Cisco Resolves Long-standing Field Compensation Issue

June 3, 2009 at 11:26 pm 2 comments

News and Commentary from the Cisco Partner Summit

Beth Vanni

Beth Vanni

Thousands of partners are in the room.  3500 partners are participating in the Virtual Summit event.   Press and analysts hang on every word from the senior executives, listening for new major investments and innovations.   These are the hallmarks of the Cisco Partner Summit, this year based in Boston, one of the oldest and most sophisticated cities in the U.S.   Many also revere Cisco’s commitment to channels and partnering among the oldest and most mature in the high tech world.   Admittedly, their programs, automation, incentives and partnering commitment from the top-down is legendary.   But, then I listened closely to the keynote speech form Keith Goodwin, Cisco’s SVP of Global Channels……

The Cisco management team announced many channel program enhancements already this week including new services offerings, further extended credit terms to partners, eliminating on-site certification audits,implementing a new limited lifetime warranty  on certain products and adding a new 15% rebate for core switching products. Much of these announcements will really help keep partners focused and profitable on core Cisco technologies and will encourage them to continue to invest in training and pre-sales work. But,the announcement that got THE loudest applause from the audience was around Cisco field sales compensation. Something so basic that it’s hard to imagine Cisco still having this issue acting as a barrier to partner field engagement.

Keith Goodwin asked the question …. “How many of you have invested to find and work an opportunity through the sales cycle only to have that deal shifted in the last week of month or quarter to another partner so that the Cisco account manager could get bookings credit in that period.” Many hands went up. Keith acknowledged that he’s been hearing about this issue from angry partners for “several years.” As a result, the announcement made was a program Keith called “Channel Bookings Neutrality”.   This program offers Cisco field account managers compensation credit at the same time for deals through partners, whether the deal gets booked by a two-tier partner (a VAR buying through a Cisco authorized distributor) or by a DVAR (a VAR buying direct from Cisco).   The crowd roared!  For those of us on the virtual webinar, we saw faces light up, heads shake, a couple of people gave Keith a standing ovation!

So,let’s make sure we acknowledge how significant this seemingly trivial issue is. We have a company who does billions of dollars through indirect channels. A company who spends hundreds of millions of dollars on demand generation, partner training, marketing training, business consulting assistance – all to help partners grow and succeed. And, one of the most core announcements at this annual event, one that might go overlooked by many business and channel reporters, had to do with basic TIMING issues. It’s not that Cisco account managers didn’t get paid on two-tier partner-led deals in the past.  It’s just that they got paid later on those deals (sometimes maybe straddling a fiscal quarter) than they did on direct VARs’ orders. Amazing. I guess it’s understandable….. getting POS data from distributors to apply credit appropriately to field teams does take a little while. Human nature wants credit now, and I’m sure quotas for Cisco field account managers aren’t getting any smaller.

This is no indictment of Cisco. They are a company truly putting their money where their mouth is regarding their channel partners. And, executing this small compensation change I’m sure took quite some time, effort and systems support globally. It supports the company’s commitment to engaging partners in everything they do and doing business in an automated and cost-effective way (their wide-spread use of two-tier distribution). This commentary is just a reflection on how basic some partner engagement issues are, and how, if not corrected or automated in some way, they can totally undermine the partner growth and development plans of many well-intentioned vendors.

Well, one more barrier removed from Cisco working with partners of all shapes and sizes. I wonder how many other large, enterprise vendors with growing channel programs share this dirty little secret …….?

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Entry filed under: Uncategorized.

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2 Comments Add your own

  • 1. Liz Cobb, CEO Makana Solutions  |  June 4, 2009 at 3:46 pm

    As basic as this is, most companies fail to focus enough attention on the power of their sales compensation programs and the impact it has on their strategy. I’m very glad to see you have written this and provided the appropriate focus.

    Reply
  • 2. Beth Vanni  |  June 4, 2009 at 4:52 pm

    Liz — thanks for your comment. I couldn’t agree more. Cisco is certainly doing many, many things right (esp. compared to other enterprise class product manufacturers). But, a bad field engagement plan, compensation and/or sr. mgmt. leadership can completely derail a well-architected channel program. Tell me more about Maka Solutions?

    Reply

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