Channel Marker

Jun 25 2008   1:25PM GMT

VAR lawsuit against Cisco pushes partner problems out of the closet

rivkalittle Rivka Little Profile: rivkalittle

The VAR community has been abuzz since it became public that a silver-level Cisco partner sued the vendor for poaching a customer and handing it off to AT&T Business.

The twittering is because most partners agree they’ve had the same problem but never taken any action for fear of losing their businesses.

Last week SearchITChannel.com ran a story about Infra-Comm Corporation suing Cisco on claims that the vendor violated the deal registration process by passing along a multimillion dollar customer to AT&T at the very same pricing structure Infra-Comm had negotiated. Sources close to Cisco said the company lived up to its obligations under the deal registration agreement by providing exclusive pricing and protection to Infra-Comm, but couldn’t stop the customer from wanting to change VARs.

Infra-Comm also claims Cisco kicked it out of the channel program in retaliation for filing suit, though Cisco sources said the company terminated the agreement because Infra-Comm was no longer focusing on gaining new business.

Only the judge in the trial (which begins in September) will decide whether Cisco actually overstepped it bounds and broke the terms of deal registration and the channel partner agreement.

But apparently it doesn’t take a judge to determine that what Infra-Comm alleges in the suit happens every day to small partners who work with most large vendors.

Most partners contacted for the story had a similar anecdote on tap. One, in fact, said “It happened to me last week.” It wasn’t with Cisco, he said, but with a vendor just as reputable and well known.

“I’m glad Infra-Comm had the nerve to do this,” said another partner when asked if he had seen this kind of thing happen before. He added that most VARs stay quiet because they know complaining will lose them the relationship with the vendor.

Some partners said Cisco has actually gotten better over the years when it comes to dealing with partners and their customers. “This happened [with Cisco] all the time in the late ‘90s, but in the last eight years, Cisco has made a tremendous change,” one partner said.

As for other vendors, he said, “People have an arrogance and they think partners should be privileged to carry their product,” What’s more, the problem doesn’t stop at handing the customer off to large partners. Companies sometimes poach customers for their own direct sales teams, he said. “Some [vendors] are trying to grow at all costs, so they go in because a deal is not moving fast enough and they cut everyone out.”

Infra-Comm co-owner Luke Hosinksi — who did lose all of his customers when his relationship with Cisco was terminated — said he will not drop the suit because he refuses to remain quiet the way so many do. That is the reason vendors get away with stealing customers and other “bullying,” he said.

Whatever the legal outcome of the Infra-Comm/Cisco suit, some say there is one benefit so far — and that is that partners are talking about the problem openly. Some believe that the more the problem is exposed, the more likely it is that it will eventually be resolved.

Click here for the complete story.

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