Techaisle Blog

As the world turned to Zoom, I switched to Webex. I have been using Webex for the last ten months. I have experienced nothing but delight with the Webex collaboration application suite, including Webex Teams, Webex Desk Pro, and Cisco Webex headset.

I first met the founders of Webex in 2001, one year after its IPO and six years before its acquisition by Cisco. As quickly as Webex became the default web-conferencing software offering, its popularity started eroding with an onslaught of solutions, especially Go-to-meeting and Skype. In the intervening years, Microsoft Teams took off, primarily because of its integration with M365, further pushing Webex into the background. However, years spanning 2019-2020 has been an inflection point for Webex. After yielding the everyday video conferencing lexicon to Zoom, Cisco Webex has just begun its steep rise in its innovation curve and has no intention of pausing and letting the curve slope down into the trough of disillusionment. The triumvirate leaders - Jeetu Patel (Senior Vice President and General Manager of Security and Collaboration), Javed Khan (Senior Vice President and General Manager of Cisco Collaboration), and Aruna Ravichandran (CMO & VP, Cisco Webex Collaboration) - are on a mission to deliver collaboration experiences that are 10X better than in-person. Perhaps naively, I have yet to understand its enormity. Still, so far, new releases and enhancements are continuing to blend physical and virtual workspaces to deliver similar immersive and authentic experiences: the latest being gesture-recognition, white-boarding, and the pending integration of Slido for polling. The next steps in delivering similar experiences are ad-hoc conversations and serendipitous interactions. Since September, Cisco Webex has released 400 enhancements with AI and security as the Cisco collaboration strategy foundations. IMImobile acquisition will enable Cisco to incorporate expanded digital channels and flow builder capabilities for contact center and customer engagement.

The future of work has become very complex. Collaboration is more important in complex, interconnected digital transformation work environments. 58% of SMB and midmarket employees (1 to 5000 employee size firms) expect to continue to work from home post-pandemic. As a result, mobility, cloud, and collaboration are important trends in today's market, and they are tightly interconnected. This interconnection empowers collaboration. Collaboration is most potent when connected, intuitive and pervasive, so deeply ingrained in the employee's infrastructure fabric that its use is a natural extension of their work environment. At the heart of Cisco's collaboration strategy is its collaboration application suite bookended by its platform, devices, and specialized experiences. The vertical integration from platform to devices promises to be a one-stop collaboration shop for mainstream businesses.

Collaboration represents a significant investment for most mainstream businesses, and collaboration platforms become a central, everyday resource touching all users within an organization. Collaboration is pervasive and critical to SMBs (1-5000 employees). Our most recent SMB survey looked at collaboration as a discrete category and found that it is the second-most prominent SMB solution area, behind cloud and security. There is a wide-ranging trend towards seeing collaboration as part of the fabric of business activity, rather than merely a means of enabling connections between discrete tasks. It is a core component for digital transformation, and innovative businesses embed it in their organizational DNA. Collaboration is a top IT priority for 96% of SMBs, 79% of innovative SMBs are using collaboration organization-wide, and 74% of digitally transformed leaders are using collaboration solutions. Therefore, it is natural for these businesses to invest in agile, adaptive, transformative, magical, and empowering collaboration solutions. Cisco is getting there. Perhaps, this is what Cisco leaders mean by delivering experiences that are 10X better than in-person.

New work patterns and the acceleration of distributed workplaces are resulting in a range of productivity benefits for SMBs today. As such, businesses see increased workforce efficiencies and talent recruitment while minimizing cost by reducing intermediaries and integrating contract professionals – and even improved environmental performance through reduced commuting and building footprints.

In the quest to deploy a perfect hybrid workplace technology infrastructure, SMBs often overlook networking – wireless, routers, firewalls, and beyond. Similarly, as small business retailers and other small commercial offices struggle with re-opening uncertainties, they also grapple with the daunting task of enabling secure and safe environments for their employees and customers. Digitization with minimum IT disruption and low manageability is on their minds.

Cash flow constraints, limited access to finances, competitive landscapes, the need for innovation, erratic revenue, uncertainties, the pace of technology change, and many more are drivers for achieving cost efficiencies within SMBs. Digital transformation is no longer the domain of only upper midmarket firms and enterprises. Techaisle's SMB and Midmarket Digital transformation survey research shows that 46% of SMBs are adopting digital transformation to reduce costs, and 38% are planning for innovation in customer engagement and services.

Helping SMBs thrive with robust IT solutions

Unbeknownst to many, the Cisco Meraki platform and the solutions it powers is a critical foundational technology to fast-forward digital transformation for SMBs. Much of this comes from its ease of use, simplicity, and flexibility for lean IT to innovate by doing more with less.

