Cisco recently held its 25th Partner Summit in Las Vegas to motivate its partners around the business model change that comes with the increasing software content in its product portfolio. Cisco now readily acknowledges that nobody wakes up thinking 'I want to buy switches and routers.' What they do wake up thinking about, according to Cisco, is how to reimagine applications, how to transform their infrastructure and how to empower employee teams. The irony is that, as the importance of technology grows within the enterprise, buyers care less and less about the product detail. This is the market paradox that the company's approach to customer experience (CX) hopes to address alongside its partners. It is also the reasoning behind the company's 'own your edge' slogan for partners, meaning that partners should take Cisco's technology further to create competitive advantage.

The 451 Take

Cisco's CX initiative, announced a year ago, is an ambitious strategy to transform the business model of the company and its channel to market. The plan is to enable and support annuity-based revenue streams as technology becomes more complex and demanding for customer IT teams. The strategy, now formally launched, is still evolving, but both new certifications and the smart portal to support the customer lifecycle are now available to support this business model transformation. Partner engagement with the approach looks promising, but there is still a huge amount of work to do to get the majority of partners onboarded and operating successfully across Cisco's core product set within five years.


At its Partner Summit in 2018, Cisco told its partners that it would be building a CX go-to-market approach with its partners that would launch at the 2019 Summit. During the past year, Cisco has built its CX pilot around customer data and rentals, collecting metrics for ARR (annual recurring revenue), ATR (availability to renew), IARR (incremental ARR or add-on sales). The company spent the past year ensuring the data it collected was accurate, and added 800 people to its renewals organization, while the sales operation was also restructured.

The current financial year is all about implementation of the CX program, creating collaborative intelligence around people, technology and partners using data and analytics. The CX Success motions and the CX Success Portfolio have been set up along with the partner model to accompany them for Cisco collaboration, networking and security product areas.

FY 2021 will then be about achieving scale with the program, reaching 500,000 customers and tens of thousands of partners. Over the next three years, Cisco intends to move the entire portfolio over to the new CX model.

Cisco CX: Success portfolio

The Success portfolio refers to Cisco's Support, Perform/Transform and Operate business, which earns the company about $14bn a year. There is still ample opportunity for growth, however, since roughly 40% of Cisco's installed base do not have full coverage contracts with support. As reported earlier this year, support and professional services are now one team within Cisco, with one rep facing the customer. Support solutions, which have been revamped around cloud products and third parties, is a $10bn service line for Cisco, employing 20,000 people. The new Solution Support end-to-end software subscription offers have begun with Collaboration Services, while DNA and Security follow in January and Data Center and Service Provider motions are launching in April.

The 'Perform and Transform' services business brings in $2bn and Cisco has created a packaged business-critical services (BCS) offering here to make this an easier add-on for partners to sell. This is now one of the productized service offerings among those that Cisco has created as part of its Essentials and Advantage programs that span 50 deliverables, each designed for a specific role within the customer organization. Partners can sell these along with their own services and have access to Cisco services as a package. For BCS 3.0, Cisco has added deliverables for DevOps and SecOps roles, making it easier for partners to build on top of these and offer lifecycle coaching sessions.

In the managed services area, Cisco has created new $50,000, $100,000 and $200,000 packages in Managed Detection and Responses, Secure SD-WAN and UCM Cloud. These offer good opportunities for partners, since while the majority of partners offer managed network services, they are not yet active in these newer areas, so they can extend these out to customers. The rationale behind these Cisco IT Operate offers is that they speed up the ability for partners to create new revenue streams with reduced investment and risk.

To support these initiatives, Cisco will create a smart customer portal to guide customers around the lifecycle journey, which will also include collaborative intelligence, stylized as a racetrack with pit stops marking milestones in the procurement, delivery and renewals phases of the customer journey. The portal content is customized to the pit stop appropriate for the customer and as the customer progresses around the racetrack, the content changes to what is relevant at that stage and the level of support the customer has paid for. The customer and Cisco together decide when to move to the next pit stop. At each one, resources include access to one-to-many custom sessions, success tips from the community, centralized e-learning for certifications and access to remote learning labs. There are also accelerators available that are 1-on-1 sessions with the customer that can be delivered on-site or remotely. Cisco is currently running pilots of the portal in the UK, Australia and the US with a limited number of customers and partners.

