Cisco Systems (NASDAQ: CSCO) has invested in Parallels, which develops cloud and SaaS automation software for hosting providers. Financial terms were not disclosed. The Cisco-Parallels relationship will also include joint development, marketing and industry initiatives. But there's a hidden wrinkle here. It involves distributors and other companies that host cloud services for VARs and MSPs.

If everything goes as planned, data center providers will leverage Cisco's infrastrastructure and Parallels' cloud service delivery products in tandem. And Parallels is calling on those data center providers to focus on SMB customers, which Executive Chairman Serguei Beloussov and CEO Birger Steen (pictured) consider to be an underserved market.

Parallels is privately held. As of 2011, I believe the company had pushed beyond $100 million in revenues. The longer-term goal -- a rapid march toward $1 billion in revenues. Steen, a Microsoft veteran, is leading that march.

Among his key focus areas: The Application Packaging Standard, which "makes it easy to package applications for seamless integration into cloud delivery systems," Parallels claims.

Parallels Summit 2013

Steen will update his vision for the company during Parallels Summit 2013 (Feb. 4-6, Las Vegas), one of The VAR Guy's Top 100 Channel Conferences this year. The event is designed for service providers, hosters, telcos, resellers, ISVs and system integrators.

Parallels already has a strong following in the IT channel. The company's technology helps Microsoft to syndicate Office 365 out to telcos like Sprint. And several distributors leverage Parallels for so-called cloud services aggregation -- essentially, online malls that allow VARs and MSPs to source multiple cloud applications for customers.

Going forward, it will be interesting to see how the Cisco-Parallels relationship plays out.