Cisco’s 1-4-7 effect

If you’re a solution provider that does deals that cost you about $150,000 and go through the RFP process, you should read this.

Imagine a return of $1 in advisory or consultant service, $4 for implementation and services and an additional $7 in hardware sales. That would mean deal that cost you $150,000 to set up and complete earned a net profit of more than $1 million potentially. Oh and the kicker here is it did not require you to go through an RFP.

That is Cisco’s 1-4-7 effect.

Nick Earle, senior vice-president, Cisco Services European Markets, described the 1-4-7 effect to a group of international journalists and analysts at the Cisco Channel Exchange conference in Lisbon, yesterday.

Earle’s job at Cisco is to develop innovative services-led strategies that accelerate partner profitability.

The whole approach is about moving forward in the sale process and increasing the overall pie of the deal instead of waiting for the RFP to materialize. The 1-4-7 net result is the average returns that channel partners are getting by taking a proactive approach to network architecture blueprints.

According to Earle, there is no RFP process because the customer has bought into the channel partner’s network architecture solution that was originally designed by Cisco. The key to making all of this 1-4-7 effect work is the stabilizing of the network, the implementation of collaborative services and guaranteeing how services run on the network.

“This is a new type of partner strategy. The network is the backbone for services on demand, fixed or anywhere,” Earle said. This approach also takes into consideration other vendors such as Microsoft and Oracle. Earle realizes that Cisco is not a software vendor. The key again here are the pre-agreements with the customer.

But Earle put it another way. If you’re a solution provider of homes and you resell doors and windows imagine if you had a blue print of a great house for your customer. Would they rather have a great house instead of just door and windows.

The old approach wasn’t bad but it just netted partners $2 of consulting and just $3 of product.

Mathieu Arnould of Orange Business Services said this gives his company better control of costs and they don’t have to replicate services as a sub-contractor. In the old way it would be hard to add Orange’s value added side-by-side with Cisco. It was even harder to manage regional projects because the requirements of the customer and the regional offices would never match.

Arnould added that margins were improved from a bottom line perspective and also by reducing the work time and operational time involved. Orange was also able to focus resources where they wanted to have them and would also get the benefit of Cisco’s resources.

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