Posted by Dan Bieler on February 1, 2013
At the Cisco Live EMEAR 2013 event in London, Cisco brought a new down-to-earth dynamism to the table. The vision for how Cisco is intending to empower its clients in an evermore connected world is becoming clearer. In this blog, Forrester analysts Dan Bieler and Peter O’Neill discuss their take-home messages from the event:
Hosted Collaboration Solution is empowering its high-end channel partners.
Dan. HCS, Cisco’s hosted collaboration suite, allows carriers to offer cloud-based as-a-service solutions, comprising unified communications, telepresence, contact centre, as well as a range of communication features under the Jabber brand. In EMEAR, BT, Telefonica, and Vodafone are already selling HCS, primarily aiming it at MNC customers. It remains to be seen whether the HCS pitch is the right one for smaller carriers and SMBs, especially as Cisco remains committed to catering to SMBs.
Peter. They also need to think about being more attractive to the needs of midmarket system integrators and MSPs. That means they must provide different price configurations that are attractive to SMBs. Positioning themselves only to the national telcos is quite restrictive and doesn’t match the increasing demand we are seeing for these solutions across the market. But, of course, if they want to compete in the SMB segment, they’ll compete with Google and Microsoft and their pricing strategies. The best way to run two pricing strategies is to use two brands.
Dan. Yes, one possible way to address the sub-MNC segment could be a greater emphasis of the WebEx brand for Cisco's communication and collaboration services. The over-the-top nature of WebEx has less of a high-end ring to it and is in tune with the changing communication habits of individuals, both consumers and business users. However, for Cisco, such a move could imply a greater emphasis on as-a-service revenue models at the expense of enterprise license deals.
Cisco’s channel business looks structured and well positioned for the future.
Dan. Cisco presented a clear strategy for its channel and go-to-market approach in EMEAR. The strategy addresses changing buying behaviour, the rise of solutions and system-focused projects rather than just box-shifting, and provides for outcome-based deals.
Peter. Totally agree. Much of Cisco’s partner strategy (we shouldn’t call them a “channel” by the way, it irritates) actually came out of EMEAR initiatives. For me, Cisco is best in class when it comes to enabling its business partners – though it didn’t stop me suggesting several other action items in my one-on-one meetings.
Dan. The foundation of Cisco's partnership approach is based on clarity of engagement rules, consistency in its approach, support to evolve and develop the business models of its partners, and, of course, Cisco provides clear financial incentives.
Software-defined networking brings new opportunities, but also long term challenges.
Dan. Cisco clearly recognizes the growing importance of software for emerging network architectures. Programmable and more intelligent networks are becoming a reality as part of the migration process towards all-IP based infrastructure, both for enterprise customers and carriers. I see two long-term challenges for Cisco (and other infrastructure vendors) as a result of SDN. First, if networks will become truly programmable, Cisco will have to ramp up its skill sets significantly in the software arena. Second, carriers are increasingly likely to differentiate their services through software.
Peter. Ah, this is the crux of the challenge. The keynote presentation clearly stated Cisco’s goal – to become the #1 IT supplier in the world. To get there, it will have to transform (through invention and acquisitions) into a more complete supplier – primarily software and most of that SaaS.
Dan. This, in turn, raises the questions whether there is a need for each carrier to maintain its own "hardware infrastructure" or whether it might increasingly pool the hardware components of the network infrastructure. This would translate into fewer networks and have obvious revenue implications for Cisco.
Peter. And the same question applies to enterprises as well – with the same implication.
Dan. Hence, the SDN trend also requires Cisco to rethink its own long-term business model. Perhaps the biggest question for Cisco remains to which extent the company should transform itself from its engineering and hardware roots towards a true service partner for its customers. In my view, Cisco could make better use of insights from existing users. By analysing which solutions generated which benefits in which sectors and geographies, and which solutions failed to address particular challenges, Cisco could enter into more strategic discussions with its customers. In the past Cisco largely resisted such moves, rightly seeing risks to a slippery slope into people-intensive services business.
However, enterprise customers, and in particular carriers, are crying out for assistance in transforming their business models and developing new markets. This consultative customer engagement would also help Cisco to fight the increasing competition from Huawei more effectively. Certainly, Cisco’s decision to bring together more closely its enterprise and carrier activities is a step in the right direction for supporting B2B2C solutions.
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