“The big change for us is the whole transition of the company into software and services.”

In a conversation with DQ Channels Daisy Chittilapilly- Director, Partner Organization, Cisco India speaks on the Channels strategies and the focus areas of Cisco for Indian Market.

Post Cisco restructuring last year, what has been the strategic changes from a partner organization point of view?

In India specifically, more than the people, the big change for us is the whole transition of the company into software and services. From a partner organization point of view, a lot of focus has been specifically made to make sure on how do we get our channels to onboard and align with their strategy. Onboard in terms of, quickly adopting their cycle patterns and moving forward with Cisco.

From channel partner’s point of view, that’s the biggest focus and to help us achieve that, at Cisco, we bring certain tools, mechanisms and programs to make these transitions happen.  We have made an announcement on this at our Partners Summit and we have just started rolling out some of those programs to our partners. So there is a whole slew of programs to help ease the partners on their journey and align their strategy to ours in terms of the business model.

What are those some of these significant changes on the partner organization front?

The biggest change is the Value Incentive Program (VIP). We have now introduced an annuity framework in that program. That’s a big shift because earlier we had a largely LAN model of doing business wherein you sell and then partners get incentivized for the sale.

But now we are moving from LAN, we are going into adopting, expand and renew motion/other recurring offers.  VIP has been remodelled to involve annuities as a part of it. VIP has 2 flavours now, it has some amount of incentives for the LAN and then there’s proportion of money towards promoting lifecycle, induction practices and so on. That’s one significant change that we have done.

Secondly, because of Cisco’s whole movement towards software-defined, we launched Network Intuitive.  We then bought a number of companies to augment our software-defined WAN offering. We never used to have a master specialization in networking. Our master specialization were all in collaboration and data centre, but now with the coming of software-defined go to market on the network intuitive side, we are redefining the network, more software defined. So we will now have master specialization on networking which focuses on things like programmability and so on.

Thirdly, we have introduced a program called DSI (Digital System Integrator), which is to take care of all the influencers in the cycle now who are helping us deliver a certain business outcome to our customers or a certain solution to our customers.

For example, our partners are very critical in making sure a customer solution or an outcome is delivered to a customer. But by nature, they don’t actually resell Cisco product or carry Cisco certification, etc and they work for some of our traditional partners that are multi-tiered sales motion. So DSI is a new program from Cisco side to take care of integrators who bring verticalized solution possible in the market.

That’s great to hear. So how many partners are part of that Network Intuitive initiative?

It has just been announced. It will be open to people to qualify and get on board. Lots of our people are networking partners, so we expect that they will quickly adapt to the requirements of this new specialization. That’s one program which is significant from a Cisco point of view

Can you confirm whether these three programs are already in motion in India? And whether they have any additional augmentations?

It is already announced. These are three things that are materially different from any of the programs that we have done earlier. They are completely new programs which have been evolved and taken to market. We have some other augmentations also like for example we have migrated digital program.  We have always said that a digital core is a foundation for digital enterprises. So, most enterprises when they go on a digital journey, understand that legacy system can only support their aspirations on digital to a certain point.

However, there are migration requirements on the legacy system. We try to make that a bit easier with a program called Migrated Digital. We had a program earlier also called CTMT which is a comparative migration program but this is more focused on digital capabilities and how partners can help customers migrate. So we have some augmentations on existing programs but the three I have mentioned to you are pretty new to this table of partner programs from Cisco side.

So between the new digital SIT and this migration to digital, is the focus in trying to shift as many of the partner bases towards digital delivery mode only?

Today, digitalization accounts for 23 percent of the total IT budget in Indian IT organizations. For us and our partners to stay relevant with our customers, speaking this language and adopting this sales motion is important. IT adoption is still on the ramp and is still not where it needs to be. We have sufficient space in traditional IT as well. That’s why all our existing programs remain very consistent and continue to be focused.

