How Cisco's helping partners sell subscriptions

We mentioned in a story earlier this week that Cisco has deployed a handful of tactics to push its partners to sell more subscription models, and it's been paying off so far.

To paint a picture of how well Cisco's efforts have succeeded: recurring revenue grew 43 percent in Australia in New Zealand last year, while overall software sales rose 28 percent, services were up 10 percent and the attach rate rose to 86 percent.

We had a chat with three of Cisco's top channel execs to get their take on what Cisco is doing to encourage subscription sales and how it's gone so far.

"It's a journey" Cisco's ANZ channel chief Tara Ridley told CRN.

"We’ve got some partners that are completely embracing it because they're nimble and that sort of managed service offering is core to their business, and we're seeing some great adoption by some nimble tier twos.

"It's a little bit more challenging with some of the larger partners because we've got to go from a traditional resell business of just selling product to now thinking about we transact the software license, how do they incentivise their sales people, how do they make sure that gets adopted, and it's a completely different motion."

Ridley acknowledged the difficulty in becoming an expert on all things Cisco when the vendor sells everything from networking, collaboration, IoT, cloud, security and everything in between.

Cisco kicked off its partner transformation strategy two years ago, though some of those initiatives have only seen the light of day within the last year.

Vicki Batka, Cisco's vice president of the Asia Pacific Japan China (APJC) partner organisation, told CRN about some of the initiatives the company has introduced to combat those pain points.

One of those initiatives is a change management program that helps partners that don't know how to adjust to Cisco's new direction.

"Over 17 weeks, we basically facilitate a partner through change. It's important that it's about them, it's nothing to do with us except we want them to build and create Cisco offers.

"So selfishly, we get some benefit but it's helping them go from selling hardware to software. Because some of them haven’t sold a lot of software, they don’t have a renewals practice, they don’t have any experience around consumption models, their financials models aren't up-to-date so they still need to pay their bills and staff so we want to help them create revenue streams while things start to shift and change."

Batka said a handful of Australian partners have been chosen for the program, but are waiting until the time is right to commence.

Practice development

The next initiative helps partners develop their own practices based on one of Cisco's many architectures.

"If you think about SAP, they're really good at working with partners where they will build an SAP practice, there will be people, skills and they will target customers. With Cisco we said 'you've got to sell everything'," Batka said.

"What we're trying to say they can pick an architecture and we'll help you build a practice around that architecture. We'll come in and do skills training, sales plays, end-to-end around that architecture, and we're doing that through our partner organisation."

Cisco's channel chief Oliver Tuszik gave us a bit of global perspective, saying there had been incredible momentum in software sales since the company started transitioning in that direction.

"To give you some numbers, in the first half for APJC, the partners grew their recurring revenue by 66 percent, so it's a business that's taking off," Tuszik said.

"It's a different model but in a world where everybody is talking about agility, flexibility or ongoing innovation, you need to have a more software-led approach. When you look at our portfolio, we will always have the top hardware, but more and more of the functionality is being driven by the software, some of it even from the cloud. But to drive this model, we need to go to a different kind of model to be able to continue delivering value."