Cisco Opportunity Incentive Program Question & Answer

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1 Question & Answer Cisco Channel Incentive Program Cisco Opportunity Incentive Program Question & Answer Revised April 13, 2004 Section 1: General Overview 1. What is the Cisco Opportunity Incentive Program? Cisco Systems recently announced the Cisco Opportunity Incentive Program (OIP) a new initiative supporting the company s continued mission to help Cisco channel partners increase their business profitability. The Opportunity Incentive Program is a deal registration framework that provides qualifying channel partners with economic incentives in the form of rebates or discounts and is designed to reward and protect the presales investment that a partner makes when developing new sales opportunities. 2. What is the significance of this announcement? The Opportunity Incentive Program is the next step in the continuation of the Cisco overall channel strategy to help our channel partners increase their business profitability and success in target market segments. This program demonstrates three important things: a. The continued commitment Cisco has made to capturing a market leadership position in specific markets b. Evidence of the company s continued focus on Cisco channel partner profitability c. Cisco continues to create programs that enable its channel partners to compete on value instead of volume or price 3. What are the objectives of the Opportunity Incentive Program? To generate incremental business: The Opportunity Incentive program capitalizes on Cisco channel partners demandgeneration capability for specified new opportunities in advanced technologies, vertical markets, and the commercial market. To boost channel partner profitability: The Opportunity Incentive Program increases partner profitability by providing a unique economic incentive to the partner creating new demand, ultimately rewarding them for their value and protecting their presales investments. To support the channel partner value model: Through deal registration, the Opportunity Incentive Program allows partners to compete equally on value using a neutral registration process that applies consistent rules to all qualified partners. Page 1 of 8

2 To increase share in important growth markets by theatre: The Opportunity Incentive Program is designed to reward channel partners demand-generation capability through new opportunities in market segments selected by our respective theatres. The Opportunity Incentive Program rewards are also customized by theatre, based on specific conditions within the geography. 4. How does the Opportunity Incentive Program achieve its stated objectives? The Opportunity Incentive Program is designed to improve partner margins to cover the cost of developing new business. The registration process enables partners to protect their presales efforts and limits the possibility of losing the deal due to price. Cisco believes that this program gives all partners equal stature and gives specialized partners added incentive to generate new Cisco business. 5. What are the benefits of OIP to the partner? Provides a financial advantage for partners who bring in new business opportunities Improves partner profitability Protects the partner s presales investments and value delivered to customers Facilitates value engagement by identifying the partner who is the first to develop the opportunity 6. How will end customers benefit by using these partners? Partners must meet certification and specialization requirements to participate in OIP, which assures customers that they are getting technically competent partners Partners must complete presales milestones in order to qualify for registering the opportunity. Cisco believes that this motivates partners to engage in the necessary behavior to ensure customer satisfaction. OIP supports the value engagement model by engaging partners early in the process and making sure that they complete a thorough and accurate assessment of the customer situation. OIP encourages this behavior by requiring partners to comply with a regulated registration process and by facilitating communications between partners and Cisco account teams early in the sales cycle. Partners are more economically able to expend presales efforts, which benefits the customer 7. Does the Opportunity Incentive Program apply to all new Cisco deals? No. The Opportunity Incentive Program only applies to incremental opportunities defined by specific offerings per geographic theatre. These offerings support theatre-specific go-to-market strategies for target market segments within the geography. 8. How are the Opportunity Incentive Program offerings chosen? Each offering supports the Cisco go-to-market strategy to gain market share in technology areas, vertical markets, and new market segments. Page 2 of 8