But for the market, that is moving towards digital budgets and partners who want to be focused on monetizing those budgets and staying relevant to their customers, that’s where these new programs come in. Our entire ecosystem will not become a digital system integrator in any way. There are a set number of players who have the capability and the appetite to play that way at this point in time, so it’s purpose-built for them. A lot of our partners, who continue to be in the system integration reseller model, continue to take benefits of our existing programs.

As we have diversified our channels, we are now trying to put in place all the programmatic support for all the partner types that we brought into the ecosystem. We had partner types which were largely distribution 2 Tier and 1 Tier integrator partners. But now we are trying to also make it bit easier for influencer partners, for large integrators, digital integrators to do businesses with Cisco and to take us into the market. I think that’s really what the focus of the new programme is.

But I don’t expect a 100 % shift. It could be meant for people who look for that kind of niche skills and a business around those niche skills.

But again in terms of that business, in terms of value, does it make too much economic sense to keep on expanding that rather than growing the depth of the engagement?

We have partners who are very choosy about where they want to do business and in what terms they want to do business. With them, it’s all about skills and extracting more values out of the joint engagements in the market.

We are still in that sweet spot of being able to spread coverage in a traditional way in India and still acquire customers and ASP which is meaningful to Cisco.  So, the cost of service of the market is still meaningful for Cisco at this point in India. But we are conscious that we may have to go to digital modes of selling.

One of our first marketplace initiatives has just gone live in India. We have a marketplace with Ingram only in a few markets around the world and India is one of the early markets. With Ingram who is one of our distributors, who has a cloud market space and we have just gone live with our WebEx offer on their digital marketplace.

We have to find another way to do customer acquisition and we believe that in digital lies the answer. So, digital is not just for our customers to do their business but also for us and for our channels to do business as well. This marketplace collaboration with Ingram is the first step in that direction.

For the distribution-led partner business especially in this new model, how is Cisco supporting the partners to successfully make this transition?

Firstly, there is distribution led motion and considerable investments in reseller and country acquisition of the channels. The second space is that we are running our channel financing program very effectively in India and the appetite has always been more.We have had that considerable growth in the amount of investment we put into that program from an India standpoint.

In India, one of the biggest concerns is that there is a widening gap between when you sell and when you get paid. To help partners with that problem, we have actually brought in more investments into the channel financing piece as well. Those are the two programs where we had substantially higher investments than what our outlay was for the year. Channel financing is actually one of our most popular programs in the country and it clearly works that we brought in our investment into that program.

VIP keeps changing, in value percentage. We keep updating the program with what is more relevant and current to the marketplace from a technology point of view. We have dedicated very high degree of investment/acceleration into these two programs.

Cisco has been following a cluster-based approach for SMBs. What sort of progress has happened on these fronts in the last few months?

On the cluster side, what we did is that, very successfully in some of our commercial territories, we did a further segmentation with a primary focus on manufacturing. In manufacturing, we had a Two-Pronged strategy - there will be a largely connected plant conversation and there will be a broader smaller cluster conversation. Our manufacturing growth is in sub-segments because for us it is all bundled into commercial. In sub-segments, we have double-digit growth; some of these verticals have triple-digit growth.

The segmentation strategy focuses on clusters, 3 in particular - Education, manufacturing and healthcare. These three have worked very well for us. On the large manufacturing plant conversions, perhaps it was early days for us when we decided to go on the path of IT and OT controls in manufacturing. So there we are still in early days, we are mostly in concept sales, proof of value, proof of concept as states. We have had some good early wins but still not at the scale where we can say India arrives and IT and OT conversion has happened in manufacturing in India.

There are some utilization issues across manufacturing companies in India, most are between 70-80 % utilization and all of this just play into decision making as well. We would wait for a few more wins to say that it is going to become a run rate motion for us. We are still in a leading position there but from a hypothesis testing point of view, it works.

Cisco had this vertical focus also from the SI part too. Any update on that front?

With regards to the vertical wise solutions, we are doing well in the FSI space, which started clocking business. If you look at used cases like Anti Money laundering, risk management, customer experience, we have validated solutions in these spaces with some our ISV partners and we have the business also from some of the large banks in India. So that emphasizes the space verticalization that worked really well.

