Cisco Mounts Cloud Computing Channel Blitz

Cisco is putting its money where its mouth is when it comes to helping its partners monetize the cloud computing solutions opportunity.

The networking market leader gave partners something to celebrate Tuesday at its annual Partner Summit in New Orleans by using the first day of the show to unveil what may well be the most ambitious and comprehensive channel offerings yet aimed at helping partners build profitable practices selling cloud infrastructure and services.

"We are putting our partner community at the heart of Cisco's cloud go-to-market strategy," said Ralph Nimergood, vice president of data center and virtualization for Cisco's Worldwide Partner Organization, during a press conference. "We wanted to make sure that the program was inclusive, one that virtually all of our partners could participate in. We think we've hit the mark."

Cisco is placing its tens of thousands of partners at the center of its cloud go-to-market strategy with a new Cloud Partner Program with three tracks: Cisco Cloud Builders, Cisco Cloud Providers and Cisco Cloud Services Resellers. Partners will be able to participate in any or all three of those tracks as of August 1.

Cisco, which has used the channel as it primary route to market for the last 15 years, says the programs open the door for virtually every Cisco partner to play in the cloud. The company is backing up its big partner cloud bet by giving partners that play in any or all of those Cisco tracks access to a wide range of new traditional channel rebates and incentives, including a new cloud rebate under Cisco's market based Solutions Incentive Program (SIP) and a cloud accelerator rebate under Cisco's deal registration Opportunity Incentive Program (OIP).

Cisco is also rolling out innovative new programs designed to offset the high capital costs associated with entering the cloud solutions game along with professional services training and tools designed to allow partners to quickly build a highly scalable and profitable cloud practice.

Cisco is promising all those that play in the Cisco Cloud Partner Program preferred teaming with the Cisco sales force on cloud solutions opportunities. That's no small matter given that about 80 percent of Cisco's $40 billion in business goes through channel partners. Cisco is also for the first time compensating the Cisco sales force for selling Cisco-powered services from Cisco Cloud Providers. That move is aimed at establishing public/private cloud sales neutrality as customers make decisions on whether to rely on cloud builders or simply move to a public cloud.

One of the more innovative Cisco cloud initiatives is a Cisco Capital Jumpstart financing program. Under the program, partners that make a $1 million minimum investment to build out a Cisco-powered cloud infrastructure can get one-year interest-free, payment-free financing under a four-year lease. Cisco is, in effect, subsidizing the cost of a Cisco Powered Cloud Provider service with a year of zero-interest and no payments due.

"Cisco gets it," said Mont Phelps, CEO of NWN, Waltham, Mass., one of Cisco's fastest growing national partners with a Cisco data center business that grew a whopping 601 percent last year. "Cisco understands that a good cloud strategy involves not only technology but channel programs that have an impact on [cloud] investment and working capital, especially the heavy front-end costs associated with a cloud model. They are looking at more than just the technical aspects to succeed. They are looking at the business aspects. If there is a program as broad or deep as this from another vendor, I haven't seen it."

Cisco's Cloud Partner Program comes as many solution providers are shifting their business models to take advantage of the new cloud computing paradigm.

"Cisco deserves a lot of credit for its leadership in driving the channel to adopt the skills necessary to compete in the cloud computing economy," said Ron Dupler, the CEO of Green Pages, Kittery, Maine, which recently won VMware's US solution provider of the year and CEO MVP award. "But you don't have a choice. If you don't make the investments to compete in the cloud computing market then you are writing your own epitaph."

NEXT: Professional Services Enablement Pushes Partners Toward The Cloud

Cisco is even offering formal professional services enablement focused on helping partners build a cloud practice. That Cisco Cloud Practice Accelerator gives partners a competitive advantage with proven tools and solutions methodology to build and scale a cloud business, Cisco executives said. The Cisco Cloud Practice Accelerator, also available as of August 1, is priced at $27,000.

Partners said Cisco's all-out cloud computing channel blitz could go a long way toward helping them succeed in the cloud computing market. Many solution providers have struggled with making the big investments and business model changes necessary to play in the cloud market.

A number of vendors with their own large services organizations have also struggled with cloud computing channel strategies. Cisco's cloud computing go-to-market strategy, for example, is in sharp contrast to networking competitor HP, which has its own $36 billion services outfit that is selling cloud solutions. What's more, HP offers its own private cloud as a service that is delivered from HP's own data centers.

"The Cisco cloud programs are a real partnership rather than just another sales route to market," said Phelps. "The channel is at the center of Cisco's cloud thought process. It should be clear to everyone that there is a high barrier to entry in the cloud market. It requires huge investments that not everybody can make. Those that do make those investments are going to have a huge advantage over everyone else."

