Cisco 360, three months in: Canadian partners are responding better than expected

Hello and welcome to In The Channel from ChannelBuzz.ca, bringing news and information to the Canadian IT channel community for the last sixteen years. I’m Robert Dutt, editor of ChannelBuzz.ca, and as always, your host for the show.

Cisco’s 360 Partner Program was a long time coming. Eighteen months of co-development with partners, significant changes to how Cisco recognizes, rewards, and incentivizes its channel, including the end of the Gold designation that partners have built their brands around for more than two decades.

The program launched in January and we’re now at roughly the three-month mark, which means it’s a good time to ask: how’s it actually going?

Erin Gertner is vice president of the Partner Organization and SMB Sales for Cisco Canada, and she was closely involved in rolling 360 out to the Canadian market. We get into what surprised her most about how Canadian partners have responded – and some of the feedback wasn’t what she expected. We talk about what the end of Gold actually means for partners who built their reputation around it, where the incentive math is landing, and what the shift towards rewarding capability depth and lifecycle engagement looks like in practice for partners of all sizes.

There’s also a practical question at the heart of this. If you’re a Canadian partner who’s still figuring out how to position yourself in the new program, what should you be doing right now?

Let’s get right into it. My chat with Erin Gertner.

ROBERT DUTT: Erin, thanks for taking the time. I appreciate it.

ERIN GERTNER: Thank you for having me.

ROBERT DUTT: 360, the partner program – long awaited, rolled out I’m going to say eighteen months or so ago, but has been live now for a quarter. How’s it going? What surprised you on the upside, and what’s been harder in getting the program out there than you expected?

ERIN GERTNER: Yeah, it was a long eighteen months, but I’m glad we did it that way. I was telling somebody yesterday, I think we very intentionally took the hard road on evolving our partner program.

As you’re well aware, our previous partner program had been in place for over twenty years, and was very beloved by our partners. And candidly, it was wildly profitable for many of them. So I think there was a lot of angst in the machine around changes, but there came a time where we really did have to go out and evolve our program as the market has changed.

So we intentionally took the harder road, which was to co-innovate the program with our partners, versus us creating a program and pushing it out to the partner community. Early days, we got a ton of feedback from partners. We certainly made a few mistakes, but I really do think we did a great job listening to feedback from the partners and making adjustments where necessary.

Obviously, the Canadian market is quite different from my peers in the US, as an example – same thing as EMEA and APJC. And it’s hard to make a program that fits for everybody. But I do think we’ve done a good job of creating a model, and having the ability to adjust a model that takes care of the majority of our partners.

What surprised me the most was: we tried to take a really strategic approach in Canada. As I said to my team, my biggest fear at the end of this is that we have partners who say “I wasn’t ready” or “I didn’t know.” And we really operated with that in mind. So our goal was to have the majority of our partner community as ready as they possibly could be, earning either the same, if not more, with us.

We did workshops with all of our partners. We enabled our distributors. We spent a really long time sitting in front of our partner community, helping them understand what investments they would need to make to be successful, as well as what would be the payoff on those investments. Some of the asks around training and other elements of the program did require investment from the partners. So we wanted to make sure we could demonstrate to them that there was a strong outcome – that there was profit to be made should they make those investments alongside us.

The thing that actually surprised me the most is that our partner community in Canada is in very good shape in terms of being able to earn with us in the future. We had some metrics and some targets that we aspired to – a certain percentage of our partners achieving Preferred, for example – and we were able to exceed those metrics.

But actually, the thing that surprised me the most is that a lot of our partners came back to us and said, “I like the accountability you have around our technical capabilities, because a lot of this does center around getting Black Belts, as an example.” And one individual said to us, “Behind the curtains, I don’t know if our team was spending as much time as they needed to on training and maintaining our certification levels. And this has really compelled our team to ensure that they are certified in all the right technologies, and we’re having better conversations with customers.”

So I thought there would be a little more noise in the machine, and there certainly was at different points – we made those adjustments along the way – but the feedback has been overwhelmingly positive from the Canadian community. I think the team did a really good job of making sure we were hand-in-hand with our partners, because their success is so critical to us. We know if they’re not making money with us, they have choices in the market and they won’t continue to lead with Cisco.

