It’s About Time – Cisco Meets the Judge
What a surprise! A judge found some of the provisions in Cisco’s ICPA (indirect channel partner agreement) to be “clearly one-sided” and “unconscionable”, and found no evidence that Cisco has ever negotiated a partner contract. Now I could say I was shocked and appalled, but the truth is that I don’t recall ever seeing an indirect channel partner contract - from any major manufacturer - that wasn’t one-sided and non-negotiable. At times, the one-sided nature of partner agreements has even led me to question the use of the word “partner” to describe the relationship between some manufacturers and their reseller channel.
In this particular situation, the provisions in question revolved around termination (of the partner) and damage limitations (the vendor’s, of course). I understand the need of a business to protect its’ interests. However, what I don’t understand is protecting those interests at the expense of the “partner”. Whatever happened to the idea that a partnership is undertaken to be a win-win business relationship? The point is to create an environment where partners create and share in success - and sometimes in failure. Not to pick on Cisco - because they have some excellent elements in their partner program - but this is a great example of how one-sided the vendor-reseller relationship can be.
The data industry is a wonderful place to be. The pace is fast (make that frantic), and the changes in technology are exciting. But I believe that the industry has hurt itself with the dysfunctional relationship between manufacturers and their reseller channel. Rather than seeking ways to strengthen their resellers and help them be more successful (increasing the sales of the manufacturer’s products), many manufacturers have actually fostered the very elements that lead to the failure of many of their own channel “partners”. For example, we see partnership agreements that require a great deal of the reseller and give little in return, including “sales” training which encourages “box selling” leading to low margins, flooding geographic areas with many resellers with the same product competing against each other, onerous certification requirements for infrastructure products, and on and on. On my website, www.sierrasummitgroup.com, I discuss what is essential for resellers to be successful, and mention the importance of vendor selection in the reseller’s success. When all else is stripped away from the relationship, the degree to which vendors actually contribute to resellers’ success directly impacts the volume of products sold - i.e. the vendors’ success.
My words of advice…. vendors beware! Those one-sided channel “partnerships” may now come under some heavy scrutiny from the “other side” of the partnership.
Anecdotally, I have often heard that Cisco partners do not make much margin due to the reasons in your article: too many partners in an area and selling boxes rather than a “solution”. Not to bash Cisco because they do have many good products and solutions, but being in the industry a long time we can learn some lessons from their entrance into Telephony and UC in general. Our Director of Sales wrote a brief piece on our blog ( http://blog.enablingtechcorp.com) describing how MIcrosoft could learn from Cisco’s mistakes.