Cisco: We won't suffer channel rule-breakers gladly

Cisco's brand protection director talks exclusively to CRN about the vendor's efforts to crack down on grey and counterfeit kit

Cisco's brand protection strategy hit the headlines last month when one of its largest UK partners, Phoenix IT Group, was stripped of its Gold partner status amid allegations it had breached its terms and conditions with the vendor.

CRN sat down with Neil Sheridan, director of brand protection at Cisco (pictured), to find out what the networking goliath is doing to support authorised partners who are being beaten to deals by rivals who are not playing by the rules or who are supplying grey or counterfeit kit.

CRN: Firstly Neil, can you summarise Cisco's brand protection activities in the UK?

Neil Sheridan: One aspect of our work is the anti-counterfeit work, which involves us identifying the source of counterfeit, the transit of counterfeit and where it has been deployed throughout the world. The other half of our efforts is towards the channel and making sure we have a level playing field in place for our partners and that our end users are able to rely on the channel to fulfil their needs.

CRN: Is it fair to say that Cisco has got tougher over issues such as grey market kit and partner terms and conditions this year?

NS: No, we don't think so. This is an ongoing effort. I've been doing this job for four years and I would say we have been pretty consistent over that period. There have been a couple of high-profile cases that have hit the press but I wouldn't say they were particularly unusual. In fact, I don't think we have terminated or dealt with [more] partners than we have in the last two or three years.

CRN: Under what circumstances might you strip a reseller of their Cisco partner status?

NS: They have a contract with us and the Ts and Cs are very clear. If they have a breach of their contract for a minor thing, that's an opportunity for us to educate them and bring them back on board. At times people will step over the mark completely and we won't be able to get to a resolution. That is where the partnership ends, quite often on behalf of both partners.

CRN: Is it fair to say you have been reluctant to take action against your larger partners in the past because of the revenues they generate for Cisco?

NS: Absolutely not. There have been many actions against some of our bigger partners in the past. These are commercial arrangements we have with the partner and they don't hit the public domain.

CRN: An authorised partner we spoke to earlier said coming up against grey kit is still a "thorn in their side", particularly in midmarket deals. They'll be quoting the customer £30,000 having utilised all of Cisco's programmes, only to be beaten to the deal by an unauthorised partner quoting £20,000. Can Cisco do more to stop this happening?

NS: The reality is that grey is always going to be there. I think every vendor on the market has got some grey kicking around. It is our job to limit that as much as we can.

CRN: What can UK partners expect from Cisco from a brand protection point of view in 2014?

NS: It will be more of the same in terms of areas of focus. What we do have in the pipeline is some new systems and processes; data analysis techniques we have been developing with our team in the US. Hopefully those will give us a greater insight into what happening in the marketplace and allow us to be even more effective as we move into next year.

CRN: Can you tell us more about the nature of these tools and when they might come online?

NS: There's nothing too outrageously unique about them but we've got much better at the data mining side of things and we do have some interesting information coming from our partners more than we've seen. The phenomenon that has changed slightly is that partners seem to be more willing to cooperate with us in the sales cycle and point out issues they are having, which enables Cisco to take the appropriate action.

CRN: Can you give us a specific example of where these tools may help partners?

NS: The situation you mentioned above. They're in the middle of the sales cycle and see grey market pricing that doesn't make sense. We can speak to the customer to help them understand the risks of buying outside the authorised channel. If they have visibility on the products, we can help them analyse them and make sure they're getting stuff that is properly licensed, SMARTnet-able and not counterfeit.

CRN: Where does the balance of Cisco grey kit come from? Are big partners who can use their global presence to bring kit from the other side of the world to the UK part of the problem?

NS: I don't see that as being the single biggest problem. It can be an issue but that's something we see as legitimate broker business in our eyes - there is a grey market there that we will always compete against. But the real problem is where we see new-in-box equipment from deals quite often fraudulently obtained where they are posing as a fake end user. We had a case recently where we had a big end-user deal and the end user didn't really exist. Everyone was acting in good faith. We provided the equipment, did the discount and months later discovered that the end user didn't exist and the equipment began appearing in the market, through no one's fault.

CRN: We've heard allegations that grey kit found here in the UK sometimes originates from other Cisco country operations across Europe as they try to hit their sales targets. Is there any truth in this?

NS: There is an argument to say the source of grey market is Cisco equipment and that's a fact of life. Much of it comes from end users. Some of it is generated through the partner channel and some of it moved around inter-theatre. It happens and we deal with it as best we can. And if there is a situation where a deal goes bad and is pre-booked and it ends up not at the end user, we will always take the appropriate action against both the partner involved and - if there were any Cisco people attached to that deal - we will deal with them as well. Our objective is to stick to that level playing field and if we see people bending the rules we will address that.

CRN: Finally, are you seeing any new threats emerging on the counterfeiting side, for instance out of China?

NS: The nature of counterfeiting has changed a little bit. But we are seeing them move up the technology scale. But the basic process and how it moves around is pretty much the same.