Channel builders

Cisco announced a host of new channel programmes at its annual partner summit last month—Channel Middle East spoke to Chris Dedicoat, group VP for Cisco EMEA to find out more about what is on offer for partners in the Middle East

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By  Mark Sutton Published  May 4, 2003

Introduction|~||~||~|Las Vegas: Cisco revealed a number of new schemes for the channel at its annual Partner Summit held here last month. With over 40,000 partners worldwide, accounting for 90% of Cisco revenues, the networking vendor is one of the most pro-active companies in terms of channel relationships.

This year’s summit saw the launch of a whole range of initiatives, including Partner Consultative Support, a scheme to allow Cisco Services to mentor partners in advanced technologies; Cisco Partner View, an enhanced productivity portal that consolidates all of Cisco’s online content into one place; new financial programmes from Cisco Capital, including eAgent, a scheme to allow partners to act as sales agents without having to take on the financing of sales; enhanced partner metrics; improved focus on the SMB sector, particularly the 100-1,000 user ‘commercial’ sector and a $150 million worldwide marketing campaign focused on creating market demand for Cisco products. Also announced was an EMEA-level revamp of Cisco’s distribution channel, which will cut the number of distributors that procure direct from Cisco, and put Cisco Distribution Partners in as master distributors to handle fulfilment instead.

Channel Middle East spoke to Chris Dedicoat, group vice president of Cisco EMEA to find out exactly what these announcements will mean for partners in the Middle East.

||**||Services boost, but not at the expense of partners|~||~||~|CME: We have heard a lot of new schemes from Cisco for its partner’s worldwide, in terms of education, marketing, sharing market intelligence, financing—what sort of state is your channel in the Middle East in terms of being able to adopt some of these new programmes?

Chris Dedicoat: First of all, in the Middle East we have our own sales force, but we pretty much transact all the business, certainly in enterprise and the commercial market, through partners.
One of the challenges we had was the level of expertise in the Middle East, we didn’t have any Gold partners in that market, so the focus is on ensuring that we can get to a position where we have accredited channels that can support the provision of our product to customers, that is probably the number one thing to us, because it is important to us from a customer satisfaction perspective.

The interesting thing is that the Middle East market is a market where we are actually seeing some of the highest adoption of advanced technologies. It is not that the partners can be not be as qualified, actually they have to be as qualified, if not even more qualified, than in developed markets, if you look at it in terms of the percentage of our business that is in advanced technologies. So certification has been a key focus for us, particularly in the mature markets, that exist in the Middle East.

The second thing for us, is distribution in that part of the world is different, there is not the advantages of the European Union and the open market, so the ability to move product from country to country is far more limited, and the tax position on a country by country basis is very different, so I think we have to continue to have a view of Europe, Middle East and Africa and to separate anything that we do, which is a global programme focused on completely mature markets.

What we have to try and do is get as close as we can in terms of providing some of the benefits of those global programmes, particularly for distribution in the Middle East. The same problems exist, [but] our ability to overcome them is somewhat reduced. So we are rolling out our CDP programme, initially to Eastern Europe, at this moment in time we will continue with the direct supply of products to distributors in the Middle East.

CME: We have heard a lot about mentoring for partners, and how Cisco services can work with them to help with knowledge transfer of skills. Will that mean more of a Cisco Services presence in the region, having a closer touch with the partners?

Dedicoat: We certainly recognise the need for us to inject some of the Cisco Services people [into the channel], and indeed that has been happening, because one of the things that customers look for, in terms of adoption of advanced technologies, is they want Cisco to be involved. Our advanced services portfolio is important to some of the customers in the Middle East, like Dubai Internet City, for example.

The other thing that we are looking to do as well is to really encourage the training of local partners in the Middle East, by the use of e-learning. We are really trying to utilise technology to communicate expertise, to do more knowledge sharing, and some of the most innovative developments in terms of our e-learning platform have come out of the region, because we have often had to [deliver training] over limited bandwidth.

Going forward, I think as we see the service providers start to enhance the portfolio of services they provide, that will also be a good opportunity to increase the knowledge that exists in those companies. Often in these markets, people are well-educated and providing that you can provide the forum for knowledge sharing, they actually learn very quickly. There is a direct correlation between the use of new technology and GDP growth, so I think that has been pretty fundamental to us, that once we can get to people, then they learn very quickly, and we need to continue to use technology to reach those people, and increase our own reach into our channel partners.

CME: Will that mean putting services personnel in the Middle East permanently, or would you take a partner who wants to learn more for a particular project out of the region to go and get this hands-on experience that Cisco has been talking about?

Dedicoat: We obviously bring our partners into our offices where we can do a bit more lab-based training. We introduced a new capability in terms of provision of lab equipment, we will provide it on a lease basis, so partners don’t have to use capital. Again, that was very important in the Middle East, [partners there] were quite instrumental in driving that, because of the high cost on lower revenue schemes, so that did drive some of our thinking.

In terms of the provision of direct service people, we do have a team of direct service people based in Dubai, as part of our customer advocacy organisation, and we expect to continue building that team based upon the business opportunity.

What we don’t want to do—we never want to have a big service organisation. We want to be able to leverage the partners, because that is realistically where the partners are going to make their margins. We want to ensure that we can provide them support locally, in the early adoption of advanced technologies particularly, but we don’t want to get to a point where we are seen as competing for their business. We want to be able to provide them with a platform on which they can ensure they provide quality to their customers, and also that they can learn themselves how they should support these new technologies.

