Amid Layoffs, Cisco Continues Cloud And Managed Services Push

As layoffs approach at Cisco Systems Inc., the networking giant today announced some Worldwide Partner Organization changes. But multiple sources say Cisco's Cloud Partner Program and managed services efforts will continue to march forward. Here's the update.

Cisco launched the Cloud Partner Program in early 2011, assisting cloud resellers, cloud builders and cloud service providers with their business strategies. The Cloud Partner Program was modeled after Cisco's existing managed services efforts. Many of Cisco's certified MSPs instantly qualified for the Cloud Partner Program. Generally speaking, the MSPs had audited data centers and best practices in place -- providing a logical extension from managed services to cloud services.

In recent months a lengthy list of Cisco partners have stepped forward to promote their cloud expertise. Key names include Long View Systems, FusionStorm, Navisite and Terremark.

Changes Ahead

The big question: Can Cisco maintain its focus on MSPs and cloud services providers amid 6,500 Cisco job cuts, which are planned for August 2011?

Generally speaking I think the answer is yes -- Cisco and its recurring revenue partners can march forward. No doubt, rivals like Hewlett-Packard, Juniper and Microsoft are attacking Cisco's core routing, switching and unified communications businesses. (As I've mentioned, I think Microsoft Lync will be a hit with many existing Cisco customers and MSPs.)

Still, big service providers and successful MSPs don't make major vendor changes overnight. One prime example: During an MSPmentor webcast yesterday, Dusten Tornow, a managed services practice manager at MSN Communications Inc., described how his business continues to bet heavily on Cisco's unified communications solutions. We didn't discuss Tornow's views regarding Cisco's pending layoffs. But I didn't sense any big change of vendor direction at MSN Communications. Instead, the company has been building out a service desk, with an assist from Nimsoft, to increase customer satisfaction rates.

The Bigger Issue: VIP

Many service providers remain loyal to Cisco. I think the service providers and Cisco itself will successfully navigate Cisco's layoffs. The far bigger issue may involve potential changes to Cisco's Value Incentive Program (VIP) for fiscal 2012, which starts August 1, 2011. If Cisco makes VIP changes, partners could suffer from margin pressure, sources say. Cisco isn't expected to fully discuss its fiscal 2012 business strategy until after Q4 fiscal 2011 results are announced August 10.
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