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Execs cite IoE and software as growth areas at Cisco summit

Cisco said shifting customer demand requires a new response from partners, pointing to IoE, software and integrated infrastructure as growth areas.

MONTREAL -- On the opening day of Cisco Partner Summit 2015, chairman and CEO John Chambers talked not only about the industry being at an inflection point where every company is becoming a digital company -- disrupt or be disrupted, he said -- but that Cisco, along with its connected partner ecosystem, must do the same.

Bruce Klein, senior vice president of the worldwide partner organization at Cisco, added that customers want business outcomes. Seventy percent of those customers, Klein noted, citing Cisco surveys, also want Cisco and its partners to deliver more flexible consumption models and 60% want end-to-end solutions that will drive return on investment. In addition, 55% of the customers Cisco polled are making technology decisions outside of IT in the lines of business (LOB), according to Klein.

These trends require something different from Cisco and its partners. "It requires bold changes from all of us across the board: business model changes, recurring revenue models, sales reorganization and new compensation plans, digital or inbound marketing, services, and moving from horizontal go-to-market to vertical and specialized go-to-market," Klein said.

Partners who are making the shift -- changing business models, selling Cisco products, adding more services to the mix, and selling to the LOBs -- are realizing a 10% revenue increase compared with those who haven't made the shift, according to Cisco partner surveys.

IoE growth opportunities

The Internet of Everything (IoE) was front and center on stage at Cisco Partner Summit, as was getting onboard with the digital age, which Cisco described as spanning the 2010 to 2030 timeframe, and leaving the information age, which the company placed in the 1990 to 2010 timeframe, to the history books. Cisco is already building a pipeline for what's touted as a $19-trillion opportunity and needs partners for the journey.

Quincy Minor, president and COO with Information Transport Solutions, a technology solutions provider based in Wetumpka, Ala., is on board. Minor said his top reason for attending Cisco Partner Summit was to hear more about Cisco's IoE strategy.

"We want to be in the forefront on IoE with our customers and to be able to talk to them about how it will be beneficial to their business in the future and give them a road map," he said. "If we're not there for our customers on IoE, someone else will be," he added.

Information Transport Solutions, founded in 1998, has 95 employees and is opening a third office soon. Today, 35% of the partner's business revenue is from managed services. Minor said that he wants to boost that figure to 50%. Additional company revenue comes from break/fix, hardware sales and project-based work. The company works with K-12 clients as well as commercial customers and municipalities.

Solutions, hybrid IT and software

All Cisco strategy and efforts addressed at the Cisco Partner Summit tied back to IoE, including the key capabilities that Klein said are driving partner growth: solutions (hardware, software and services); hybrid IT; and software. He touched on new efforts from Cisco in each area.

Since the introduction last year of the Cisco Solution Partner Program, an initiative for independent software vendors (ISVs) and technology partners, the program has signed up 800 partners and 1700 products in vertical areas. By the end of this year, the top 100 ISVs in the program will leverage more than $1 billion in incremental revenue by partners connecting with partners to deliver business outcomes, Klein pointed out.

Another solutions-thrust focuses on Cisco's Marketplace, introduced last year.

Cisco intended its Marketplace to serve as a place to find validated enterprise-class apps, products and services. It was also designed as a resource where partners could connect with other partners. But according to Klein, partner feedback was less than stellar. So, Cisco recently made changes based on what partners asked for -- a Marketplace organized by verticals and products, and added sales enablement.

The vendor also invested in partner experience managers who'll assume the operational responsibilities of partner account managers (PAMs) so that the PAMs can spend more time focusing on helping partners drive their business and connect with the right partners to grow their business.

"And we're continuing to invest in that area, so partners can expect to see more things throughout the year," said Klein.

As for the second growth area -- hybrid IT -- Klein cited IDC market figures pointing to a 40% growth rate between 2014 and 2015 for the integrated infrastructure market, now estimated at $6 billion.

With FlexPod and Vblock, Cisco claims a 46% share of the integrated infrastructure market, said Klein. And with the 2014 introduction of VersaStack, a data center infrastructure offering created in conjunction with IBM and OpenStack with RedHat, Cisco is offering partners more integrated infrastructure options that partners can take to their customers.

In the third big area -- software -- Cisco is making bold moves and intends to be a leader in this space working with partners, Klein announced to Cisco Partner Summit attendees.

Today, with WebEx, Cisco is the second largest Software-as-a-Service (SaaS) provider in the world, said Klein. Nine out of 10 of Cisco's recent acquisitions are software companies. Cisco ONE Software, a portfolio of software products, was introduced in Milan in January and the company also has new analytics software.

To enable its partner community to offer Cisco software, the vendor announced a new Software Partner Program that will officially launch in calendar year 2016. The program will introduce three new partner roles: Software Lifecycle Advisor, Software Consultant, and Software Integrator.

