Cisco Partner Summit Preview: ‘What A Channel-First Model Looks Like For Software’

Ahead of Cisco's Partner Summit, CRN speaks with Nirav Sheth (pictured left) and Vinay Nichani to talk software sales, the role of partners in Cisco's software and services pivot, and how the company is helping partners sell the entire life cycle.

Pulling Back The Curtain

Cisco Systems believes it's the perfect company to show the industry what a channel-focused selling model around software and services looks like. It’s also eager to share with partners at Cisco Partner Summit 2019 the progress it is making on its mission to become a software-first company.

The San Jose, Calif.-based tech giant has seen success working with partners to create the next-generation stack that will earn them even higher margins and more recurring revenue.

Ahead of Cisco's Partner Summit, CRN spoke with Vinay Nichani, vice president of worldwide software sales, and Nirav Sheth, vice president of worldwide sales and systems engineering for Cisco's Global Partner Organization, to talk software sales, the all-important role of partners in Cisco's software and services pivot, and how the company is helping partners sell the entire life cycle.

Here are excerpts from the conversation and what partners can expect to hear at Cisco Partner Summit 2019.

How has Cisco been evolving its sales motion to align better with how the industry wants to consume IT?

Nichani: We are driving a big shift in our business to software and the recurring model—that's not a secret. We are rapidly evolving our sales motion to align to that, and it’s very customer-driven. Every customer is thinking through how to do this digital journey. It's about greater flexibility and agility in how they consume technology and, also, customer environments are increasingly app-centric. We're now in a place where 46 percent of consumers are more loyal to an app instead of a brand [according to AppDynamics]. Customers are trying to navigate across applications, 5G, IoT, SaaS and AI, and they have to do it all securely. So with that dynamic happening with our customers, we are trying to pivot along with our partners to a model that more aligns with outcomes instead of our traditional motion of selling products. Customers are saying they care less and less about the speeds and feeds of the box and more about outcomes and, increasingly, those are coming from software. The control points are software, like DNA in the networking space and ACI in the data center.

Our customers want to customize how they consume, so we are looking at how do we simplify our customers’ consumption though buying programs like enterprise agreements? Which fundamentally means that if a customer is willing to commit to us on the outcomes they want to achieve, we'll give them value they cannot get transactionally. Over the past few years, we've been incubating that motion and it’s grown exponentially—it’s the lead motion in how customers want to consume their software, and it's also led to tremendous opportunity for our partners.

Why is software such a big area of opportunity for the channel today?

Nichani: It's an opportunity for partners to not just drive a new sales engagement, but to position value-added services throughout a customer's journey to drive outcomes. And that ties closely to where we are going with CX [customer experience] and unlocking value through the life cycle and not just selling a product and walking away. So, we are also working closely with CX to enable that with our partners. Big picture is our customers are navigating transformation, and they need more flexibility. We are increasingly enabling that with software.

How important has the channel been to Cisco's software pivot?

Nichani: The channel has always been critical. When we look at this software motion—enterprise agreements—those are not just for big customers. We are selling those across our segments, down into the midmarket and across geographies globally, so partners have been front and center in how we thought about that from the beginning. There very much have been partners that led the way in terms of investing in software and wanting to be in front of this versus some of those [partners] that may be lagging, but we have a heavy focus on aligning resources to making sure our partners are successful, not just in selling, but in developing practice capabilities and being profitable. In the last couple of years, we've been evolving our incentive structure and profitability approach for partners to align more to this software motion, and I think you are going to see us take that even further at Partner Summit.

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How is Cisco helping partners sell more software?

Sheth: We want to get the customer to activate, adopt and, ultimately, renew, so we have a lot of incentives built like our life-cycle incentives program which awards partners for additional behaviors in any of these Sass or subscription-based offerings or enterprise agreements. The bulk of the portfolio that [Nichani] is leading for Cisco's business, all of these things are being transacted on something called the subscription billing platform, and all of these offerings qualify for VIP [Value Incentive Program] annuity. So not only are we rewarding our partners for the deal itself, we are rewarding partners for how they expand their customers’ footprint and for maintaining the book of business, which is very unique when compared to the industry.

Partners who have invested in life-cycle capabilities with Cisco enjoy three times greater sell-with growth rates.

What can partners expect to hear at the 2019 Partner Summit?

Sheth: I think we have an opportunity to showcase to the rest of the industry what a channel-first model looks like for software, SaaS and subscriptions. The feedback I get from partners is with others they work with, [including] other partners or our competitors, most partners have had a lot of sensitivity around enterprise agreements and software from vendors that they feel disintermediates them, and what we are seeing is absolutely the opposite. We've continued to embrace our partners and reward them across the entire life cycle.

In our Q4, our channel penetration globally was in the upper 80s across product and services, and then double-clicking into things like enterprise agreements for SaaS offerings like Webex, our channel was even higher than that, which is a testament to how committed we are to the channel.

Cisco has been very declarative in the concept of customer experience and life cycle and we are doing that in lockstep with our partners. The partners that have been investing in customer experience and life cycle are growing bookings 2X to 2.5X faster than the rest. Their mix or recurring revenue is much higher, and their renewal rates are definitely higher. Most importantly for our partners, their profitability is much higher as well.