ROBERT DUTT: So to that point – CRN in the States surveyed partners heading into the launch and found about 40% were positive, about the same number were in the wait-and-see camp, and very few – I think it was about 7% – were actively unhappy with the way things were looking going into 360. Now that the program’s live and partners have actually had a chance to see their PVI and the incentives and how it all looks to them, have you seen the mood trend in Canada? Have you started to see those wait-and-sees move toward the positive camp, or what are you seeing in terms of that momentum?

ERIN GERTNER: I mean, I think our big partners were sort of a no-brainer. A lot of them had a lot of the skills, depth, and capability that were going to be required to get them into Preferred in all the categories. So a few of them grumbled early on because they had to do a little bit more training and enablement, but they quickly hit the thresholds and they’re all in good shape.

What we’ve actually seen is our distributors took a really strategic approach to our two-tier partners, and they’ve been running a lot of workshops and working hand-in-hand with some of our smaller partners. And we’ve actually seen quite a few new partners come on board because they have the ability to be specialized in certain architectures.

For example, we’ve been recruiting more security partners, and the distis have done a great job of working alongside those security partners to help get them up and running. Because a piece of feedback we used to hear in our old program was: “It’s really hard to earn with you because we don’t want to be a network reseller. That’s not interesting for us. We’re a pure-play security partner and we’d like to continue to be a pure-play security partner. And just because it fits for you, it doesn’t fit for me.”

I think this evolution of the program has allowed partners who are pure-play security partners, or great data centre partners, to come on board and start earning rebate pretty quickly, as well as get the designation so customers know that they are deeply skilled and deeply qualified in that particular architecture.

ROBERT DUTT: From your comments a bit earlier, it sounds like partners who you expected to be hitting Preferred are hitting Preferred, and in some cases folks who you maybe weren’t expecting to hit Preferred are hitting Preferred – which is a nice little bonus. But as PVI becomes the engine of the new model, do you find that Canadian partners are generally landing where they expected?

ERIN GERTNER: Yeah, for the most part. We do have a few partners who do a lot of business with us but are smaller – just have a few employees – and they’re very critical to our business because they serve some small subsegment of the public sector, for example. Those are the corner cases that we’ve been taking back to our global team, and they’ve provided some flexibility in how we treat those partners.

Because again, when we looked at our partner landscape, we wanted to make sure everybody who plays a critical role in how we deliver our business for Cisco Canada was taken care of. For the most part, the program has fit the good majority of our partners in the Canadian landscape. For the ones where there are exceptions, or where the program doesn’t make full sense, we’ve been working with them in the background to try to figure out: can we help make an investment, or can we look at treating some of those partners in a bit of a different way to make sure they’re going to be successful with Cisco and continue to earn with Cisco?

So some of that is still underway, even though the program has already launched. We’re still continuing to tweak it and take feedback.

ROBERT DUTT: VIP was for so long the thing that partners watched most closely – the best indicator of where Cisco thinks we should be pointed. How is CPI, the Cisco Partner Incentive, actually landing now that it’s out there? Before launch, I think anytime you switch something like that, there’s always going to be the “what if we used to get X millions in rebates and now we get half of that?” Now that it’s live, how’s the math working out? And do you find partners are generally at least at parity with where they were with VIP?

ERIN GERTNER: We haven‘t gotten to a point where we’ve given anybody a check yet, because we’re still in the infancy of the program. But all the feedback I’ve heard from partners so far – and we have a few partners who sit on our advisory board, so they were early in testing out those calculators and have a really good sense of where they’re going to land – the majority of those partners have said they’re tracking to the same or better from a profitability perspective.

Again, to your point around VIP, it’s always very clear where we’re leaning in and where we’re trying to go as a company based on the back-end rebates and the accelerators that follow alongside that. So I think our partners do have a good understanding of where they need to focus and what the outcome will be of that focus.

So far the feedback has been very positive from the calculator, but I guess we shall see in a few months from now.

ROBERT DUTT: Let’s talk about the end of Gold. It was such a standard for such a long time. It was well understood by partners and I think it was well understood by customers. Longview was one of the first Canadian partners to achieve Preferred in all five of the architectures, but they still flagged some concern with the fact that there’s not an easy way to signal that multi-architecture depth the same way that Gold used to in one easy packaging. For a Canadian partner that’s kind of built their brand around Gold or included that in their messaging, what’s the practical guidance in positioning their expertise to their customers now, especially looking across architectures?

