Cisco Services Leverages Software Assets To Transform Its Services Value Proposition

As you’re all well aware by now, a perfect storm of technology innovations — including cloud, analytics, mobile, and social­ ­— is fundamentally disrupting the way your company engages with its customers (as well as employees and partners). For service providers in particular, the main challenge is understanding how to best leverage these technology innovations to remain relevant and ultimately generate more business value. So it’s exciting to see a service provider like Cisco Services come up with new offerings that respond to this challenge in innovative ways.

I met with Cisco Services Asia Pacific Japan and China (APJC) executives last week in Seoul to discuss their strategy in Asia. I wanted to highlight a few takeaways that I believe will be important for sourcing professionals in Asia and beyond:

  • Cisco Services is a key enabler of Cisco’s overall transformation. Cisco Services used to be a captive consulting organization providing support and technology services for a product company. In a recent analyst call, John Chambers identified Cisco Services as one of the main levers that will help Cisco transition from a transaction-oriented to an annuity-based business model and help the company become the largest IT company globally. The company’s aim is for Cisco Services to represent 24-26% of total revenues in the next 3-5 years. These goals are extremely audacious; achieving them will require huge efforts from Cisco, including some targeted acquisitions in the services space.
  • Cisco Services leverages software asset based solutions to differentiate and generate value. The second important lever for growth is software. Cisco has made interesting progress since the last event in Bangalore in December 2011 in leveraging its own intellectual property to automate and industrialize its support services. From software probes that discover devices connected to the network to correlation engines that automatically link a network incident to a configuration change, software assets are now a critical part of Cisco Services offerings.
  • Sourcing professionals should expect more service innovations going forward. Cisco Services has launched a number of software asset-based services like remote management services (RMS). The service provider is in the process of strengthening its business consulting practice to better align the value proposition of these software asset-based services to its clients’ business outcomes. The aim is to provide clients with both superior insights (driven by analytics) and improved operating outcomes (leveraging automation technologies), all based on an understanding of what works and what does not within the client’s network infrastructure.

Cisco Services is off to a good start; however, it will require much more if Cisco is to become the No. 1 IT company in the world, including expanding its services portfolio to a multitechnology vendor environment. Overall, this is good news for sourcing professionals, who now have a more credible service provider to consider — one that is better aligned with the objectives of internal IT and business stakeholders.