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Cisco security services: Impact on channel partners

Sue Troy

Cisco last week announced plans to establish a security services practice, hiring former Boeing information security exec Bryan Palma to head up the practice. In doing so it's building out its existing services offerings

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and establishing a services beachhead in security, a business that garnered $1.3 billion, or about 3%, of revenue for the company in fiscal year 2013, which ended July 27.

But will Cisco's security services practice encroach on the services business of existing Cisco security services partners -- or be welcomed by those partners?

The company plans to offer consulting, implementation services and managed services "to enterprises and governments," according to a blog post by Cisco's Chris Young, senior vice president of the security and government group. "Our goal at Cisco is to be the No. 1 security partner for our customers," Young wrote.

Cisco intends to work with its channel partners to deliver security services. "Cisco works closely with [our channel] partners and there will be opportunities across the board [for Cisco Services and the channel]. We need make sure this is coordinated and aligned. A lot of partners have great security services, and we'll continue to encourage those," said Palma in an interview with SearchNetworking.com.

But whether or not Cisco's existing security services partners will welcome a formal security services practice from Cisco depends on the profile of the existing partners, said Kevin Rhone, senior partnering consultant for analyst firm ESG. "[Partners] can look at it positively or negatively, depending on their desire to sell Cisco-branded services versus their own," Rhone said. "Some partners will find that as a positive to either augment their capabilities or expand in terms of capacity or frequency of certain areas of expertise."

Partners who want to resell Cisco services will be able to do so, perhaps filling in a gap in their own offerings, Rhone said. 

But, he said, "Some partners will find [Cisco's security services practice] as a negative, because they want to be in the business of selling only their [own] brand of services. It really depends on the size and strength of the partners."

One Cisco partner we spoke with, whose company already offers security services, said he was not concerned about competition from Cisco's security services business, for a number of reasons. Rolf Versluis, CTO at Adcap Network Systems Inc. of Alpharetta, Ga., said he believes Cisco is targeting very large customers with its security services, a customer type that Adcap does not call on.

Versluis said that he did initially question whether Cisco services would be competitive with Adcap. "I asked … a number of different people a number of different times … 'Are you trying to build a services business that's going to compete with us?' Every time I ask that question, I get the same consistent answer: No." Versluis said that Cisco's message about services has been that they are primarily for the largest customers, to give those customers peace of mind that Cisco is directly involved with their projects and to give Cisco the experience it needs to work with its products in actual production environments.

Rhone, however, suggested that Cisco might expand its target for security services from very large customers to smaller ones. "While the emphasis right now is on large, complex customers and their branded service, I think that the driving force from clients of all sizes … to buy one overall solution from one source … is going to drive both sides" to pursue a goal of selling Cisco-branded services to midmarket and possibly even smaller customers, he said.

As of publication time, Cisco declined to specify whether it is targeting particular customer segments for its security services, saying that more information will be released as Palma settles into his new job.

Beyond the issue of the target customer for Cisco security services, Versluis said, Cisco-branded services will cost more than what he can afford to charge. "The way that I understand those services are priced, they are fairly expensive compared with what a Cisco partner like [Adcap] is able to do. They'll typically be two to three times as expensive as the services that I can do."

Versluis said that the Cisco security services also provide his company with an option not previously available: If a customer were to demand that Cisco handle the services work, Adcap could resell those services from Cisco.

Versluis said that the new security services bring another advantage to Adcap. "If I'm competing against a different Cisco security reseller that hasn't invested as much in their security practice and doesn't have the capabilities [of Adcap] … they might have to resell Cisco professional services [whereas Adcap would sell its own services]. They wouldn't be priced competitively in doing that," he said.

Like Versluis, Rhone also suggested a services pricing advantage for VARs over vendors. "[Solution providers'] cost structure, their overhead is less, which normally means that [customers are] going to be saving, not only in terms of the hourly rate that they might be proposing, but also the fact that they'd tend to be more economical in terms of the number of hours that they would engage with you."

Additional reporting by Shamus McGillicuddy.


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