Memo From Partners to Cisco: Don’t Cut VIP Dollars
Many of Cisco Systems‘ channel partners are digesting key Worldwide Partner Organization changes that Cisco announced today. Overall, The VAR Guy is hearing a consistent theme from those partners: On the one hand, partners are pleased to see some key channel leaders — like Keith Goodwin, Edison Peres and Wendy Bahr — still in place. But those same partners are calling on Cisco to keep investing in the Value Incentive Program (VIP). Here’s why.
When Cisco’s Fiscal Year 2012 starts on Aug. 1, some partners fear it will lead to changes in the VIP program. Notes one partner, “There is already word that they will look to scale back VIP dollars, yet again. They made a big cut this period already.”
If Cisco makes VIP cuts in fiscal 2012, partners say such a move would be counter-intuitive — especially in the router and switching business. Multiple partners note that Cisco is being attacked by Hewlett-Packard, Juniper and Microsoft.
Here’s where Cisco’s VIP program comes into the picture: Generally speaking, partners can make more up-front margin when they work with HP, Juniper and Microsoft rather than Cisco, according to a few folks in the know. If Cisco makes VIP cuts in fiscal 2012, Cisco’s back-end program could be less rewarding to partners, some VARs say. The potential result: Cisco-only partners could find it increasingly difficult to maintain a Cisco-only focus, some partners say.
That’s a lot of anonymous chatter. But The VAR Guy trusts his sources…
Of course, The VAR Guy must concede: The information above comes from partners speculating about Cisco’s fiscal 2012 channel strategy — which has yet to be announced. Another key consideration: Partners are watching closely to see which Cisco channel team members exit the company as part of 6,500 layoffs this August. The VAR Guy suspects Cisco won’t make any statements until after the company reports Q4 earnings for fiscal 2011 on Aug. 10.