Partnering Strategies

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1 Partnering Strategies Relationship Building to Win Steve Harmon Cisco Systems - Sr. Manager, Strategic Alliances 170 W Tasman Drive, San Jose, CA Phone: , Fax: Sharmon@cisco cisco.,com 1

2 Partnering Perils Managing strategic partnerships with no specific whole product in view is not a bad strategy, it is dreadful Geoffrey A. Moore Inside the Tornado 2

3 Ecosystems Shared Vision Short-Term Win-Win New Business Long-Term Win-Win Chemistry Shared Destiny 3

4 Agenda Alliance Strategy Alliance Management Challenges Examples 4

5 Alliance Strategy Course Number 2000, 1999, Cisco Systems, Inc. 5

6 Strategies for Creating Growth Opportunities Increasing Primary Demand Alliance Breakaway Entering New Tornado Markets Inflection Points Technology Regulatory New Buyer Groups 6

7 Tornado Markets Optical Streaming Media Wireless VoIP Storage Area Networks 7

8 Strategic Growth Tool-set Acquire Commitment Joint Marketing/ Sales/ OEM Alliance/ JV Investment Strategic Value 8

9 Cisco Strategy 9

10 Ecosystems Dynamic alliance linkages Focus on horizontal business model Shared knowledge accelerates multi- partner solution integration New solutions delivered to market faster 10

best-of-breed alliances to develop ecosystem solutions which rapidly

11 Strategic Alliances Value Value was created by developing interoperability and links between different technologies Value is now created by linking best-of-breed alliances to develop ecosystem solutions which rapidly accelerate market adoption Cisco Is Uniquely Positioned to Create and Manage These Links 11

12 Customer Value End-to-end solution offering Faster time to market Best-of-breed solutions from industry leaders Reduced total cost of ownership 12

13 Alliance Value Wider audience reach Faster time to market Increased revenue, decreased costs Higher customer satisfaction 13

14 Alliance Management 14

15 Objective Leadership role in partnering vision and direction Success is determined by market impact of entire partnership lifecycle Create lasting/long-term value 15

16 Strategy Leading proponent of partnering objectives Process leadership to Alliance peers beyond transaction and through partner lifecycle Provide business success metrics 16

17 Why Alliances Time-to- Market Investment Scale Relative to Return Risk Reduction Or Learning Complementary Product or Technology High Barriers to Market Entry Joint Solution Set Fit 17

Competitive Advantage Market Enabling Technology and Solutions

18 Alliance Framework Criteria Partnership Revenue Commitment Strategic Fit Alliance Framework: Building Sustainable Competitive Advantage Market Enabling Technology and Solutions Development Collaborative Business Development Joint Investment Infrastructure 18

19 Measuring Success Expansion of market and resource coverage Growth in new and emerging markets Customer, alliance, and field satisfaction Revenue growth 19

20 Challenges 2096_10_2000_c1 20

Instead of Competition or the Customer Too Great of Cultural Gap Too

21 Challenges Misaligned or Poorly Understood Goals Organizational Structure to Implement Lack of Short-Term Wins Focusing on Each Other Instead of Competition or the Customer Too Great of Cultural Gap Too Much Imbalance Lack of New Initiatives and Evolving Goals 2096_10_2000_c1 21

22 Examples 2096_10_2000_c1 22

to Pursue New Markets Future Technology Sharing IP Networks

23 HP Relationship Fill Out Solution Delivery Model Better Understanding of Customer Problem and Executive Positioning Partner to Pursue New Markets Future Technology Sharing IP Networks Expertise New Services Packaging Critical Account Penetration Future Technology Sharing 23

24 Operating Structure 24

Overcome Patent Barriers to Entry and Lead on Contractual Liability Knowledge about IP and Packets New World

25 Motorola Relationship Knowledge about Wireless Leverages Core Investment in Packet Technologies and Technical Support Infrastructure with Maximum Upside Block Vertically Integrated Competitors Global Integration Partner Overcome Patent Barriers to Entry and Lead on Contractual Liability Knowledge about IP and Packets New World Networks Services Business Block Vertically Integrated Competitors Global Logistics Capability Support in Financing if Critical 25

26 Operating Structure 26

Problem and Executive Positioning IP Networks Expertise Early Access to New Technology for

27 Cap Gemini Ernst & Young Fill Out Solution Delivery Model Preempted Competitive Take-Out and Assure Capacity Strong SPLOB/EMEA and ebusiness US Presence Better Understanding of Customer Problem and Executive Positioning IP Networks Expertise Early Access to New Technology for Practice Development Global Cisco Demand Creation and Customer Base New Services Packaging 27

28 Operating Structure 28

29 Summary Partnering Critical to Success Delivering on Customer Needs Win-Win Strategy 2096_10_2000_c1 29

30 In the 80 s it was companies that had effective internal product development. In the 90 s it was companies who could mix internal development with the ability to effectively acquire and integrate. John Chambers CEO Cisco Systems In the new millennium it will be those companies that can do the above and effectively partner. 30

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