Techaisle Blog

Cisco Partner Summit, Nov 4-7, Las Vegas, was a whirlwind of interlocking, interdependent, important set of announcements to guide and assist channel partners to transform, own their competitive edge and target an elusive yet huge small and midmarket opportunity. The genesis of a transformed partner is the idea of relentless focus on Customer Lifecycle and begins with rebranding to Cisco Customer Experience (CX) Success Portfolio. Oliver Tuszik, Senior VP, Global Partner Organization is committed to developing a partner program that delivers customer success. Under the leadership of Maria Martinez, Cisco has thought through the channel enablement levers – customer content and assets, digital tools, co-marketing, co-selling and incentives at each “mile-marker” along the entire “race-track” aka, customer life-cycle.

Naturally, Cisco is expecting and forecasting many upsides for its channel partners including and not limited to 15% increase in revenue because of bigger deals and new deals, 20% increase in professional services that are fixed-price / right-sized deals and 5%-10% increase in HW pull-through. Partners who embrace the CX Lifecycle can hope to double their business in 3-5 years.

It is a very ambitious initiative. Out of the 60,000 Cisco partners, a majority may not have the skills and staffing to follow-through and pull it off. Cisco is not naïve. To some extent Cisco is relying on its distributors for enablement of the tier 2 partners. It is no doubt a touch ask and the onus will lie on the partners to make themselves heard, align and participate. But distributors can play an important role in driving tier 2 partners to develop CX practices. To make that a reality, Cisco is making investments in the foundation for partner lifecycle services. Cisco has developed a framework, or model, and is providing tools and resources to help partners monetize customer success and how to organize and operate their businesses for sustained success.

Cisco launched CX Certification and Specialization to help partners develop the talent needed to support customer success and to help them differentiate their business. Cisco is providing role-based training so that partners can ingrain customer success in their organization and deliver lifecycle services at every step of the customer journey.

Cisco is a partner-driven organization. Revenue through partners was 85% in 2019 as compared to only 38% in 1996. It is a major shift with a steady 6% average CAGR over the last 13 years.

The full Techaisle Take report with graphs and charts can be downloaded here

Recap of announcements

Here is my recap of the announcements that I have grouped into five areas.

Commitment
1. Customer success is #1 target
2. Partners remain default GTM for the entire lifecycle
3. Align Cisco internal teams
4. Want and support all partners

Requires increase SW content in portfolio, cultures and teams’ alignment, design programs to increase profitability.

New opportunities
1. Platform-Enabled (Programmability + DevNet)
2. New Buying Centers (Segmentation & Sales Plays)
3. Customer Success (Lifecycle & Recurring Revenue)
4. Multi-domain architecture

Reimagine customer applications, secure data, transform their infrastructure, empower teams

Distribution
1. 2T growth engine -Distis to spend time, energy on tier 2 partners
2. SMB execution – scale, touch small and midsized firms
3. Simplification & scale to drive operational excellence
4. CX lifecycle - contribute to renewal strategy

Disti business ranges from 30% - 40%; 2/3rd of $20B is from VAR, Tier 2

Customer Lifecycle
1. Lifecycle Advantage
2. Joint engagements & digital renewals
3. Collaborative intelligence
4. Refreshed re-branded portfolio

Invest US$50m in assets and programs in last 1 year. Expectation is that partners can make up to $50K incentives on customer lifecycle

Partner Marketing
1. Marketing Velocity Program
2. Partner marketing velocity central
3. Marketing Velocity Activate
4. Portfolio Explorer

10,000 partners are using marketing velocity central and virtual demand center - moving away from leads to qualified leads

One of the big announcements of the week was a renewed focus on the SMB segment with purpose-built products supported by marketing programs.