3 9. Why should partners participate in the program? Cisco is committed to rewarding partners who identify, develop, and win new Cisco business opportunities. This program offers significant return on investment (ROI) for partners who foster new incremental business. We believe that the channel programs we offer combined with the market leadership and financial stability that Cisco offers makes Cisco the partner of choice for these growth markets. 10. How is this different than other Cisco channel partner programs? The Opportunity Incentive Program is the first program that directly rewards partners for securing new incremental business. It directly links partner investments in the presales process with incentive rewards from Cisco. In addition, this is the first global program that incorporates deal registration, designed specifically to further enable channel partners to compete based on value. 11. Is this a global program? The Opportunity Incentive Program can be applied globally with a standard registration process and the supporting tool. Theatres can customize specific offerings under the auspices of the OIP so that the program directly addresses their specific go-to-market strategies. 12. How will this program help Cisco and its partners gain more business? We expect OIP to drive new business. Cisco has heard from many of its partners that current margin pressure makes it difficult to invest in developing new opportunities. This program enables our partners to make presales investments with the knowledge that those investments will be rewarded and protected. 13. How much will the Opportunity Incentive Program affect partner profitability? On any single deal the partner registers and closes, OIP will significantly enhance the partner s margin on their total Cisco business related to that transaction. Looking at the partner s overall business with Cisco over a period of time, the net impact of OIP depends on what percentage of the partner business is OIP related. The more business a partner generates in markets targeted by OIP the greater the rewards to the partner. 14. Can I combine multiple profitability program benefits? Yes, in some cases. Cisco allows partners to combine discounts or rebates from the Opportunity Incentive Program with the Cisco Value Incentive Program. Other future incentive programs will specify whether or not they can be combined with other programs. 15. Who can partners contact for any questions about the program? Partners should contact their Cisco CAM or send an message to Page 3 of 8

4 Section 2: Requirements and Details 1. How does the Opportunity Incentive Program work? Partners who meet Opportunity Incentive Program criteria may submit an application to register an opportunity. Prior to registration, partners must qualify the opportunity, engage decision maker(s), quantify budget, define requirements, and complete a high-level design. The Cisco Channel Account Manager (CAM) and the Enterprise Sales Organization (ESO) account team then review the registration application to validate the new opportunity. Approved opportunities are registered with a unique form number for six months. When the partner closes the opportunity during the six-month approval window, they can use the form number to receive the special discount or rebate. In the case of a discount, the form number can be used at the point of ordering to obtain the additional margin points specific to the approved OIP opportunity. Partners can also request a one-time renewal if the opportunity does not close within the initial six months, but receiving this extension is contingent upon obtaining approval from Cisco. 2. What are the requirements to qualify for entry to the program (presales milestones)? The Opportunity Incentive Program comprises multiple independent offerings supporting specific Cisco go-to-market offerings. Each of the independent program offerings will have specific, measurable criteria to help ensure that all partners maintain equal status. Specific qualifications for each program are available on the respective program page. All partners must complete the following tasks prior to registration: partners must qualify the opportunity, engage decision maker(s), quantify budget, define requirements, and complete a high-level design. 3. What are the requirements to receive the discount rebate? Is it guaranteed? To receive the payment, the partner must first receive approval for their application. Next, the partner must close the deal during the time period the application is active. All registered deals will expire in six months, however partners may request a one-time renewal, with Cisco approval. 4. When will this program be available to partners? The program was publicly announced at the Global Partner Summit 2004 in Hawaii on February 11, Each theatre will be independently rolling out their initial program offerings within Cisco fiscal Q4. 5. Is this intended to be an ongoing program? How long will it last? Yes, however Cisco will change the target markets and offerings as needed to take advantage of market opportunities. Cisco will continually solicit feedback on the success of the program and make changes accordingly. Page 4 of 8

5 Section 3: Deal Registration Process 1. What does the approval process entail? High Level Opportunity Registration Flow Partner enters Cisco.com Completes registration form and send to CAM CAM approves? Send partner denial YES ESO YES Finance YES approves? approves? Register deal Expired After 6 months Enter form # into DART or Ordering tool YES Send form # to partner Order received? YES Re-register? After 6 months Presentation_ID = Cisco task = Partner task 2002, Cisco Systems, Inc. All rights reserved. 7 Partner completes presales milestones for specific opportunity Partner goes to online tool, completes registration form and submits Opportunity Form to CAM Cisco CAM provides first level approval on the form: if denied, closeout; if approved, route to Cisco account team Account team approves or denies opportunity based on whether partner is creating new demand for Cisco If approved, the opportunity is registered and registration form number is sent to the partner for use at time of placing order Opportunity is date-stamped as of approval date; valid for a maximum of six months, or time duration specified in OIP offering if shorter 2. What are the expectations of the partner to be able to register an opportunity? Generally, in order to successfully register an opportunity the following must be true: Opportunity meets market/technology/customer requirements as defined in program rules for that offering Opportunity meets minimum expected deal size Partner holds any required prerequisites to register such as a Cisco Specialization or Certification Partner has completed presales milestones Page 5 of 8