CME: You mentioned equipment leasing there—the eAgent programme is solely US at the moment, but in terms of some of the other financing schemes, it is quite interesting that you offer the option of buying accounts receivable from partners, and a number of wider financial services. Will you be doing any of these programmes in the Middle East?

Dedicoat: We want to look at how we roll these programmes out. The challenge that you have, for example with the eAgent, historically would be that a company would have a licence to import the goods into the country, and then they would pay tax on the transfer price into the country. With eAgent, the way that would work, the order will be placed on the partner, and then Cisco will provide that product directly to the customer, maybe through a distribution partner. But then you have got to look at where and who is going to be paying local taxes. In the European Union, as long as somewhere in the European Union you pay tax, then you are alright.

||**||Finance, SMBs and business in Iraq|~||~||~|CME: With the GCC customs union, that came in from the start of this year, with one single tax for the whole GCC, is that likely to make a difference in rolling out these finance schemes?

Dedicoat: Those are the sort of things that we have to consider, it is one of the considerations that is different to other parts of the world. One of the things that we do see in the Middle East for some of the bigger projects, we have utilised Cisco Capital. We do that with a consortia of banks, we will work with them to provide a capital capability, we see working with banking partners as the way we will continue in the Middle East.

CME: Cisco has a $150 million global marketing campaign kicking off in June, will it cover the whole of the EMEA region?

Dedicoat: It is in selected countries—Germany, France and the UK to begin with, and then it is going to be rolled out in other markets. I don’t think that it will happen in the short term in the Middle East, obviously we will look to extend the campaign in phase two to as many countries as we can.

CME: Something else that looks very interesting is the idea of the commercial segment of the SMB market, 100-1,000 users and the data you have collected there regarding approaches to that type of customer. Obviously this is pretty close to the size of a lot of businesses in the Middle East, so in terms of pushing that to partners, what is your plan for driving sales in that segment?

Dedicoat: That [segment] actually currently makes about one third of our business in EMEA, and what we are looking to do is we want that part of the market to be as light a touch from us as we can.
We want that to be a part of the market where we encourage the partners, who have historically not addressed that part of the market. The reason they did not address that part of the market, was that the cost of sale for them, if all they were going to provide was a router, was not a viable model. The difference now is because the portfolio is a lot larger, and includes voice, a commercial company with a hundred employees is an opportunity now that is worthwhile our partners engaging in. The revenue opportunity is significantly greater, because you are providing a telephony system as well as a LAN as well as the wide area connectivity, security, maybe content too, so the package that a partner can provide into that market space, for them it is a bigger opportunity, and therefore we feel that they will be more encouraged to engage their sales force. Which is good for us, and it is also good for our partners. Again, their integration skills, and the fact that often those smaller companies don’t have their own IT personnel, the value that those partners provide is even more important in that sector than in the enterprise, where they have their own skills.

CME: In terms of identifying some of the verticals in the commercial segment, are you looking at packaged offerings, or making solutions kits available to partners?

Dedicoat: What we want to be able to do is to use the web site to communicate the fact that there is a solution, so the principal would be that we want to work with the partner. With IP telephony, we provide the phone, we provide the call manager software, we provide the LAN that provides the connectivity, but that is not a solution.

What that partner then has to add to that, for say the hospitality market, people have to provide software specifically for hotels on the IP phones, they have to provide the software to provide the contact centre support when people ring in to the hotel, they have to provide the security features, in terms of security management. There is a rich service content, particularly in IP telephony, which is the value-add opportunity for our partners, and actually we are seeing quite a lot of innovation in the Middle East, where we are seeing partners developing software specifically for the hospitality market space.

I think that is what we will begin to see, partners focusing on areas of competence where they can add value in terms of their services and software that they integrate into certain segments. In the Middle East the likely segments will be around the financial services market space and also around hospitality and retail.

CME: Cisco has a lot of services online, you have just consolidated a lot of these in the PartnerView portal, but with bandwidth problems we have in the Middle East how are you going to drive things through the web, and how much of the content will you provide in local languages?

Dedicoat: We have translated Cisco Networking Academies into Arabic. Where we feel that there is a need to provide information in a local language, because it is touching people that are not necessarily yet in business, then we would do it. Cisco Networking Academy is an education programme, it is used in universities and schools, and there is a lot of adoption of it in the Middle East, so we provide translation.

The challenge that is interesting, is around IP telephony, because what is new to Cisco with IP telephony is that we are providing a customer interface, we are providing customer facing applications, where we didn’t historically. One of the challenges as we prioritise around the world is the adoption of different language support on Call Manager. Clearly there is a high proportion of Arabic speakers, there have been some specific challenges, because the language is complex to translate onto a relatively small screen.

CME: Does Cisco have any plans for Iraq, in terms of putting your people on the ground in the country?

Dedicoat: We are already working with the American Red Cross, really at this moment in time our focus is on the humanitarian effort, and what we can do as a company to support that. We will look at how the situation develops. Clearly we have not been involved historically, but we expect it to be a market, where the country is prosperous, and we expect that to be an opportunity for us. I would expect to see us as part of the development over time, but our focus today is trying to help some of the agencies with communications. The same occurred in Kosovo, communication was one of the most important aspects of the rebuilding and making sure that people were able to contact people.||**||

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