ORLANDO–Cisco Systems Inc. has introduced a new value engagement business model which it hopes will emphasize a teamwork between channel partners and the firm’s enterprise sales organization, helping both groups increase profitability and
productivity.
At the Cisco Partner Summit’s Global General Session Tuesday morning, Paul Mountford, vice-president, worldwide channels for the San Jose, Calif.-based company outlined the new strategy which he said is partially a result of the changes in the economy and what customers now want.
Over the last year, the IT sector has seen a rapid change in the market and massive economic downturn created by the collapse of the dot-com and telecom industries, said Mountford. Worried about survival, channel partners got creative and started to play outside of their traditional value roles. “”[You] would play in different parts of the market because you wanted to generate revenues and profits for yourselves and your employees. That’s what hard times do: it drives you outside where you normally operate to get business,”” he said.
Although overall customer satisfaction rates went up over the last year, they were lower in the 70 per cent of business transactions where channel partners and Cisco’s enterprise sales group worked together.
Mountford said the lower customer satisfaction rates can be blamed on later partner engagement during the implementation of solutions, and that’s because of the current neutral engagement business model.
“”Neutral engagement works extremely well in the tornado market”” — the days before the economic downturn, when the customer wanted to get technology as quickly as possible. But neutral engagement often means lowest price, which in turn drives margins down, even in the high-end services, he said.
“”If the enterprise team at Cisco has been driving the deal and we engage you late, it’s impossible sometimes for you to present value to the customer,”” Mountford said. In addition, the enterprise sales group may even give away the design service that many partners make money off of, because the goal has always been to get the technology into the account as quickly as possible, he said.
Meanwhile, the behaviour of end-users also changed. In the tornado days, “”they (customers) wanted products, they wanted them as quickly as they could, and they wanted to put them in their architecture . . . but now they want a return on investment,”” he said.
Customers are now going through the “”show me”” phase where they want to see what a service is going to do for their business. “”They’re looking for solution provision, they’re looking to reduce the cost of their supply chains. They want somebody who can deliver the whole solution. They’re not focused on products, they’re focused on solutions and return on investment.””
Through the value engagement model the firm will now drive business management rather than account management, “”so that we work on the delivery of business to the end user in our enterprise sales teams rather than transactional activity,”” Mountford said. “”It makes sense to move from the neutral over to the value engagement model where we sell value together and understand each others’ opportunities.””
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