Techaisle’s latest research forecast shows that in 2021:

- WW SMB IT spend will be US$738 B (excluding telecom services)
- WW SMB Cloud spend will be US$156 B (excluding telecom services)
- WW SMB Managed Services spend will be US$65 B (excluding telecom services)

It is too huge an opportunity for Cisco to not be a major player. Cisco therefore announced two key initiatives:

1. Cisco Designed for Business: purpose-built and curated products for small businesses. For example, Meraki Go (zero touch deployment for indoor and outdoor WiFi access points, security gateway & switch), Catalyst 1000 series switch. Cisco’s collaboration solutions WebEx and newly announced WebEx Desk Pro built for all businesses of any size is suitable for small businesses also. I am delighted that Cisco has formalized and is operationalizing its stake in the market. Cisco Deigned for Business is not only a concerted effort to appeal to the small business segment but also an announcement to its smaller resellers and distributors its seriousness in addressing the needs of small businesses by offering purpose-built product solutions. However, I caution Cisco not to be completely swept away in its “race track” customer lifecycle journey with respect to small businesses. Cisco will derive better benefits by connecting its Designed for Business with SMB business outcomes.
2. Ignite the Midmarket: with upfront margin and good discounts, bonus for sales growth, simplified deal registration, deal protection, sales playbooks that provide value propositions, multi domain reference architectures, CX customer journeys and integrated industry use cases with step by step process

Techaisle Take

• Cisco has the right strategy to enable, empower and transform its channel partners
• Cisco’s focus on customer lifecycle along with its partners can accelerate their customer’s path to success at every stage of the lifecycle to deliver their business outcomes faster
• Small businesses, specifically midsized firms are the battleground for the next decade and Cisco has announced its intent at the right time supported by an effective plan and program
• Two problem areas have been overlooked – time and resource allocation by Cisco partners and vendor partnerships as compared to overall channel partner community

The core changes in the demands on different areas of the channel business are critical and challenging, but they can be seen as more effect than cause. In all aspects of channel business, long-held business tenets are being replaced by an emerging reality that has been ushered in by the move to cloud and amplified by many other trends – changes in buyers and buyer behavior, as well as management and process changes, and evolutions in service/technology delivery – that are reshaping how technology is acquired and used, and how suppliers need to act to meet buyer requirements.

NEXT channel

Techaisle has identified twelve areas where channel partners must abandon ingrained behaviors and move to new approaches that will enable NEXT (Networked, Engaged, Extended, Transformed) channel businesses.

Partner-to-partner relationships are important to cloud business success

There are seven imperatives that impact all areas of channel business operations, there are two imperatives that relate to internal management/process items, two that impact service/technology delivery, two that affect go-to-market and customer relationship management, and one – the shift from ‘turnkey solutions’ to ‘ecosystem collaborative solutions’ – that touches on all three areas. Let us discuss this last imperative.

Solution packaging isn’t a ‘religious issue’, it’s a ‘customer choice issue’ – and customers are clearly choosing to move from turnkey systems to hybrid environments that can be aligned with their evolving needs; this will also require an accelerated frequency of partner-to-partner collaboration (not opportunistically but strategically).

The chart above illustrates an important feature of this migration: it increases both the scope of projects that the channel partner can engage in and the profitability of those engagements. As the chart demonstrates, 65% of channel firms that consider themselves to be “very successful” in selling cloud report that they frequently collaborate with other channel partners; firms that struggle with cloud success are much less likely to proactively work with peer channel firms.

Drilling into the data from 2014 to 2018, we find that the opportunistic collaboration has increased by 69%. There are many sporadic efforts but no single vendor is formalizing and enabling this P2P collaboration.

What is the new Turnkey solution:

IT provides the tools to support greater efficiency and market engagement. What are the best ways to help the workforce to capture these benefits, and be more productive? The workspace isn’t defined by windows and walls and common area couches. For millions of SMB and midmarket employees, the “workspace” isn’t a physical location – it’s a virtual space defined by access from multiple screens which are used from multiple locations. This is especially true of mobile workers, a category which is increasingly indistinguishable from “workers.” Techaisle data shows that 72% of SMB employees are mobile, 87% of SMB employees use mobile devices to access corporate information.

Workforce enablement

Techaisle global survey found that improving workforce productivity is the second most important midmarket business objective for 2019 and among the top five objectives of small businesses. Data shows that for 42% of SMBs’ improving employee productivity is a priority and 43% of SMBs are using digitalization initiatives for employee empowerment.

