Partners: Cisco's IoT Strategy Set To Unleash Services Opportunities, Help Them Forge New Ties With Operational Technology Vendors

Cisco Systems is putting its Internet of Things strategy into higher gear, aiming to leverage its massive networking footprint and next-generation technologies to take IoT devices to a new level. The strategy will unleash rich services opportunities for channel partners by enabling them to tap into an operational technology market hungry for turnkey IoT solutions, according to Cisco's IoT leader, Rowan Trollope.

"This is the biggest thing, in my opinion, to happen to Cisco's business probably in 20 years," said Trollope on stage at Cisco Partner Summit 2016, referring to the services opportunities becoming available in the operational technology market.

The San Jose, Calif.-based networking giant's plan is to create an intelligent network tailor-made for the IoT market, then directly tie Cisco's network into every IoT device possible. "We're actually going to need to talk to the device makers and give them a set of tools and APIs and some code, some certificates, to allow them to participate in the network so that the network and the [IoT device] can operate as one," said Trollope, senior vice president and general manager for Cisco's IoT and Applications business.

[Related: Cisco IoT Leader: The 'Network Must Become Automated' For IoT]

Cisco is creating a Certified Device Program where any type of IoT device that needs connectivity to the network will have to become certified by Cisco. This revamped IoT effort aligns with Cisco's next- generation Digital Network Architecture (DNA) and Tetration Analytics platform.

To help channel partners sell IoT offerings and services more easily and effectively, Cisco has built internal teams -- including an Industries Product Group and Digital Transformation Practice – tasked with creating and customizing Cisco technologies for specific IoT vertical industries such as manufacturing and smart cities.

The strategy can be broken down into three steps,Trollope said. " Evolve the network. Create a new business and an engagement with 'things' makers in a way that we haven’t ever done before and, finally, take that to market and to the customer totally differently with [partners]," said Trollope.

So can this strategy of combining Cisco's next-generation technologies with IoT products work? And can Cisco successfully lead its more than 60,000 channel partners to make the jump into the operational technology marketplace to reap untapped services opportunities? Partners and analysts say they believe if anyone can do it, it's Cisco.

"There's a real need for intelligence in the network to recognize devices and adapt appropriately," said Robert Keblusek, CTO of Sentinel Technologies, a Downers Grove, Ill., Cisco Gold partner. "I'm unaware of any robust standard in this space, and many IoT devices lack embedded security elements and don’t communicate with the network on the policies needed for optimal communications. … If Cisco can help drive this, I believe it will benefit everyone."

Keblusek said the market for partners to add value to operational technology organizations through services is "open and very large."

Research firm Gartner predicts that IoT will support total services spending of $235 billion in 2016, up 22 percent from 2015. "IoT services are the real driver of value in IoT," said Gartner analyst Jim Tully in a report regarding the IoT market.

Sentinel Technologies already has formed a number of relationships with operational technology vendors, including in the intelligent factory automation space, according to Keblusek.

"We're able to partner to bring a manufacturing customer into a next-generation production facility," he said. "We also have other partnerships around technology to take advantage of the massive amounts of data generated by IoT devices and create visibility of the data as well as actionable intelligence."

Mike Greaney, CEO of Crofton, Md.-based Force 3, a wholly owned subsidiary of Sirius Computer Solutions, said he is bullish on Cisco's new IoT strategy as well, adding that operational technology vendors are helping solution providers to close some gaps.

"It helps fill in holes in a partner's offering where they can align with these already-Cisco-recognized [vendors] who are already part of the team, if you will. We can then team with them and develop our own consortium of partners," said Greaney.

Force 3 already is targeting the federal market with some operational technology vendors, according to Greaney.

" We're spending a lot of time evaluating a variety of Cisco ecosystem partners and … [making] sure that [we] partner with a company [that has] technology or services that will resonate in the federal space," he said.

Greaney took it a step further, saying that Force 3 might even consider acquiring an operational technology company that aligns with its target market.

" Along the way, some of them -- if they have a particular niche that is appealing to us -- they could become an acquisition target," said Greaney. "So there's a benefit there both ways -- you can either build your offering and some of these companies will fill voids that partners may have, but they also might be appealing enough to invest in."

Meanwhile, a key component to Cisco's strategy is to solve security issues surrounding the IoT market, according to Cisco’s Trollope.

"Part of our Certified Device Program is to say, 'You must tell us what traffic is valid from your device. That information must become inherent in the network, provided to the network.' When you do that as a device maker, it allows us to automate the network infrastructure. It allows us to reach back and pre-configure the network," said Trollope. "When it turns on, it connects to the network, the network understands which device it is and automatically sets those policies and … we don’t want that device to do anything but talk to its own website or control service. … We're rebooting the security equation for the Internet of Things."

Ezra Gottheil, principal IoT analyst for Technology Business Research, said Cisco's security play has the potential to succeed.

"The devices themselves are now on the internet with an IP address, and that's kind of scary. That is a place where the network provider presumably can increase security. So Cisco has a very plausible story here," said Gottheil.

However, he said, IoT devices are still somewhat vulnerable because the "last mile" might not belong to Cisco depending on a variety of factors such as the device’s power source or whether it is mobile.

"Cisco may not be in the position to ensure there's encryption all the way down to the device. It depends on the nature of the device, but it's absolutely true that once it connects to the part of the network that Cisco owns -- which is probably anything on Ethernet and anything on wireless and, through Jasper, maybe anything on cellular – then it can ensure all that security from the device back to the edge or the data center," he said.

Gottheil also said Cisco's strategy of leveraging its networking incumbency to target the IoT market to solve business outcomes "makes a lot of sense." He said the IoT market is running into a wall in terms of turnkey, off-the-shelf, secure IoT offerings.

"One of Cisco’s advantages is they have a lot of customers, from the relatively small to extremely large, in every vertical, every sub-vertical. So if they say, 'You’re a company that wants an IoT solution or incorporate IoT in your existing products, we'll help you build it by making it more secure from using the Cisco network. Then we'll help you with [access] to our customers,'" said Gottheil.

IoT is necessitating that IT companies form strategic partnerships with other vendors outside the IT arena, he said.

"IoT means you’ve got to partner ten times as much as you ever did because you have to partner with guys who make beer vats and pizza ovens," said Gottheil. "It's a challenge for horizontal companies like Cisco to come in and pretend they know something about brewing beer or making pizza, so you really have to partner."

The IoT market has been top of mind for Cisco, with CEO Chuck Robbins last year saying the future of Cisco and its channel lies within IoT.

In February, the networking giant planted its stake in the IoT market by acquiring Jasper Technologies for $1.4 billion. Jasper provides a cloud-based IoT service platform that helps enterprise and service providers launch, manage and monetize IoT services on a massive scale.

"That IoT cloud starts with Jasper and is being extended to all of the other networking types that Cisco has today … which means that anywhere in the world you will power up a Cisco-certified IoT device and it will connect automatically to the next generation DNA-powered network and authenticate the device on the network and set up the traffic flows with a few clicks," said Trollope.

The network today is unsuitable for IoT, according to Trollope, and Cisco is the only company in the world that can solve that problem "because we own the network."