Cisco acquired Meraki in 2012, around the same time (2013), when it divested Linksys to Belkin. Over the years, Cisco has continued to innovate on its highly successful Meraki platform. It is no secret that Cisco Meraki invented cloud-managed networking technology in 2006. It has continued to innovate and expand the networking portfolio to IoT solutions and cover any business need or use case. The Meraki platform consists of switching, security & SD-WAN, wireless access points, mobile device management, and extending to IoT, including smart cameras and AI-equipped sensors to drive business intelligence.

Regarding deep intelligence and analytics, Meraki Health and Meraki Insight allow SMBs to monitor all aspects of their network and applications from the Meraki dashboard or API and easily detect and fix potential issues in minutes. Techaisle's survey shows that only 4% of small businesses have internal full-time IT staff. They spend 79% of their time on support, maintenance, and troubleshooting— creating an IT efficiency deficit and negatively impacting organizational productivity. Meraki Health's objective is to simplify troubleshooting for the lean, almost non-existent, or over-burdened small business owner/manager. Small businesses need to propel growth and enable new business initiatives freeing up time and resources. To ease the digital transformation, Meraki provides many capabilities that protect SMBs of any size, including:

• Preventing cyber-attacks: Meraki MX Security & SD-WAN appliances protect SMB businesses, users, and devices. Meraki security has the backing of Cisco Talos, one of the largest commercial threat intelligence teams globally.

• Deploying remote workers: Meraki Z3 teleworker gateways provide connectivity and secure and seamless in-office experiences. Meraki Insight delivers deep visibility into critical business applications and proactive troubleshooting for remote workers.

• Ensuring safe occupancy: Meraki MV smart cameras let SMBs maintain social distancing guidelines by remotely monitoring and tracking safe occupancy levels in physical environments through intelligent analytics, such as object detection and tracking.

• Cost savings from simplicity: All Meraki products are deployed and controlled from a single pane of glass. Meraki Health is available for all devices, saving many troubleshooting times by pinpointing specific problematic devices and clients via root cause analysis.

SMBs agree that Meraki solutions can be quickly deployed with zero-touch provisioning and configuration and remotely managed through a cloud-based GUI dashboard (single pane of glass), with all-inclusive licensing. Meraki provides 24/7 technical support (email or phone) and a lifetime warranty on devices (except cameras & outdoor APs) with advanced replacement.

Challenges in small business security

Techaisle's SMB security survey research data shows that security is a top IT priority and challenge for 76% of SMBs, and 65% are planning to increase IT security investments. Within the SMB segment, small businesses often lack the skills required to work with software-based security solutions and are 25%-33% less likely than midmarket firms to work with managed service providers.

Most small businesses are not proactive in addressing security issues, but that may not be the whole problem or perhaps even the greatest obstacle to small businesses’ adoption of security technology. Relative to midmarket firms, small businesses have limited to no internal IT security staff, are not generally working with a managed service provider capable of handling security needs, and are about 50% less likely to embrace external vendors' software-based security solutions.

While small businesses could theoretically pursue some strategies used by larger competitors, they lack the experience and skills to identify, deploy, and manage the products and relationships used to develop shields protecting valuable corporate data, applications, and human assets.

Meraki addresses these issues by providing a secure in-office experience to remote workers—giving access to applications while maintaining visibility and control from anywhere with a cloud-managed dashboard. It also encrypts data with Auto VPN, allowing employees to quickly, securely, and remotely connect to corporate locations.

Meraki smart cameras also address physical security, remote monitoring, and intelligence by including on-device storage and flexibility to access data through the cloud. The cameras allow for many playback features with machine learning and AI to compress the data and provide business intelligence instantly gleaned from long recordings. It is an ideal product for SMBs implementing social distancing guidelines, remotely monitoring physical spaces, reducing in-person exposure on-site, and ensuring comprehensive security.

How SMBs can adapt and digitize

As I said earlier, there is increasing importance for innovation and digitization (not referring strictly to the substitution of digital records for physical documents, but more broadly to the use of digital technologies to meet business goals) in SMB strategy. Dependence on technology as a critical element of business success, burgeoning complexity, and cost constraint has created a perfect storm for small businesses to adapt to changing environments using specifically designed technology.

Over the last few months, we studied use cases and Meraki's usefulness within the SMB segment. Meraki addresses real and compelling issues, and I believe it will continue to expand within the SMB community. Verticals such as healthcare, manufacturing, retail, and financial services have been quick adopters of Meraki, specifically for launching new business models, deploying remote workers, transitioning to hybrid workplaces, cybersecurity, location analysis, contact tracing, social distancing, personal safety, curbside pickup, and more.

