Cisco promises a simpler licencing regime

Tired of the complex licencing system Cisco Systems Inc. (NASDAQ: CSCO) has for all of its collaboration products?

Company officials said Wednesday they are doing something about it.

On a conference call with IT reporters, Rob Lloyd, Cisco’s president of development and sales, said it will simplify licencing of its various communications applications, including the cloud-based WebEx audio and video collaboration service and the on-premise Unified Communications suite, Contact Centre and Call Centre applications.

“We’re hearing from customers and partners that the separate licencing mechanism that exists for those should be combined,” Lloyd said.

So the goal will be to decrease the number of enterprise licence agreements to simplify the way customers can buy Cisco collaboration, “and totally compress the number of licencing and renewal fees”

He didn’t say when the new scheme will be in place.

The call was as much to talk about Cisco’s confidence in its future as it was to shed some light on its strategy for the next few years.

As part of that, Lloyd repeated what Cisco told financial analysts last month: It believes the company’s services business over the next five years can grow to at least 25 per cent of annual revenue from the current 22 per cent.

That will be done “without disrupting the close relationships with channel partners,” he said. Cisco will never create a “hard deck where we take accounts and the rest is left for the channel.”

Also during the call, Lloyd said Cisco will shortly unwrap the first concrete parts of its announced software-defined networking strategy, part of a five-year plan to build a new platform allowing enterprises and service providers to better deliver applications over networks.

The upcoming announcement – which Lloyd said will be made within the next 30 days — will be a toolkit and roadmap for letting developers use an environment Cisco calls onePK, which is a set of application programmable interfaces (APIs) for all of its operating systems, switches and routers.

These APIs will link to software applications for visibility into the Cisco infrastructure to automate task such as optimizing resources.

“In the next few weeks we will launch a roadmap, with the features and the services that will be available through the onePK,” said Lloyd, “and how customers can begin to imagine using it in use cases so it begins to deliver the simplicity and programmability between the mass infrastructure and the investments they’ve made, the features of IOS, XR and Nexus OS, and how they can begin to simplify their IT stack.”

The promise to create onePK was made in June as part of Cisco’s software-defined networking strategy. SDN is an emerging approach to virtualizing networks to automate tasks.

But Lloyd and Cisco executive vice-president and chief development officer Pankaj Patel also said that the onePK announcement will be the start of a bigger effort: To build a new platform to simplify how organizations deliver information technology. Cisco CEO John Chambers talked about this last month with financial analysts.

The idea, Lloyd said, “is to streamline the ability of an application to call directly to a network service and begin to provision a capability” – for example, if a person is transmitting an electrocardiogram test of his heart from home to a doctor with a mobile device, the mobile application can set data encryption, quality of service and other network capabilities.

“We do see an opportunity of creating a platform with two layers,” Lloyd said: Infrastructure APIs and application APIs.

Asked why it would take five years to realize this vision, Lloyd said it’s a long term vision. But it should allow Cisco customers to unlock value they have in their existing network infrastructure by coming up with new ways of taking advantage of applications and business processes.

Companies such as Cisco, Juniper Networks, Brocade Communications, Alcatel-Lucent and VMware are only just firming up their SDN strategies. There isn’t even complete agreement on what SDN means, although most say it is a way of separating network control plane from the data plane, which forward traffic. Through software, there would be central control of traffic.

Some, Lloyd noted, have predicted that SDN is a threat to hardware-based network equipment makers like Cisco – or, as he put it, see SDN as “the ultimate threat and the final kneecap to Cisco.”

But the company believes SDN “is actually potentially a huge advantage if we unlock the value of $180 billion of (Cisco’s) install base by creating some APIs and interaction to the intelligence we’ve built (in the network) and begin to expose that to applications and business processes.”

In fact, Lloyd and Patel took pains to remind the reporters that Cisco is heavily into software, planning do double its annual software revenue over the next five years to $12 billion and grow its service business to at least 25 per cent of revenues, up from 22 per cent.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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