Cisco to partners: We're all doing services now – resistance is futile

Cisco Partner Summit This week, Cisco gathered its partners in San Diego to make one thing abundantly clear: it's not just about network boxes any more.

The company that made its name helping everyone move data from point A to point B has laid out a new vision for itself and its vendors, which will see Cisco put itself everywhere from security to mobile and endpoints.

To that end, Cisco also says it will be pushing the partners who do the groundwork of installing and managing its products to make their own shift from simply supplying companies with hardware to managing services based on those Cisco products.

Among the new offerings will be the recently-announced Digital Network Architecture (DNA) platform. The push, which focuses on managing virtual appliances and cloud services alongside on-premise hardware, is emblematic of the new look Cisco is pushing for itself.

New CEO Chuck Robbins said this week, when speaking of his predecessor Jon Chambers, "I am trying to get us to move faster" with that transformation.

Where Cisco will be moving, however, could be a place where some of its current partners are hesitant to tread: a software and services-based approach that will see the traditional business of shifting network hardware take a back seat to IT management tools such as the recently-acquired CliQr.

Forrester analyst Tim Harmon said that the approach has some obvious benefits for Cisco, which is naturally poised to expand from network management to general IT tools.

"The margins on software are higher than hardware, that part was inevitable. Services is a natural catch to any type of solution sale," he said.

Meanwhile, as Cisco changes so will its partners. And for many companies that change will not be an easy process. For many smaller IT companies who partner with Cisco, the shift will mean a move towards business strategy and analytics.

"Many vendors, a lot of customers, don't perceive themselves as digital," said IDC analyst Leslie Rosenberg.

"It is incumbent on Cisco to enable their partners to have that discussion. It is not an IT conversation, it is a business conversation."

Jump

Not everyone will be able to make that transformation, however. Alan Pelz-Sharpe, vice president and managing director with analyst firm Digital Clarity Group, told El Reg that inevitably, some companies will be unable to make the jump from hardware provider to business services.

"The partner channel has been very consistent for about 15 years, but in five years' time there will be significant change and in ten years' time it will be really dramatically different," he said.

"A lot of the smaller channel partners, if they don't reinvent they will just become irrelevant. That work is not there any more."

Cisco, for its part, says it will work with partners in its channel program to help train employees on making the transition to services, and the company said that those who want to stick with providing on-premise IT and networking will still be able to do so.

"You always will need to have switches and routers, there is nothing wrong with that," said Milo Schacher, vice president of Cisco's EMEAR partner organization.

"The only challenge is how relevant you are staying with your customers."

Customers, meanwhile, should expect to see Cisco and its partners push an approach that pitches not just IT hardware and services, but also emphasizes business strategy and data services.

"[Customers] get the technology, but they do not know where it is going. Cisco does," said Pelz-Sharpe.

"They don't get what is possible; Cisco does."

The shift will not come overnight. Cisco and industry analysts agree that the change to a focus on services will need time, as many companies are still transitioning from on-premise IT to cloud and hybrid services.

In the meantime, Cisco will need to adjust the way it sells products. Switchzilla will have to learn how to present companies with a strategic plan making the business case for using its new and growing line of software and services.

Additionally, Cisco may have to expand with new partners who can make that case directly to the businesses that will subscribe to those services and fill areas such as IoT connectivity that Cisco's current crop of partners might not cover.

"Sometimes Cisco's acquisitions outpace their channel partners' pace. They can only take on so many solutions in their portfolio," said Harmon.

"They're going to ask channel partners to be a lot faster."

However, the transformation might end up taking much longer than Cisco anticipates. Pelz-Sharpe noted that, in the end, it will be customers who dictate the shift, not service providers.

"I think it is going to take ten to twenty years to happen," he said.

"We are all talking about digital transformation, but the fact is everybody is in a different place, and the truth is most people are not anywhere close." ®