SMB owners and executives are concerned with issues that extend beyond technology. Yet, today's business environments are increasingly dependent on IT support, products, and services that improve productivity and efficiency or expand market reach and potential.

Final Techaisle Take

IT initiatives that can be linked meaningfully to broader business objectives can attract SMB executive support – meaning that products and services that address key business priorities have the most significant growth potential. Meraki is well on its way.

Today's economy demands that technology support SMB activities. The future will be defined by them capitalizing on technology-enabled business options. If SMBs are thinking about the path forward, from today's foundation to tomorrow's opportunity, they should include Meraki in their evaluations. Writing this analysis reminds me that I work from home and should probably replace my mesh routers with Meraki devices.

Post-pandemic, as small businesses look ahead to focus on getting back to growth, Cisco has identified the small business segment as a key priority and one of its most significant opportunities. Cisco is committing more resources than ever before to energize and activate Cisco partners' prospects in this space. Cisco identifies its addressable opportunity to be US$30 billion. It is no doubt less than Techaisle's global IT spend forecast of US$230 billion in 2021. But then, Cisco's product portfolio is not all-encompassing, and its definition of small business is on wallet share, any company that spends US$200K or less on Cisco products and services. However, Cisco's is sharpening its focus on the sub-$50K wallet-size small business segment, where Cisco's market share is minimal.

Let us analyze how Cisco is planning to address the small market.

Cisco held its annual Partner Summit on October 28-29, 2020, where it announced its new partner program. Since then, I have been sifting through pre-event analyst briefings, at-event announcements, post-event partner discussions. It has been difficult to find flaws with the Cisco partner program's vision, trajectory, commitment, and investments that Cisco is making in an integrated execution model to simplify partner engagement, support profitability, and drive partner differentiation. Cisco is focusing on customer-in rather than product-out.

Key announcements:

• New partner program organized around four roles (Integrator, Provider, Developer, Advisor) while maintaining three-tier structure (Gold, Premier, Select)
• Partner Experience Platform (PXP), a digital house to deliver a single source of truth and provide actionable insights, API-enabled for more automation and higher efficiency for partner success; consistent eight-month initiative resulting in a move from 166 siloed partner tools to a unified platform approach
• Business Critical Services (BCS 3.0), a set of advisory services for customer use cases, for example, a secure remote workforce, trusted workplace, cloud transformation, multi-cloud networking, workload management, and automation
• Significant increases in incentives for participating in BCS, Success Tracks, and Solution support

Rather than elaborating on each announcement's details, in this Techaisle Take, I am highlighting the three areas that showcase why Cisco is leading the charge in defining channels' future.

Future-ready partner profitability journey

The impact of the cloud on traditional channel business models is wrenching at all levels of business operations. Pay-as-you-go models are compelling to customers; there are higher rewards in business valuations for recurring revenue, and pursuit of as-a-Service calls for different sales approaches. Cisco recognizes that the profit model that was relevant yesterday, based on product lifecycle with margins, rebates, and close to the box services, is not the profit model that a partner will need to succeed. In direct contrast to several IT suppliers' narration about the customer journey, Cisco leads the partner profitability journey's conversation. Before the new announcements, the Cisco partner program was Cisco-out but not customer-in. Cisco put partners in a box, based on how they transacted or interacted with Cisco. The new program emphasizes the roles that partners play for customers. Besides integrators and providers, Cisco has added two new roles– developers and advisors. Developers who assemble solutions by leveraging Cisco components or building on Cisco's platform, and advisors who use their expertise to guide customers to the right solution, often in a pre-sales motion, or kickstart on the lifecycle journey.

Channel partners have looked to vendors for information on technology directions. They will continue to align new offerings with customer needs and internal resources with emerging requirements. This dependence grows more acute in times of structural industry change, as channel partners look to vendors for product insight and guidance on how to position their firms to ride with and not get swamped by the waves of change. However, the cloud has broken many of the links which connected channel and IT supplier business strategies. The buyer needs have become much more acute in the cloud era – meaning that the channel partner has an essential role to play in supporting mainstream businesses in IT acquisition. But the services/functions that have justified vendor payments to the channel have less direct value, which has strained the vendor/channel relationship. The channel's most significant opportunity is in meeting buyer needs – and that requires that the channel partner plot a path for the buyers rather than vendors. Cisco's new partner program helps partners be future-ready and build these capabilities to drive profitability by delivering full customer value across the lifecycle.

