How Cisco aims to prevent complexity from killing partner profits
- Cisco’s portfolio is growing rapidly as the company enters new markets.
- This increases overhead costs for its crucial partner network, which drives 90% of Cisco’s bookings.
- Cisco wants to reduce complexity before killing partner profits, its partner’s manager told Insider.
Cisco’s portfolio is growing and its offerings are becoming increasingly difficult for its reseller partners to manage.
As Cisco tackles new markets beyond its core networking business, the growing complexity of the $ 230 billion enterprise tech giant’s offerings means its partners must absorb the overhead costs associated with the network. management of a growing portfolio. New offerings simply require more manpower, technical expertise, and valuable time to manage.
Today, the company is taking steps to try to prevent this complexity from crushing the profits of the partners.
“If it is so complex to implement and run a product, to manage all the programs, the configuration, it will kill the profitability of our partners,” said Oliver Tuszik, global head of partner sales at Cisco, in an interview with Insider. “They pay their salespeople on profit margins, not on bookings.”
Cisco relies heavily on reseller partners to generate revenue – approximately 90% of the company’s bookings are made through its partners, which range from large companies like IBM and Amazon Web Services to smaller companies around the world. whole.
These partners now manage a wider Cisco product line than ever before, as the company rolls out new offerings in areas such as security, cloud and collaboration. At the same time, customers are demanding a wider range of products from existing businesses, such as networking, in the context of the rise of remote working.
Partners echoed this concern. One of Cisco’s main partners, World Wide Technology, sells $ 6 billion in Cisco products annually. WWT executive Brian Ortbals told Insider that the increasing complexity of the portfolio made it “difficult to strike a balance.”
“It’s about taking this very rich and expansive portfolio and consolidating it into things that hopefully resonate with clients,” Ortbals said.
Today, Cisco is dedicating resources to helping reduce complexity for partners, Tuszik said. The company has reorganized its partner experience platform to consolidate data and give sellers actionable insights into buying habits.
The company also guides its partners to offer more managed services which bundle various offers and sell them as a subscription, which generates more revenue. In some cases, Cisco even encourages its partners to bundle its services with those of competing vendors, according to Tuszik.
The success of these initiatives will prove crucial to Cisco’s broader push into selling its products as a service and generating more recurring revenue. Tuszik said reducing complexity for partners and customers will remain a top priority.
“We have to make sure that the relationship with Cisco and the creation of the solution becomes easier,” Tuszik said.
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