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Cisco's Intercloud strategy is no threat to its channel partners

The $1 billion investment in the cloud has some of Cisco's partners concerned.

By far, the biggest news last week from Cisco’s channel event, Partner Summit, was the Intercloud announcement, where the company outlined its vision for a world of interconnected, federated clouds.

Part of the overall cloud strategy for Cisco involves building its own cloud services that could be bought by businesses directly and potentially compete with its channel. That caused some to wonder if Cisco will stick it to its resellers and take the business direct, effectively cutting its channel partners out of the loop. It seems like every year that I hear rumors that Cisco would become more aggressive with its channel partners, but this year it seemed the noise was louder than ever. In fact, I had a conversation with another analyst, whom I’ll leave unnamed, who was convinced that Cisco had been building a secret group inside the company that would enable Cisco to become its own, global systems integrator that would obviate the need for such a large partner organization. Think of it as Star Wars Attack of the Clones meets IBM Global Services.

Well, for any channel partner that may be concerned, I can definitively tell you that this is not the case. After attending Partner Summit, I left convinced that Cisco is as committed to its partner organization more than ever, for the following reasons:

  • Cisco achieves massive scale with its partner community. When Cisco’s new SVP of World Wide Channel Edison Peres took over the Channel organization, he inherited 65,000 resellers that give Cisco reach everywhere IT is being sold. This huge base of systems integrators, telcos, value-added resellers, distributors, and other types of resellers give Cisco ubiquitous reach across the globe, where almost any customer, no matter how big or small, can easily leverage Cisco technology.
  • The partner community is Cisco’s biggest competitive advantage. With all due respect to the product groups at Cisco, the partners are the engine that makes the Cisco car go. Whenever the company releases a new product, Cisco’s channel, combined with the right incentives to tweak the channel, can get that product into the market faster than any other means.
  • It promotes Cisco's architectural strategy. Along with the right incentives, Cisco has a number of industry certifications, some of which are considered the high water mark of knowledge in networking. The Cisco Certified Internetworking Engineer (CCIE) is to networking as the Jedi are to Star Wars fans. The CCIEs and other certified Cisco experts typically leverage the unique capabilities of an end-to-end Cisco architecture, and are often heard saying things like “these aren’t the switches you’re looking for” when alternatives are suggested. Cisco provides enormous amounts of support to its channel to ensure they’re successful, and in return, the channel ensures Cisco is.

Over the years, Cisco and its channel have had a great relationship working towards a common goal of doing what’s right for the customer. In fact, the channel has been so successful with this that, in aggregate, the partners’ customer satisfaction scores are actually higher than Cisco’s. This is the primary reason that over 85% of Cisco’s revenue flows through its channel today.

In a Q&A session at Partner Summit, Peres clearly stated that Cisco’s goal is to ensure that, post-Intercloud, the ratio of business that flows through the channel would remain in place. In fact, I would look at Intercloud as Cisco’s way of arming all 65,000 partners with cloud arrows to add to the quiver of products available. The cloud is coming, and coming in a big way. Partners should look at Cisco as giving them the tools to be more competitive, and not concern themselves with Cisco competing with them, because that’s not likely to happen any time soon.

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