It is critical for partners to invest in new capabilities and differentiate their practices because the differentiated practices can jump-start their profitability journey. Front-end discounts and deal protection matter too for the partners. Cisco is inching towards a vendor-partner zero-friction future by introducing guided deal registration, which means faster approval time through a simplified process, apply the right promotions to offer the best discounts. Partners that are customer experience specialized will see incremental discounts and protection.
To align with the primary revenue model, cloud channel partners often view sales commissions as tied to a book of business, which is a challenging proposition to present to seasoned reps who have substantial quotas and variable compensation expectations. It is one reason why established channel partners have difficulty migrating from product sales to hybrid/cloud sales. To assist the partners, Cisco provides a bonus for maintaining monthly recurring revenue and a cumulative book of business. Lifecycle incentives vary from US$7500 (lifecycle starters) to US$100,000 (for defining a use case and then successfully delivering upon it) with the potential to earn up to 6% for additional software licenses sold.

APIs are essential to empower the consumption of Cisco technologies and enable partners to build tools and services on top. The shift to APIs isn't a matter of moving to where the market is going – it represents a requirement to accommodate a current need that will continue to increase in importance. Software-led business assessment is a tool that Cisco is introducing to help partners identify where they are in their journey. The tool identifies areas that partners may want to invest in or begin the process of becoming software-led and moving into the world of transformation. Associated with the assessment tool is a profitability simulator. Once the partner has determined the transformation path it wants to take, the tool simulates a profitability profile to ensure that partners get a return on their strategic investments.

Pivot to customer value creation through as-a-service

The notion that channel businesses need to add value - logistics, installation of software, upgrade, or implementation of a system, provision of services - to remain viable is old. Each value-add has an essential factor in common – it looks at what the channel does to enhance its revenue stream or differentiation. However, future-ready channel partners need to look at the issue from the other direction: how do the products and services delivered create value for the customer? What is my client able to do differently or faster, or more efficiently in a way that enhances their revenue stream or differentiation? In today's post-pandemic reality, customers are not especially interested in optimizing their hardware and software widgets' performance – they are focused on improving their businesses' performance. And this is where Cisco is focusing, empowering partners through agility, relevancy, and profitability to create customer value successfully.

We know that "as-a-service" is growing and is on its way to becoming the dominant technology acquisition model, as both a consequence of customer demand and a result of IT suppliers changing their business approaches to emphasize the as-a-service delivery model. Like HPE and Dell Technologies, Cisco is on a mission to empower buyers' preferences for rapidly deployable solutions through as-a-service, the need to work with managed service providers, realize value from technology investment, and assure the desired business outcome.

Cisco is estimating its as-a-service opportunity to be US$140 billion, two-thirds of which is potentially from the small market segment with pre-integrated solutions based on consumption models. Cisco is approaching the new technology acquisition business model holistically through three lenses: 1/ delivering exceptional outcomes, 2/ enabling and facilitating agility for Cisco customers by removing their operational burden when adopting Cisco solutions, 3/ regardless of the IT and cloud maturity as well as the size of the business, allowing them to adopt Cisco solutions in the most flexible manner.

Seeing the 'new normal' through the eyes of the customer

As per Cisco, its most profitable partners have been winning larger deals by accessing new buying centers outside of IT, by co-selling with ecosystem partners. Over the past six months, the need for partners that can support strategy, implementation, integration, and optimization has become much more acute. Business patterns changed by COVID-19 require businesses to accelerate digital transformation within their operations. In many customer organizations, purchasing authority has shifted from IT to business management. The shift requires partners to position their offerings and services in terms that emphasize business metrics, such as time to market and measurable revenue and cost impact, rather than technical specifications and targets. This business focus ripples through partner marketing and technical operations: marketing needs to emphasize time-to-benefit, the ability of individual solutions to contribute to overall business agility, and the direct application of IT features to pressing business needs; on the technology side, partners need to focus as much as possible on services centered around pre-built vertical solutions that can be deployed and integrated rapidly, with replicable processes and predictable outcomes, so that delivery matches the vision set by marketing and the requirements of the customer executives.

For decades, a turnkey solution approach worked well for customers, the channel, and vendors but it is out of sync with a hybrid world focused on a continuous path towards ever-greater levels of digital business capabilities. Business users are not committing to static systems that manage defined tasks/processes; instead, they are building approaches that allow for incremental deployment of new capabilities that increase reach and efficiency. And this is where Cisco is heading with a book of business aimed at the business buyer through a co-selling approach with Cisco sellers and ecosystem partners. To be successful, channel partners need to develop an ability to be flexible in their approach to customer needs. Cisco is committing to support this flexibility by enabling an ecosystem that can extend the ways solutions are deployable by adopting APIs that facilitate integration across complementary offerings. It also requires Cisco to establish alliances that help position these integrations as part of a strategy aligned with a digitally-transforming market.

Final Techaisle Take

In short, Cisco's partner program is ready for the future. It is a program that can help channel partners become the navigators in plotting customer digital transformation strategies.