ERIN GERTNER: I think you said part of it in the question, right? The fact that they are the first, and that they are Preferred in all the categories, is actually better than Gold.

I was talking about this to somebody yesterday. What is interesting about Gold – and I was actually on the sales side of our business for the majority of my career – there was always this perception that if you were a Gold partner, you were great at everything. And that was a market perception for a really long time. When in fact, when you pulled back the covers, you could be a Gold partner just by selling a lot of one thing.

So we’ve actually embarked on a marketing campaign that’s been live for a few months now – I think you probably heard about it at Partner Summit – talking about some of the change in our branding. Now when customers are evaluating our partners, or when our account teams are evaluating when to bring in partners, the fact that it’s very clear which partners have the right expertise, the ones who have made the right investments and who’ve got really deep technical depth – that’s now very clear with Preferred status versus what used to be Gold.

I think we still have some market education to do around what it means to be Preferred and the amount of investment that partners need to make to get into Preferred status in each of those architectures. There was quite a bit of chatter at some of the advisory boards about Gold going away and what they felt that meant to their business and their market. But I actually like where this program has gone because their expertise is very clear now, which wasn’t the case with Gold.

ROBERT DUTT: Gold did have this great market perception of being good at everything. It was easy to capture in kind of one word, one concept. But your point there then is that it’s easier with Preferred to express where you’re good and the breadth of that. That’s an interesting takeaway for partners.

The philosophy in the program has shifted even more so than in the previous shift – away from rewarding transaction volume, towards rewarding capability depth and lifecycle engagement. Sounds great conceptually, and I understand why it’s important, but for a partner whose business model has been built around those big infrastructure deals and landing them, what does that transition look like in practice? Is there a smooth ramp to getting that worked into the business, or is there potentially a cliff here?ERIN GERTNER: So it’s a multi-year journey to getting to a true place where our incentive programs are going to be aligned to full lifecycle. The intent of the program is to work with partners to build those skills and capabilities around lifecycle, adoption, managed services, and all the other things we’re asking them to build. But we know for some partners that is a multi-year journey, and that’s okay.

When we look at our back-end rebate structure, we are taking a slower approach. On the surface, we’re asking partners to do all these things with us and come along for the ride – but we are still incenting them very heavily on hardware resale in the near term. We want to make sure they have a very clear path and that they do understand that we’re evolving the business and we’re evolving the way we incent for good reasons. We need to do that. Adoption – especially as software continues to be a larger portion of our overall business – and lifecycle becomes even more critical over time, as well as the renewal business. But we aren’t just flipping a switch.

The intent of this program was never to punish, and it was never meant to save Cisco money. We talked a lot about how partners are so critical to our success – we want to make sure they are continuing to be very profitable with us. So we’re trying to take them on a longer-term journey and we’re not trying to make it hurt.

ROBERT DUTT: The engagement metrics right now are sitting at 90% land and 5% each to adopt and renew. I think Tim Coogan has said that that will shift over time as the market dictates, but how fast do you see that coming? Should partners be building those adopt-and-renew muscles now in anticipation of the bigger shift, or is there still some runway there?

ERIN GERTNER: I would say we need to get started now. Some of those certifications take a year or two, and building those practices – for partners who have historically sold hardware, building out an adoption practice – I mean, we did it, and it took us a couple of years to get that up and running. So building out those practices is really critical for partners.

What’s interesting about this program is that we had partners asking us to shift away from paying solely on hardware, because they were saying, “You’re asking us to go out and do all this extra work with customers to help them deliver the outcomes they’re looking for. We should be incentivized around that as well.”

So I would say: get started now. I don’t think I can speak to when our back-end programs are going to shift more to adoption and renew, because nobody has shared that with me. I’m not sure we even know – I think we want to see where our partners are on the journey.

But I would say get started now. Get yourself in a place where that makes sense. And candidly, you’re going to yield better outcomes from your customers and better renewal rates if you’ve got a great practice around that.

I was talking to a partner a few weeks ago who said, “We love the whole adoption motion. It has us having conversations we’ve never had with customers, and we’re much closer to the executives at our customer base because we’re talking about use cases and talking about whether we’re seeing success or whether we need to pivot. We’re having quarterly touchpoints and QBRs talking about whether or not what we sold them is working and they’re seeing value from it.”

