Cisco CEO and chairman John Chambers told delegates at the company’s annual partner summit in San Diego this week that the massive cost cutting and restructuring measures initiated last year have begun to pay off.
Walking like a pentecostal preacher amongst the 4,000-strong audience – 7000 virtual delegates were logged in online - the charismatic industry veteran declared that Cisco was in a much stronger position today than a year ago, having trimmed right down and made significant headway in key markets at the expense of its rivals.
“We are more aggressive as a company than we’ve ever been.”
Juniper, one of Cisco’s fastest growing rivals, has lost ground to Cisco in its core carrier market, Chambers claimed, while stating that HP’s share of the networking market hadn’t grown since it bought 3Com 18 months ago.
Chambers also hit out a number of rising start-ups recently highlighted as potential threats, saying their growth had recently been “flat”.
As for Cisco’s main nemesis, Huawei, Chambers and other Cisco executives were swift to dismiss the company’s ambitions to make gains in the enterprise networking market, claiming while the Chinese company had tried to persuade large numbers of partners to defect, most had decided against making the switch. A number of US partners interviewed by CRN said they had never heard of the Chinese company.
Cisco for its part appears more confident in the face of its rivals, having managed to cut around $US1 billion in costs while consolidating what had a become a sprawling and unwieldy product portfolio into five core categories.
“[We had about] five inches too much around the waist,” Chambers said.
A major part of the restructure included shedding some 23,000 jobs, many of which were in sales, a fact which has arguably made Cisco more reliant on its partners.
And at this year’s 16th annual partner summit, Cisco appeared to be even more committed to ensuring their loyalty.
Cisco made two key channel announcements this week. The first was the consolidation of nearly 50 services oriented programs into the one, a move which Cisco hopes will enable partners to continue growing the services components of their business, which a recent survey by Cisco indicated was averaging 50 percent.
"It's well aligned to what we currently do," said Laurence Baynham, group general manager of Brisbane integrator Data#3, which took part in the APAC beta program of the initiative. He added that when it comes to advanced maintenance services, for instance, "the new model lets us pick which are relevant and which are not".
Cisco also formally announced an extension of its partner-led program, announced at last year’s partner Summit in New Orleans. Having already been in trial phase for over six months, partner-plus is designed to provide Cisco resellers with more resources to capture customers in the mid-market. Greater rebates and other financial incentives, better training and access to Cisco engineers are the key inducements.
A year on, partner-led has been widely applauded by Cisco partners. A chief reason is that it stipulates Cisco sales staff not approach small and mid-sized customers independently of partners.
Chris Meagher, CEO of Sydney-based Cisco partner Logicalis, said that partner-led had helped the company develop a smoother sales process whereby the customer was able to identify more clearly with the Logicalis brand rather than the vendor.
“The customer gets one message," he noted, adding that the message from this year's partner summit was that Cisco appeared more committed to ensuring that partners owned the customer relationship.
Ivan Bradley from Perth integrator L7 Solutions said he unprepared for the level of engagement offered to Cisco's partners.
"It surprised me. I got to speak to the right people that can actually influence things."
"Cisco was here [in San Diego] to listen."
The video play
Chambers keynote was peppered with many familiar touchpoints, including the framing of video as "the new voice".
"Video captures the imagination of CEOs and political leaders," he said.
Shaun Wormald, co-founder and CEO of Sydney-based Cisco partner and video specialists Broadreach, said demand for video solutions amongst Australian enterprises was especially robust. The company partners with Australian carriers including Telstra and Optus suppling solutions for companies like ANZ Bank, IAG and Westpac.
But he says market opportunities have expanded to the point where it is now selling Cisco-based video solutions direct. For the 12 months to June 30 Broadreach is expected to post growth of around 40 percent.
A veteran of Cisco partner summits, Wormald said this year he felt the company had succeeded in clarifying what had in the past seemed a “haphazard” collection of products.
“For the first time we saw the glue … bringing together the full end-to-end strategy.”
For Chambers, Cisco has a mandate to do so or be relegated to the realm of mediocrity.
Companies that are average don't make it, he told delegates, while recent history has shown companies that are above average as competitors only ride that for three to five years. Most of the companies that were on the Fortune 500 list when Chambers became Cisco’s CEO in 1995 are no longer there, he said.
And Chambers is adamant that Cisco will be a survivor.
"We did not lose share or spend in any major enterprise or service provider [account] in the world," he declared.
Gary Moore, Cisco's chief operating officer, added that thanks to Cisco's restructuring efforts, sales quotes are now turning 35 percent faster and overall order bookings are now 50 percent faster than before.
Among other key technology trends, Chambers cited software-defined networking (SDN) -- a technology area in which Cisco is rumoured to be working on new products -- but he didn’t provide any specific details.
He admitted Cisco needed to do a better job with security, however in a later session he said the company’s “architectural” approach did more to address today’s more complex security challenges than firewall products. But he provided little detail here either.
The cloud push
Something Chambers had a lot to say about was cloud, affirming that Cisco was committed to significant investment in the area and would continue to help its solution providers join and prosper within its year-old Cisco Cloud Partner Program.
"Cloud is the most network-centric technology ever," he said.
Cisco’s chief technology officer Padmasree Warrior confirmed the company is about to go live with Cloud Connect, a new platform for optimising the cloud experience, preserving cloud security and simplifying cloud-based operations - all off a powerful software platform developed in part with technology from several recent Cisco acquisitions.
For solution providers, the kicker will be what Warrior described as Cloud Connectors, a way for partners to build applications using Cisco's cloud software platform and further customise the experience. Cisco will firm up the announcements at a launch event on May 22, Warrior said, and at June's Cisco Live event in San Diego.
Warrior's said while other vendors such as Amazon, Google and HP attack parts of the cloud, only Cisco is offering cloud infrastructure, cloud networking and cloud applications, Warrior said.
Cloud Connect will be the latest piece of an evolving Cisco cloud strategy that includes the cloud partner program Cisco launched a year ago and the CloudVerse framework it debuted in December to organise its unified data centre, intelligent network and cloud application platforms into a strategy supported by new products and services.
Cisco, said Warrior, sees a world of "many clouds" with enterprise and service customers wanting to leverage public, private and hybrid models. The goal is to support all of those customers and help them to tackle challenges such as bring-your-own-device.
Its unified data center approach is more cost-effective than competitive converged systems, Warrior said, and offers the broadest range of storage, virtualisation, application and management partners. Cisco's Unified Computing System (UCS) now has more than 11,000 unique customers, 3,000 repeat customers, 2,000 channel partners and 44 ISVs writing to the UCS API, she said.
As part of its commitment to helping partners sell Cisco cloud solutions, the company announced a new ‘master cloud builder’ certification, which would deliver more in-depth training.
It also launched a major salvo across the bow of Microsoft by announcing to partners this week that it would be giving away core presence and IM components of its Jabber platform for UC integration which customers and partners using Lync still have to pay for.