Q&A: 8 Things Every Cisco Cloud Partner Should Know

Focus On The Cloud

Though software-defined networking dominates many of the Cisco conversations taking place in the industry today, recent product launches and partner program changes suggest the tech giant is still getting bullish on cloud -- and wants to take its partners along for the ride.

Bob Gault, vice president of Cisco's Cloud and Managed Services Partner Organization, talked with CRN last week about the progress he is seeing within Cisco's redesigned Cloud Partner Program, how Cisco is helping partners win in today's services- and cloud-based IT era, and why Cisco's new InterCloud platform for hybrid clouds can help them do just that.

Here's a glimpse into what Gault had to say.

What's the biggest hurdle Cisco partners face when embracing cloud?

You have partners still trying to decide whether they go down the path of being a cloud reseller or a cloud provider, but all of them are beginning to recognize that cloud is not a passing fad. They need to play a role in cloud in some way, shape, form or another.

The No. 1 challenge they have is can they afford to get into cloud, because it's not just standing up a cloud -- it then becomes all the other things they need to take into consideration. We believe there are six or seven different things they really need to take into consideration when they transform their businesses. Things like their sales organization and do they have the right skill sets in place that can help them move the conversation from a one-time capex discussion to an annuity-based discussion, which can create alarms and concerns within their organizations.

Cisco is betting big on hybrid cloud with InterCloud. What's the benefit to partners?

I think for partners and end user customers, at the end of the day, it just provides an option and more flexibility and more agility to the IT decision-maker. Generally, up until this point, it always feels like it's been a private or public cloud discussion, or a private versus public cloud discussion. For whatever reason, that’s always been the case, probably because cloud hasn't been as open as we'd like it to be. As a result, it puts a partner in a box. [They] have a discussion with an enterprise user that they are going to go down a private path or a public path, but that they really can't accommodate multiple workloads in a private and public cloud environment. It limits the conversation and the opportunities with that end user customer. The cool thing about hybrid cloud is that it's not private versus public, or private or public -- it's private and public. Now, partners can change the conversation with the IT manager.

What's the ideal ratio for Cisco partners in terms of on-premise vs. cloud sales?

It's a good question, and I don't know the answer to that -- just want to profess to that right up front. But if I take a look at all the numbers that are floating around out there, I think the latest numbers I saw is that 30 percent of all IT spend is going to be cloud-based by 2020. If you just use simple math, that basically says that a reseller's business model should be looking like, between now and 2020, 70 [percent] and 30 [percent], which is 70 percent of their revenue should come from one-time capex … and the other 30 percent is going to come from an opex model or selling cloud solutions.

I see it as happening sooner. Our business is beginning to reflect that a little bit. But if you just go by that simple math, it tells me that the healthy blend could be around 70-30 [percent] over the next five to seven years.

How many Cisco partners already have this 70-to-30 mix?

It depends on the profile of the partner. As we leave Q2, we have almost 130 cloud providers out there. Of those 130 cloud providers, more than half of them are service providers. So, from my view, cloud is not necessarily a technology play, it's really a business packaging play. When we think about the service providers, they have been delivering services in an opex model for years -- classic managed services. So whether it's been an annuity-based model or capex-based model, they've been doing this. It's become natural for them. Cloud is basically the next generation of classic managed services.

Cisco revamped its Cloud Partner Program last year. Talk about progress there.

In the Cloud Builder [program], we have close to somewhere around 150 builders. In the Cloud Provider side, we have something very, very close to that, as well. Believe it or not, in the Cloud Reseller [program], we have had double-digit reseller [growth] since July and are now somewhere around 125 or 130 partners with the expectation that we will have 300 cloud resellers by the end of the fiscal year, and we are on pace to do that. We announced the Cloud Reseller program at the last [Cisco] Partner Summit, and I think the team has done a very good job executing on that and educating the resellers on the different benefits of the reseller program, in addition to the benefits that they can get from the provider of the solution that they are selling. So I think us introducing a program that has a low bar in terms of requirements for entry is what we were looking for.

What's the first organizational change partners should make to prepare for cloud?

It probably all starts with the product house. It depends on the partner, but if they have product houses -- or people within their organization who are responsible for adding to the product portfolios that they are selling into the marketplace -- they need to have people that are dedicated to cloud. [They need to be] dedicated to public data center cloud or public collaborative cloud. Our most successful partners put dedicated people right in the front of the product houses who are going to be responsible for, accountable for, and goaled for introducing a cloud solution into the product portfolio. Also, the most successful partners we have seen, it's been driven top-down. So the CXO has made it a mandate that cloud is going to be part of the strategy, and that CXO is expecting the sales team to have a certain number of cloud sales throughout the fiscal year.

Besides Cisco's Business Transformation Playbook, what other cloud resources do you have for partners?

We actually have a go-to-market resource center, and we are going to be refreshing and relaunching that. Basically, this resource center is for Cisco Powered partners, and if you are a Cisco Powered partner in the cloud and managed services program, we will give you access to resources that other partners are not getting. Those resources will span from time-to-market resources, resources that will help them with cloud ROI tools, resources that will help them get into the marketplace as quickly as possible through testing and certification of the solution they want to put into their portfolio. We will provide them with enablement tools. It's a curriculum -- it's 101 to 301 -- and it's the fundamentals of cloud and, once you get through that, we provide a curriculum on a simulator, which is basically a sales call.

What's your advice for partners grappling with the annuity revenue model that comes with cloud?

To me, it's as simple as there needs to be a rules of engagement document that is circulating around within the company that is formally approved at all levels, cross functionally, and then down into the sales organization that more and less says, 'we don’t want to proactively take run-rate business and turn it into ratable revenue.' Unless somebody has a gun to your head, or the customer is really demanding that that happen, there is no reason to take run-rate business and turn it into ratable revenue. There [should be] a rules of engagement document that says an existing customer needs to look like this from a profile perspective: there is a competitive landscape issue, they are demanding they move from capex to opex, or there are specific applications their current architecture won’t support unless they move to cloud.