So I think it’s a good motion for partners to build regardless. It will drive a different level of engagement and conversation with their customers. When we’re going to fully incentivize around it, I’m not entirely sure – but I know it’s coming. Be ready, start building that expertise now. There’s hopefully limited downside to doing so.

ROBERT DUTT: One of the things that analysts have noted about the program change is that it’s really a bet on skills first – that partner value is measured by what you can do, not how much you sell. That’s a big cultural shift, not just a programmatic one. Acknowledging that there are going to be some partners who are maybe a little bit behind the curve, and some who are ahead of you saying “what took you so long?” – how far along are Canadian partners in making that mental shift themselves?

ERIN GERTNER: I can feel [they’re] pretty far along. I think it was a bit of a shock early on because we never had any accountability in our programs around maintaining certification levels and technical depth. But our best partners have great technical expertise and a really strong understanding of our solutions and what they can deliver to customers.

And as I said earlier, some of the feedback we’re getting from partners is, “I’m glad you’re doing this – it’s holding us accountable to making sure we’re staying on top of the solutions.” Our portfolio has moved so quickly over the last couple of years. Our best partners are the ones who have great understanding of the technology and what it can deliver. So I think early on there was a little hesitation from some partners around that, but the feedback has been overwhelmingly positive in the last little while.

ROBERT DUTT: Let’s talk about SMB. The Canadian channel in market skews toward small and mid-size, and this happens to roll into your line of work as well. I’m seeing two different takes on what 360 means for smaller partners. Tiffani Bova from Futurum warned that smaller or resource-constrained partners may be sort of specialized out of the ecosystem. But Cisco’s analysis with Techaisle argues that 360 dismantles the bias toward big partners. Those are two very different reads. I’m curious what you’re seeing in the market in Canada and what’s closer to the truth in practice.

ERIN GERTNER: It’s so funny when you ask – we were joking about this yesterday on a call. When you ask one set of partners, they’ll say 360 was created for the big partners. And then you ask another set of partners, they’ll say 360 was created for the small partners. So it was really created for everybody.

I think the distis have done a really good job of leaning in with some of our SMB partners and helping them figure out where they want to play and what they need to do to be successful. They also have a lot that they can bring to bear to some of the smaller partners – for example, they’ve got a really good EA practice, and they can help augment some of those skill sets that are required for the SMB partner.

So if there is an SMB partner out there that wants to work with us, distis are really well equipped to help them get on board. And we’ve also got some incentives, programs, and specializations that are offered specifically for the SMB market.

Still, a good majority of our business happens with our big partners, but also through that two-tier channel and distribution. And we need those partners to be successful alongside us. We’ve made a lot of investments to ensure that’s the case.

Is it going to be perfect for everybody? Maybe, maybe not. But we certainly did craft the program to make sure that SMB would have an equal chance at success.

ROBERT DUTT: One of the big promises of 360 is that managed services is now treated as a standard earning motion rather than kind of an exception to the rules. How’s that landing? Are you seeing Canadian MSPs that have their operational maturity and lifecycle engagement reflected in PVI, or is there still friction to be resolved there?

ERIN GERTNER: I think it looks a little bit different, but we actually are seeing a lot of our partners go out and build Cisco Partner-Powered managed services, which I love. Due to the shift in 360, I was working with a partner a few weeks ago who’s building out a managed Meraki practice, and we’re also seeing a lot of partners starting to build up managed security with us as well.

Going through the certifications can be a little bit cumbersome, but we’ve also made quite a few investments in our partners to help ease some of that transition – especially partners who are building really great, highly relevant managed services for SMBs or for any customer base. We’re trying to offset the cost or do what we can to help them through that journey, because I know in some instances it is a heavy lift.

But the focus around managed services has actually been really good. Partners are getting thoughtful around where they can deliver value to their customer base, where there’s opportunity, and they’re coming to us proactively to build, which I love.

ROBERT DUTT: One of the neat things about the program is the fact that Meraki CMNA and CMSS certifications now actually count towards Black Belt, and that’s an important part of the program. CMNA, CMSS – it feels like a big deal for SMB-focused partners. Are you seeing Canadian partners taking advantage of that pathway and getting represented better because they have those certifications?