There are many factors involved in driving productivity, including management approaches, processes and practices, and collaboration/synergy across activities and functions. But technology is a key contributor to productivity – directly, and through its ability to positively affect processes and internal coordination.

Techaisle research shows that these benefits don’t accrue to all SMBs equally: SMBs that are advanced in their approach to IT (“Enterprise IT”) are about twice as likely to achieve the productivity-enabled benefits than lowest-performing firms, and 30% more likely to realize productivity benefits than the average SMB.

The statistics quoted above show that IT is seen as a source of productivity-enhancing capabilities – meaning, in some way, that IT has ‘permission’ from the business to help drive higher levels of workforce performance. However, improved performance requires a strategy, and in technology matters, this strategy should be driven by IT management. It is important that the IT function be responsive to business requirements, deploying requested technology and delivering user training. There is another role, though, that IT management can and should play: focusing on technologies that are proven to contribute to workforce enablement, deploying these technologies within the organization and working with business staff to ensure that the benefits inherent in the technologies are recognized and captured. This advances the IT function from simply responding to requests to providing leadership in enabling the SMB and midmarket workforce.

Techaisle’s research has identified a number of solutions that are seen as driving productivity within SMBs and midmarket firms – approaches that IT managers can and should explore as they seek ways to connect the potential of IT to demonstrable increases in productivity. Three of these solutions - unified workspace, collaboration, and mobility, are especially important in a technology-dependent economy, and each contributes meaningfully to enabling the workforce.

Unified workspace

‘Distributed,’ ‘remote,’ ‘mobile’ – these are the realities of today’s workforce. In many economies, roughly half of workers are remote for at least some part of the work week.

Increasingly, SMBs and midmarket firms are using technology to provide cohesion within the workforce. Unified workspace solutions, which (in Techaisle’s definition) “provides secure anytime, anywhere, any device access from any web browser with single sign-on and password management for all public and private applications, services and file sources used to run the business” help SMBs to organize workers into connected groups. Techaisle research has found that over 75% of firms deploy unified workspace to support the needs of multilocation and full-time remote or travelling workers. These systems also help IT to deliver on key goals of data protection and mobility enablement. Businesses that have adopted unified workspace technology believe strongly that it contributes to productivity by providing a single workspace from which employees can accomplish majority of their daily work, delivering better access to applications and resources.

Every year or two (or three), a new trend sweeps the IT industry, and breathless coverage asserts that the new phenomenon has arrived fully-shaped to transform technology and/or IT’s role in business strategy. This is, of course, very rarely true. Most trends play out over a long time, and change in technology tends to be incremental rather than revolutionary. For example – it is certainly true that digitalization (and digital transformation) are important issues today, and that they will have a transformative effect on IT and business strategy. But Techaisle research demonstrates, they are a recent highlight in a series of business issues and technology themes that stretch back at least 15 years, from 2003 to 2019.

Key SMB and Midmarket digitalization themes, 2003-2020

As we enter the next decade, it seems that online capabilities and activities are entering a new era. There are still advances to be made in the ‘net’ realm: there is constant pressure to expand the speed of the Internet, enabling it to handle the voracious demands of unstructured content like video, and the rise of IoT and 5G portends a coming tsunami of data from billions of connected devices. However, the key focus of web-based business investment is now less about the ‘net’ and more about the ‘work’: the ways that an increasingly-connected world supports pursuit of previously-unattainable objectives. The most important IT-related development in 2020 will be this focus on connectedness – connected cloud, edge, applications, security, collaboration, workspaces and insights. Internet and the web are the navigation routes that we have been developing since the 1970s; the always-on, everywhere-connected Interwork© platform is the destination that we will be creating in 2020 and for years to come.

This eBook has been written to provide guidance to supply-side management responsible for digitalization strategies that affect sales and marketing of advanced IT solutions to SMBs and midmarket firms. The document is structured into six sections:

1. What’s past is prologue – The Path to Digitalization
2. Closing the gap between business priorities and IT challenges and the rise of digital
3. Business Issues over the years – paving the route to digital transformation
4. The rise of innovation – and digital – as a business focus
5. IT challenges over the years – paving the route to digital transformation
6. What’s future is epilogue: Connected Business

Download the free eBook here