We're making changes that will more tightly align Cisco's sales organization with the consumption changes that are happening in the marketplace ... so that we can minimize any conflict out in the field.
Chuck Robbinssenior vice president of worldwide field operations, Cisco

The Software Lifecycle Advisor is an opportunity for partners to sell software, but also help customers activate, adopt features and renew licenses.

The Software Consultant will be important, according to Cisco, in prescribing solutions and may have expertise in an industry vertical or around a certain type of software. Consultants will work with customers to identify their business needs.

The Software Integrator will have specific skills around prescribing software solutions, delivering the solution and integrating it, as required by the customer.

Cisco will launch the program in fiscal year 2016. Until that time, partners are advised to consider building out software practices to capture new revenue opportunities.

New offers

For Cisco Cloud Builder partners, the company announced the Cisco OpenStack Private Cloud Bundle, a remotely managed cloud that sits on the customer premises. Partners monetize the offering by selling the stack, Cisco's managed service and wrapping their services around it.

"It's a great offer for customers' developers -- for example -- customers who are scaling up their ERP applications and are scaling out development," said Klein.

The new offering costs 30% less than a private cloud service from Amazon Web Services, he added.

For cloud providers, Cisco is taking its Cloud and Managed Services Program (CMSP) to the next level. Cisco is expanding services and will simplify the program. "There'll be new offers around virtual managed services that you can put into your cloud," said Edison Peres, senior vice president, Cloud and Managed Services Partner Organization at Cisco.

Attendees applauded Cisco's announcement that it changed partner audit requirements from annually to every three years. This applies to Gold and Master specialized partners and partners in the CMSP program.

For resellers who make money on professional services, Cisco will be introducing a library of seven new professional services that partners can take to market with Cisco. "We'll share the blueprints and tool kits and tools on how you can take this to market," said Klein.

Klein, during his Cisco Partner Summit presentation, only mentioned one of the new professional services, Cloud Consumption Services. This service is designed to help CIOs assess the impact that cloud apps are having on security, total cost of ownership, risk and other factors. The service will also provide a report to determine a company's needs when it comes to cloud.

All seven of the new professional services will be rolled out this week at Cisco Partner Summit.

Cisco's internal changes

Cisco brought out company executives from sales, engineering and marketing to highlight changes that Cisco is making internally.

Chuck Robbins, senior vice president of worldwide field operations (Robbins will be Cisco's new CEO effective July 26), pointed out that his organization is integrating the product and services sales organizations, "so that we can show up with both our partners and our customers as one Cisco."

Robbins' organization is also helping its teams understand how to position outcomes and how to be connected more towards the business results that technology enables through LOB discussions and increased focus on industries. Another change that Robbins pointed out was around compensation.

"We're making changes that will more tightly align Cisco's sales organization with the consumption changes that are happening in the marketplace, such as cloud offerings and managed service offerings that many partners are taking to market, so that we can minimize any conflict out in the field," he said.

Pankaj Patel, executive vice president and chief development officer at Cisco, noted that he launched a major transformation in his organization 18 months ago. Some transformation goals, he said, were to sharpen engineering's focus on developing technology that solve business problems, to prioritize a product portfolio to growth areas, and to enable strong collaboration across the entire organization.

"We also shifted $1 billion in Opex in one year; I eliminated 60-plus business units; all but three of my direct reports are in new roles; more than 70% of the engineering organization has a different reporting structure; we're moving towards fast, agile DevOps; and, we're thinking differently and moving from selling boxes to selling architectures and solutions," he said.

On the marketing front, Karen Walker, interim chief marketing officer at Cisco, talked about making bold changes in three areas: a move to revenue marketing, -- which means marketing is accountable for driving a net new sales pipeline; a move to digital and social marketing, and promoting the Cisco brand.

"As John [Chambers] mentioned, 87% of CEOs know that the next wave of the Internet is going to disrupt their business, but only 7% are ready to do anything about it. So the next chapter of our brand campaign is about creating that burning platform, that intensity, that reason to act now," she said.

Marketing will also focus on security, Intercloud and collaboration and telling the Cisco story in a fresh and provocative way, Walker added.

Next Steps

Cisco Partner Summit: 'Use storytelling and content marketing techniques'

Cisco revamps the Cloud and Managed Services program

Learn more about Cisco Intercloud

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What is your company doing to adapt to the digital age?
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We don't sell software, however we are definitely a company that is driven by technology. Most mid-sized and large companies are, these days. The mindset of the organization has been slow to change, though. I feel like IT is still viewed as an operational cost-center, when in fact without IT there would be literally no revenue. 
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""We're making changes that will more tightly align Cisco's sales organization with the consumption changes that are happening in the marketplace, such as cloud offerings and managed service offerings that many partners are taking to market, so that we can minimize any conflict out in the field," he said."

This is the kicker, and where a lot of companies that have tried to move from a hardware solution to a software solution have failed -- if the sales people get compensated more for selling hardware, then they're going to keep trying to sell hardware, no matter how much the company wants to claim it supports software. It doesn't matter how good the products are if the sales team doesn't get behind them.
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Right on, Sharon. I've heard this before.
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