It’s going to be a slow process, but Cisco System’s new channel chief is adamant about steering the partner community towards a software recurring revenue and lifecycle model.
Oliver Tuszik, Cisco’s previous country leader for Germany, has been in his new role since September and succeeds Wendy Bahr, who announced her retirement in the summer. Tuszik, who prior to his role with Cisco was the CEO of one of its largest partners, introduced himself to partners in Las Vegas last week and encouraged them to think software, and move towards a recurring revenue model built around services.
“The entire logic around how we want to cover these life cycles is more partner-focused than ever before,” said Tuszik. “And it’s because of one simple reason – we simply cannot do it alone.”
New management platforms combined with automated, intent-based networking, for example, will allow one administrator to manage a much wider field. But those systems need to be installed and maintained. Combine that with the fact that more than 20 billion devices will be connected to the internet by 2020, the opportunities for partners are aplenty, explained Tuszik. Cisco’s latest response to the rapid pace of innovation include new SD-WAN and security technologies, open intent-based networking platforms and new Catalyst switches. Cisco itself has managed the transition so that partners continue to account for nearly 90 per cent of sales.
But it takes time for all of it to come together, said Tuszik, citing his experience as a member of the channel community. Even Cisco hasn’t been able to walk away from these shifts unscathed. The company recently axed a reported 450 jobs, and while he didn’t confirm the number, CEO Chuck Robbins did confirm the layoffs in a recent earnings call, describing them as an “unfortunate step” – and not an operating budget reduction – during the company’s efforts to align its Customer Experience (CX) initiatives to accelerate the company’s business toward cloud and subscription services.
At his keynote Thursday in Vegas, Robbins thanked partners for embracing the latest company transition, and told them they were on the “right side of the cloud transition.”
“We said three-and-a-half years ago that we were going to refocus on our core, we were going to accelerate the pace of innovation and shift our business model. We didn’t get to wake up one day and say, ‘Okay we’re done.’ This is an ongoing, piece of work. And we’re learning as we go. That’s what we all have to do. But in today’s world, we have to perform at the same time.”
Partner program changes
Changes to its partner programs will balance bringing products to market that deliver immediate benefits and building a roadmap for the future.
Oliver Tuszik, Cisco’s new channel chief, talks about Cisco’s increased reliance on the channel. Photo by Alex Coop.
Marc Surplus, vice-president of strategy, planning and programs for Cisco, outlined some of these changes last week. He introduced a number of adjustments and new bonuses within their Value Incentive Program (VIP), in addition to a simplified structure for recurring revenue. One of the first, and biggest, changes to be made, said Surplus, will be the addition of a new Customer Experience Specialization in July 2019, an extension of Cisco’s existing Lifecycle Advisor program where 200 partners are already rewarded with all things associated with adoption, expansion and renewal.
Canada’s 1,700 Cisco partners are beginning to understand this transition, with a few standouts such as Long View Systems, Bell and Telus, already immersed in the recurring revenue model.
“We’re becoming a customer-obsessed company versus a product-obsessed company,” said Mark Collins, vice-president of marketing for Cisco Canada. “And we’re bringing this message to our partners through new software and recurring opportunity business models, so it’s not just us telling them they need to adapt to this, we’re moving the money for them to those areas.”
Tuszik’s appointment as channel chief is a great move for Cisco, noted Rola Dagher, president of Cisco Canada.
“He has an outstanding mind and understands the importance of a winning culture and collaboration,” Dagher told CDN. “He’s been preparing for this role for a long time and his passion to our partners is off the charts.”
Application development on Cisco’s open platforms is one of Rick Snyder’s top messages to partners, the Cisco’s vice-president of Americas told CDN. He also acknowledged software’s role in the recurring services model, noting nearly 90 partners in the Americas are certified lifecycle advisors. Snyder said he wants at least another 50 partners added to that list by this time next year, and for every partner to develop some level of software development expertise, whether that’s in-house or through DevNet’s resources.
“Partners have to move over to software development and lifecycle practices,” he said. “I would like every direct VAR partner to have at least a couple application experiences with DevNet.”
Our thanks to investment research platform Seeking Alpha for the transcriptions from Cisco’s Nov. 15 Q1 2019 earnings call.