Cisco’s Chuck Robbins on XaaS: We “Realized We Weren’t As Operationally Ready” | CRN

November 30, 2022, 11:34 AM EST

“Cisco has a long way to go, but it’s really a long-term thing. While you could argue they’re behind the market, we think they’ll be able to learn from all of their competition and to deliver even more powerful products,” a Cisco partner told CRN about the company’s service drive.

Customers are looking for different ways to acquire the computing they need, including buying an as-a-service model to save capital, but Cisco has recently encountered some hurdles as a service, according to Cisco executives. the company.

For the San Jose, Calif.-based tech giant, supply chain constraints have been an ongoing impediment to the all-as-a-service (XaaS) trend, as Cisco and its partners couldn’t deliver the equipment that is part of the ace-a. -service offers, in particular, its Cisco Plus strategy.

“And then we also realized that we weren’t as operationally ready,” Cisco CEO Chuck Robbins told analysts of the company’s XaaS push at Cisco Partner Summit 2022 earlier this year. this month.

Many customers interpreted the launch of Cisco Plus as a different way to finance IT – a “sophisticated lease” – compared to a true XaaS model, said Neil Anderson, regional vice president of cloud and infrastructure solutions. for Cisco, based in Maryland Heights, Mo. Gold World Wide Technology (WWT) Partner.

But channel partners want to put vendor XaaS offerings “under the hood” and have built their own services on top of the stack to create a turnkey offering for their end customers. Customers, on the other hand, often want the ability to manage some of their own IT, Anderson said.

“Part of the problem with getting to a true service model, as a utility, is that most customers still want some form of co-management. They don’t want someone to do everything for them and they don’t have any visibility on that. They want a portal where they can see how things are going, maybe touch a few things. So this co-management idea, I think, is going to be really important for the network as a service,” he said.

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WWT sees this prerequisite in all areas, not only in networking, but also in the collaboration space. The company is seeing more and more tenders with a requirement for managed services. “It allows the partner to add an extra layer of value to it so that it’s not just a resale lead, it’s [giving] the partner has skin in the game long term,” said Joe Berger, regional vice president of digital experiences for WWT.

Cisco Chain Chief Oliver Tuszik told CRN in an interview that the company is focused on enabling customers to buy and consume the Cisco Wallet as part of an as-a-service movement if this is how they want to buy, and for more partners to sell in such a service model.

“Our strategy must be to enable our customers, wherever they are in the world, to purchase whatever Cisco has in its portfolio as a service or as a managed movement,” Tuszik said.

But the effort as a service goes beyond the products. This is to strengthen Cisco’s Supplier Partner role that the company introduced in 2021 as part of its Global Partner Program, he said, a role designed with the MSP partner in mind and that recognizes partners based on their investment in managed services and solutions as a service. As the managed services business took off, Cisco has since increased its investments in vendor partners with predictable pricing, bid registration for managed services, more flexible consumption options, investment funds and dedicated business development, technical support enablement and co-marketing, the company said.

Cisco is also building more modular programs and new incentive programs, Tuszik said. “We encourage our employees to sell partner-managed services,” he told CRN. “We pay our sales team more if they sell a partner-managed service — 50% more,” he added.

At Partner Summit 2022, the tech giant revealed it had tripled the number of employees working on service build moves with partners, as well as a 1.5x payout multiplier to support growth partner-managed SD-WAN, Secure Access Service Edge (SASE), and comprehensive observability offerings.

Companies like HPE and Cisco are turning to partners in this time of resource constraints and talent shortages to learn more about what the channel can offer in terms of managed services and what they can take away from vendors. Customers are looking for “cloud-like” computing experiences that are more automated and also encompass on-premises technology environments for customers struggling with requirements that prevent them from getting into the cloud, such as data sovereignty. That’s where Cisco Plus fits in, said CJ Metz, vice president of modern infrastructure for Cisco Gold Partner Trace3, based in Irvine, Calif.

Trace3 is also an HPE partner. Metz said the key differentiator for HPE GreenLake has been how the company has shifted its full focus to supporting its as-a-service strategy, including executive compensation, sales compensation and the support structures that underpin it. -tend. “[HPE] just had more time to take more risks, to learn the hard lessons,” he said.

Cisco, he added, has told its partners that it needs to catch up. “Cisco has a long way to go, but it’s really a long-term issue. While you could argue they are late to the market, we believe they are going to be able to learn lessons from all of their competition and come up with even stronger products.

For Cisco’s role in its operational readiness for XaaS, Robbins told analysts, “I think over the next 6-12 months you’ll see a lot of progress on that front.”

Meanwhile, Cisco is already bringing many as-a-service offerings to market through its channel partners, the CEO added.

“We have things happening in the cloud markets that we didn’t have before, we have partners delivering as a service today and we have the SASE [Cisco Plus Secure Connect Now] offer there,” Robbins said. “There are a few things we need to do, but there are so many offers that are available today for customers.”

Cisco doesn’t specifically detail revenue related to its Cisco Plus strategy, but the company’s most recent fiscal quarter, which ended Oct. 29, saw software subscription revenue grow 11% year over year. other.