6 3. For how long is the discount valid? In general, six months from the date of approval unless otherwise specified in program rules. 4. Is the discount guaranteed when the partner is approved for the deal? Yes. 5. How much is the discount? This is specified in the individual program offering rules for that target market. It may vary depending on the target market. 6. What if my sales cycle is longer than anticipated? The original registration expires after six months or whatever is specified in the program rules. If the registration expires and the partner has not completed a business transaction, they have the opportunity to re-register the same account one time. Cisco has the right to approve or deny the re-registration. 7. What qualifies as a new opportunity? In general, partner-driven business that is incremental to Cisco. The specific opportunity requirements are specified in the program rules for each OIP offering. 8. What opportunity offerings are available? Currently, there is the Cisco Security Agent offering for the United States only. 9. Is there a minimum deal size requirement? Most OIP offerings will contain a minimum deal size requirement. One of the premises of OIP is to reward partners for presales investments. The partner needs more protection and reward for larger deals where the presales investment is large. Conversely, the partner should not be investing a lot of presales cost into smaller deals and, therefore, these deals don t need investment protection nor justify extra discount to the partner. 10. When the program provides the incentive in the form of a discount, how is the discount applied? It is given at the point of sale to the partner. Page 6 of 8

7 Section 4: Financial Impact 1. Is Cisco making a large investment in this program? Specific investment costs for this program will not be disclosed. We feel the investment will not materially impact our financial results, and represents our commitment in advanced technologies, vertical markets and the commercial segment and to the mutual success of Cisco and its partners. 2. Will offering partners additional discounts affect revenue or margins for Cisco? No. The Opportunity Incentive Program focuses on rewarding channel partners with rebates and discounts on new incremental business. This is a revenue opportunity that is fully partner-driven and thus significantly reduces the cost of sales for Cisco, which in turn allows for the larger discount or rebate. This program is a mutually beneficial proposition for both Cisco and the partner. Page 7 of 8

8 Corporate Headquarters Cisco Systems, Inc. 170 West Tasman Drive San Jose, CA USA Tel: NETS (6387) Fax: European Headquarters Cisco Systems International BV Haarlerbergpark Haarlerbergweg CH Amsterdam The Netherlands www-europe.cisco.com Tel: Fax: Americas Headquarters Cisco Systems, Inc. 170 West Tasman Drive San Jose, CA USA Tel: Fax: Asia Pacific Headquarters Cisco Systems, Inc. Capital Tower 168 Robinson Road #22-01 to #29-01 Singapore Tel: Fax: Cisco Systems has more than 200 offices in the following countries and regions. Addresses, phone numbers, and fax numbers are listed on the Cisco Web site at Argentina Australia Austria Belgium Brazil Bulgaria Canada Chile China PRC Colombia Costa Rica Croatia Czech Republic Denmark Dubai, UAE Finland France Germany Greece Hong Kong SAR Hungary India Indonesia Ireland Israel Italy Japan Korea Luxembourg Malaysia Mexico The Netherlands New Zealand Norway Peru Philippines Poland Portugal Puerto Rico Romania Russia Saudi Arabia Scotland Singapore Slovakia Slovenia South Africa Spain Sweden Switzerland Taiwan Thailand Turkey Ukraine United Kingdom United States Venezuela Vietnam Zimbabwe Copyright 2004, Cisco Systems, Inc. All rights reserved. Cisco, Cisco Systems, and the Cisco Systems logo are trademarks or registered trademarks of Cisco Systems, Inc. and/or its affiliates in the U.S. or certain other countries. All other trademarks mentioned in this document or Web site are 2004 the property Cisco of Sytheir stems, respective Inc. All owners. right The reserved. use of the word partner does not imply a partnership relationship between Cisco and any other Important company. notices, (0206R) privacy statements, and trademarks of Cisco Systems, Inc. can be found on cisco.com Page 8 of 8 Printed in the USA

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