Phelps said he sees 2011 as a pivotal year in the cloud computing solutions explosion. "The heyday of hardware is behind us," he said. "2011 will be the year we really start seeing the impact of the cloud. You've got to understand the big bets that have to be made. The business component necessary to be successful in the channel is now at another level."

Cisco, for its, part is cautioning that there are still plenty of opportunities for partner to build cloud ready data center infrastructures. The company's channel leaders are advising partners not to ignore the cloud-ready infrastructure opportunity, especially since by all accounts more than 50 percent of traditional data centers are still not virtualized or cloud-ready.

Cisco sees the cloud computing opportunity as "intertwined" with the massive Cisco data center offensive which the company estimates is a $45 billion opportunity. Cisco sees cloud computing separately as at least another $10 billion opportunity.

The Cisco Cloud program requirements are based for the first time not only on Cisco specializations like data center or unified communications, but also partner investments in certifications from third-party vendors including VMware, BMC, Citrix, EMC, Hitachi, NetApp, and RedHat.

Cisco is defining cloud builders as traditional system integrator solution providers that are building private and public cloud for clients like NWN; cloud providers as providing infrastructure as a services like Terremark and cloud services resellers which include tens of thousands of small medium business (SMB) focused partners acting as a sales commission agent reselling cloud services

The Cisco Cloud Builder program includes two levels: a basic cloud infrastructure designation and a more rigid cloud management and services designation.

The Cloud Builder infrastructure track is based on cloud networking, system competency based on certifications from Cisco itself like its data center architecture (Cisco Unified Compute System) and borderless network specialization, plus one of certification from a key partner in each of several select disciplines like virtualization (VMware) and storage (EMC, Hitachi Data Systems). Cisco estimates that by time of launch about 500 partners worldwide will qualify for Cloud Builder Infrastructure track with more joining over time.

NEXT: Requirements For Cloud Professional Services

The tougher cloud management and services competency validates that partners have the skills to provide automated cloud provisioning, metering, self provisioning portals and billing systems. It also includes a professional services requirement. That cloud management and services track requires the basic cloud infrastructure competency along with certifications from the likes of BMC Cloud Lifecycle Manager and VMware's VCloud Director and Cisco's Enterprise Orchestrator. Cisco eventually aims to add key ISV requirements with possible players like SAP and Oracle.

Cisco is also mandating a Cloud Professional Services practice requirement for the cloud builders in addition to cloud management and services competency.

One of the cornerstones of the Cisco Cloud Partner program is a Cisco Cloud Professional Services practice accelerator offering that includes three modules: Cloud Program Management Accelerator, Cloud Technical Consulting Accelerator and Cloud Customer Workshop Accelerator. Each of those three cloud professional services accelerators has specific training on virtualization, cloud software, cloud readiness assessments aimed at providing intensive training for five to ten partner employees in a series of interactive training modules and mentoring.

The Cloud Professional Service offering provides partners with Cisco intellectual property, solutions methodology, tools and training modules for a cloud professional services practice, all based on the experience of Cisco's own advanced services organization.

Cisco is also "co-investing" with its partners with new channel funds to get solution providers to step up to the cloud management and services competency. Cisco has already committed to funding early pilot program partners and is setting aside co-investment funds for the next fiscal year.

The Cloud Provider track and designation provides reference architectures that an infrastructure-as-a-service provider must meet along with a strict, formal on-site audit requirements to assure that cloud providers meet ITIL IT service management requirements. The Cloud Provider designation includes inspection of a provider's service level agreements, network operations center (NOC) capabilities and reference customers. Cisco will also audit for architecture, service portal validation and cloud services point of sale functionality with links to Cisco systems. The Cloud Services Reseller designation simply requires Cisco Premier status and a valid contract with the service provider they represent.

Cisco said it aims to promote cloud builder, cloud provider and cloud services reseller status in its partner locators and to encourage preferred teaming with Cisco sales reps. Cisco said the three primary cloud program tracks include market development funds for demand generation and capacity expansion, and a cloud catcher marketing kit that includes extensive branding for partners, marketing collateral for client seminars and demand generation campaigns.

What's more, Cisco said its traditional rebate and incentives still apply for all the traditional Cisco products used to build clouds under Cisco Value Incentive Program (VIP) and incentive accelerators.

Cisco expects a number of partners to play in all three cloud segments with a good number of SMB solution providers acting as Cloud Services Resellers.

Chad Berndtson and Jennifer Hagendorf Follett contributed to this article.

For more on Cisco's vision of the cloud see CRN's exclusive interview with Chairman and CEO John Chambers.