Another vertical is ITes. IT is their core business, they have always bought solutions. They are the solution providers and we continue to build our technology into their solutions. That focus is also going pretty well.

Then we have local partners. From a verticalization standpoint, these are the 3 verticals, right -  ITes, FSI and manufacturing. In FSI, we have started to grow and have continued to build healthier pipelines. With regards to ITes, our success is measured by how much of our technology is embedded into the solution that the ITes players carry into the market. In manufacturing, we are still at that funnel building stage. That’s how the 3 verticals are moving in terms of the verticalization approach.

Overall from the product point of view, there has not been just addition of products but also changes in consumption models. How is this aligned with the partner organization?

All the time, there are newer products, but also there are new consumption models which are equally important. We are customizing more bite-sized offerings for that space driven by both local as well as global consumption models.

At Global Partner Summit, we also announced this managed service focus through this platform called ConnectWise range. SMBs can consume on a subscription model some of our technologies and we are in the process of, evaluating how we bring that platform and offering into India as well. So it’s a combination of newer products and acquisitions which lead themselves to be consumed in the lower end of the market and newer consumption models at Cisco. We have the number of offers now in collaboration as well as. Previously our portfolio to the lower end of the market was largely limited by the ability to serve the networking market.

But now we have an offering on the digital marketplace for the smaller partners. We have WebX which is the very bite-sized offer, available at a price point that any business with 5-10 employees can also buy. Similarly, we also have a number of offers which are very much smaller to consume. So there are some consumption models that we are bringing to the market because we believe quite bullishly in the commercial market.

Except for the top 300 accounts, everything else is commercial in our definition. There are enough large value businesses, in the commercial business as well. For us, the commercial is not SMB, it includes a decent chunk of all the enterprise like clients, who’s technology maturity is just now coming up to speed.

We have the traditional, mid-market and then we have volume. Our commercial is a little bit here as well, so that’s why we call it commercial because their buying behaviours are very different. The top end of commercial buy is almost like our enterprise customers. The middle is only aspiring to be an enterprise and the lower end is completely volume.

We have spaces in all three pockets, so we believe in doubling down on this strategy and it’s already returning to us in terms of growth. We expect that trajectory of growth to continue in the next 2 to 3 years, so that’s clearly one focus. Related to that, we will also have a channel strategy around the acquisition of partners, resellers. Secondly, we have on-boarded about 50 ISPs in retail manufacturing and FSI. We have built out about 7 to 8 of them and we have validated solutions, joint offering that we can take to the customer.

Our intention obviously is to build such offerings with all the people that we have onboard so that we can have a truly vertical conversation, expose this solution conversation to our extended partners so they can carry this offer into the market. Some of them have the ambition to be part of our price list globally as well. Right now the focus is to not just onboard them but to build differentiated solution offering for them to the market, that’s the focus in the digital outcome space.

How many channel partners do you have?

We currently have 2500 partners in India of all sizes and shapes. This includes large global integrators, large master system integrators, distribution, 2 tier partners, SPs who are focused on the enterprise and commercial business.

We have made an investment in people who are focused on talking to these partners on an ongoing basis. Some of the large partners know lifecycle. They may not know Cisco’s lifecycle but they do have lifecycle pattern. For them, it’s about just little bit of education, how to tweak that model and how to align it with Cisco and them. Then there are partners who are looking to us for guidance because they have never done lifecycle practices before and are looking to us for guidance.

In that space, we have adopted more of the role of consultants and advisors. From this quarter onwards, we have focused activities on helping anybody who wants to set up a lifecycle practice, who has not done it before and has a Cisco Business, can actually ask for our help in order to do that. In both places, we are putting an investment. In the first place, people focus on partners to help them build lifecycle pattern and it depends on an organization. So we have invested in people at our end, whose job is to only talk to the partner’s day in and out on lifecycle.

The second one is on consultants who will come and look at your book of business and say okay this is your Cisco Book of business and in the next 2 - 3 years, this is how you need to steer and what are the organizational changes you need to make, and the workforce planning to surround.