Three big profit drives for channel with Cisco intent networks

SAN FRANCISCO, CALIF. – Almost hidden in yesterday’s big Cisco announcement of new intent-based networks – code named Wolverine – was the networking giant’s subscription-based go-to market strategy.

In a nutshell, Cisco has decided to make software subscription a main part of its portfolio. With the release of the new Catalyst 9000 Series, it will come available with DNA Centre via subscription most likely in a pre-bundled offering on the Cisco One license.

Nirav Sheth, vice president of the global partner organization solutions, architecture and engineering at Cisco, told CDN that Cisco One program is being tweaked for these new networking solutions.

But what Cisco is also doing is shifting its focus from talking about these products from a features perspective to more of a business point of view.

Sheth said that successful channel partners are leading the business discussion on delivering a business outcome rather than selling a point product. And, they are earning between 30 to 40 points of margin on consulting services.

“We are making these networks open and programmable so if they choose to invest in software development let’s say and develop their own IP. It’s now a panacea for the channel and they can get 60 to 70 per cent margins, while creating their own recurring revenue stream on top of monetizing the Cisco support contract,” he said.

Jim Duffy, a market analyst for the 451 Research Group, told CDN the subscription model will bring more flexibility and predictability to software licensing for them as well, and make it easier and less confusing when acquiring software licenses from Cisco. Previously, the many variants of IOS with perpetual licensing was difficult for customers to manage and track.

One partner Altus Consulting of Costa Rica, used Cisco’s software to developed its own branded Altus Collaboration Suite built on Cisco Unified Communications Manager. This solution provided cost-saving related to billing, call control and system administration along with some automation benefits.

“From what we announced today, I am a firm believer that to unlock all three of those revenue streams in one partners must pivot from a networking discussion into a business conversation. This is not about all the bells and whistles. Yes, we are innovating but the customer has issues with security and extracting cost out of the management of IT. They also need to future proof the environment as more things will come onto the network such as the Internet of Things,” Sheth said.

But where the channel is most profitable is in security, Sheth added. The C-suite customers are looking to optimize cloud, but the next critical things are the company’s security posture and to quickly identify threats to the network.

“Security is built into everything we are doing at Cisco and the partner is valuable as they can transcend the digital network into a security discussion. High profile attacks such as Wannacry and the DDOS last fall on NetFlix has shown how malware can get into the network. And, once there it can go left, right anywhere. For the first time the partner needs to show the customer they have X-ray vision on traffic even if its encrypted,” Sheth said.

Duffy said the Encrypted Traffic Analytics tool was the most intriguing aspect of the announcement. “The ability to detected encrypted malware is a huge step forward for securing the networks of Cisco customers,” he said.

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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