ERIN GERTNER: Again, everybody’s path looks a little bit different. I was just working with a small partner who’s going out and getting his CCNA and getting himself certified so he can improve his PVI score. And that’s been awesome. Having more technical people at our partners who know a lot about Cisco has been an interesting journey for them.

He was sort of grumbling a little bit at the beginning doing it, and then he said [it was rewarding [? – unclear in audio**]], being able to have a little more depth to conversations when he’s sitting in front of a customer. So we’re seeing partners take all different types of paths to get to where they need to be from a certification perspective. But again, it is certainly holding them accountable and encouraging them to get more technical depth and capability into their organization, which ultimately will serve the customer better over time.

ROBERT DUTT: The Secure AI Infrastructure specialization drove three times the enrollment of any previous specialization, from what I’ve read. What does that tell you about where partner investment is heading? Is there a risk that everyone rushes toward AI and neglects the bread-and-butter networking and security competencies? Or are we pretty much so well entrenched there that there’s the opportunity to build into the next thing and still defend the home base?

ERIN GERTNER: I keep saying to partners: there’s no AI without a network. And when we left Partner Summit, I had three partners come up and say to me, “That was my biggest aha moment of this whole thing.” Even if you’re not selling Cisco servers – which we encourage them all to do – whatever you’re doing is built on the foundation of a secure network.

So I love that people are gravitating more toward AI, because it does pull through. If I go back to the days of IP telephony, we used to joke when I was in the field, if somebody bought a phone, it pulled through PoE ports – I think AI is going to be the same opportunity for a lot of our partners. It’s going to pull through observability, it’s going to pull through security, it’s going to pull through networking. So I almost think those things very much go hand in hand together, versus standing on their own and being autonomous.

ROBERT DUTT: Finally, if you’re a Canadian partner listening to this and you’ve been in the program and getting used to it for coming up on a quarter now – what’s the one thing you should be doing right now to position yourself as the program matures? What’s the one thing you can differentiate yourself by year end?

ERIN GERTNER: That’s a great question. I think it’s going to end up being a few things.

One: make sure you have a good understanding of the program and how it works. Because again, it was intended to make sure our partners are making money working with Cisco. Profitability is number one for us in the channel. We value our partners so much. I have a partner who always jokes, “The thing I love about working with Cisco is you guys always ask us about our profitability” – and we really do care deeply and immensely about the profitability of our partners.

So to your point around VIP, you can always sort of tell where Cisco is going. I hope all of our partners have a pretty good understanding of where we are going – and if you don’t, reach out to us directly or to our distributors.

If you follow the bouncing ball on that one, make sure you are leading with a secure networking conversation, and make sure whoever you’re working with has a lot of depth and knowledge in how to leverage the program and how to work within the confines of it.

Go out there and be loud and proud of where you are with your PVI score and where you are focusing from an architecture perspective. We love that there’s a really large breadth of partners who are good at many things, or really good at one or two things – and that works for us. Again, if you need help to be successful, reach out to our teams, because we love working with our channel partners.

ROBERT DUTT: All right. Erin, thanks for taking the time, and congratulations on getting the program out there, getting it launched, getting it established. Good luck on quarter two and beyond.

ERIN GERTNER: Thank you. Thank you for the conversation. I really enjoyed that.

ROBERT DUTT:There you have it – Erin Gertner from Cisco Canada.

I’d like to thank Erin for her time on this one. A few things worth sitting with.

The feedback from the Canadian partner community has apparently been more positive than even Cisco expected – including partners who said they actually appreciated being held accountable to their certification levels because it gave them internal cover to make the training investments they knew they should have been making anyway. That’s a more honest answer than most vendor channel chiefs would volunteer.

The other thing I’d keep in mind: the incentive structure is still heavily weighted toward hardware resale in the near term – 90% land, 5% adopt, 5% renew. But Erin was pretty clear that the shift towards adoption and managed services is coming. The timeline just isn’t set. Her advice was simple: start building those muscles now, because it takes a couple of years to get an adoption practice up and running. Don’t wait till the incentives force your hand.

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Until next time, I’m Robert Dutt for ChannelBuzz.ca, and I’ll see you in the channel.