Cisco is confident that partners that embrace the Customer Success lifecycle will double their businesses over the next two to three years. With the introduction of the CX specialization as a certification, Cisco says that it is bringing audited rigor to the process. Since announcing the CX program a year ago, the company has found that partner engagement is higher than it anticipated, but it has had to slow down a little on the rollout of the offerings to reflect the speed of partner adoption.

Partner Strategy

Clearly, partners have a role to play at every pit stop in the customer lifecycle journey, and Cisco has been running partner pilots to demonstrate how to monetize portfolios, successfully operate renewals and organize using the insights generated from the portal. Getting certified for CX is a good way to get the approach embedded so that partners can scale using the smart portal to integrate themselves, the customer and Cisco in the ongoing process. With the CX Specialization Framework, partners get access to tools to assess where customers are, as well as e-learning for themselves and incentivization programs. The financial model behind the CX portfolio is based on the Cisco Services Partner Program (CSPP) to bridge the lifecycle incentives that help partners move over to the recurring revenue business model. Partners need to become self-sustaining and the Meraki product has provided Cisco with a template for this changed behavior as partners moved from discounting Meraki with core IT to offering professional services in a heterogeneous environment.

According to partners themselves, the migration to ARR is most challenging when it comes to managing their sales teams because these teams need to be educated around finance and recurring revenue. Some partners have started the migration by overpaying reps in order to wean them away from up-front commission. However, because customers are driving the move to the SaaS business model, sales professionals are falling into line. The more challenging aspect is changing behavior around the ongoing customer relationship for renewals, which is where the Cisco CX specialization has a big role to play.

In this way, Cisco is expanding the opportunities for partners in professional services and managed services as lifecycle advisors and encouraging them to create specialized skills in the financial, regional and industrial sectors to form their own 'edge' or differentiation around these services. In particular, IoT is a growth focus for Cisco and the 152 newly authorized IoT partners announced at the Summit are achieving, on average, 18% higher growth rates than those without authorization. Indeed, Cisco DevNet has proved a successful way for partners to offer IoT capabilities and the DevNet program itself is expanding with the announcement of a New DevNet specialization for partners, launching in summer 2020 that recognizes partners with demonstrated software capabilities and business practices.

Between 35 to 40% of Cisco's business goes through distributors, accounting for 70% of all commercial transactions. This has prompted Cisco to once more rethink its strategy around small and midsized businesses of 250 employees or fewer. The plan is for distributors to become CX certified themselves to support VARs because this part of the ecosystem brings Cisco about 30,000 new customers each quarter. The success of the Meraki product set is once again proving to be the template for this maneuver to better address the SMB market.

Distributors, along with other types of partners, can feed their data into the CX portal, meaning that it can be used to support heterogenous environments. For example, Ingram Micro has already created a service under Lifecycle Advantage using the portal to drive a third-party asset management system, which is now being sold to the community.


When it comes to partner programs, Cisco's closest competitors for channel loyalty are Dell Technologies and Hewlett Packard Enterprise. All three are taking a multi-cloud, hybrid approach to the new software-defined infrastructure, and all three are in the middle of their own major business restructuring. However, Cisco has the most ambitious transformational partner approach with its CX initiative.

Katy Ring
Research Director, IT Services

Dr. Katy Ring is a Research Director for IT Services at 451 Research. In this role, she covers consultancies, system integrators and outsourcing companies applying advanced technologies to deliver digital transformation services.

Johan Vermij
Analyst, Internet of Things

Johan Vermij is an analyst for the Internet of Things practice at 451 Research. He covers the smart energy vertical, including renewables, oil & gas. Prior to joining 451 Research, he has worked as an IoT practitioner, managing innovation projects across multiple sectors including aerospace, government and finance.

Mark Fontecchio
Analyst, Internet of Things

Mark Fontecchio is an analyst for the Internet of Things practice at 451 Research. He covers horizontal IoT technology, as well as focusing on the commercial transportation vertical. Previously, he was the M&A Research Manager at 451 Research, where he helped direct the firm's coverage of technology mergers and acquisitions, and its M&A KnowledgeBase.

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