know how quickly traditional VARs will migrate over but the relaxed requirements should make it easier for them to enroll.”

Roth said that changes to the MSCP program are geared toward the “non-traditional VAR that has demand but can’t make the investment for an NOC and needs to out task those capabilities. We recognize that SMB partners don’t have the capital to make deep investments in Cisco technology and managed services that the larger partners can.”

Cisco will not involve itself in the white label relationship between entry level and higher tier program members other than executing its annual audit of NOCs for proper levels of equipment, staffing and capacity, Roth said.

Partners at the Advanced and Master levels are not compelled to participate in a white label arrangement but those that agree to collaborate will be listed by Cisco in its partner locator, he said.

The vendor has not confined program changes urging collaboration only to smaller VARs, Roth said. It is encouraging its larger managed services players to partner with one another to maximize opportunities to move into new markets or “adjacent technologies such as unified communications and telepresence,” he said.

Cisco believes it has timed its program adjustments accurately to reflect current market dynamics.

“With access to capital and credit restrained, partners are asked to provide IT as a service,” Roth said. “Our research shows that demand for managed services will grow twice as fast as traditional IT. The partner community sees greater opportunity for revenue when they put managed services on top of our technology. It creates a higher level of stickiness with the end customer.”

TAGS: services,SMB,IT,Cisco,channel program

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