Cisco Systems is ironing out the wrinkles in its own systems and processes, as well as within its sales motions, to help partners sell more managed services as managed services bookings outpace Cisco’s overall product bookings.
All signs point to managed services being the primary buying model for IT services in the future. Cisco Systems saw 31 percent growth in partner managed services in 2021 compared to 27 percent growth in overall product bookings. Forty-five percent of the company’s market opportunity by 2025 will go through the managed services route to market, marking a whooping $113 billion total addressable market for Cisco and its partners. What’s more: Cisco is doing 95-98 percent of managed services through the channel already, so empowering partners to sell managed services offerings is critical, Cisco executives said during a managed services roundtable for press and analysts on Wednesday.
“What I’m really excited about is [removing] the friction in our sales motion, because when the customer asks for a managed outcome, they’re really looking at the partner, which means that our sales motion has to be a partner-led sales motion,” said Alexandra Zagury, vice president of partner managed services and as-a-service sales. “We’re reinventing the partner managed sales model.”
Customers have shifted away from buying products in favour of buying business outcomes and user experiences, Zagury said. “There used to be these long cycles of deployment, Now, [partners] are delivering and upgrading as you’re going. There’s no longer the setup and then the upgrade. That’s no longer the KPI for success,” she told CRN USA.
The first step in Cisco’s managed services push involves Cisco’s multi-architecture technology, which is already being shaped to become managed-ready, Zagury said. That involves making sure offerings are multi-tenant in nature, standard APIs are in place and that Cisco can export data into partner data lakes.
“We’re going through our whole portfolio and really looking at the big outcomes that we can deliver and then matching them against whether they’re managed-ready or not,” she explained.
Cisco has some existing “managed-ready” offerings that MSPs, or “provider” partner-types within Cisco’s Partner Program are offering today, including cloud-based Meraki Wi-Fi, routing, and security solutions, the “superstar” of Cisco’s managed services portfolio, according to Cisco channel chief Oliver Tuszik.
Similar to how Meraki is being sold, Cisco is working to shift the mindset of its sales team to look at technology through the lends of an “offer catalog” that solves for customer pain points, Zagury said. “Here you see how we’re trying to shift the mindset of way of our sales teams and starting to sell an outcome as opposed to selling an architecture or a piece of technology,” she said.
Cisco said it has tripled its investments in service creation resources across all geographies — the act of taking its platform-based portfolio and building services with partners. The company has more than 100 new service creation projects globally.
“Just think about it — that’s 100 new offers that are going to be deployed in our partner catalogs for us to jointly sell with our partners,” Zagury said.
Managed services aren’t just for enterprises, either, Cisco’s Tuszik said. Cisco’s small business segment is growing faster — the segment saw 32 percent growth in bookings in 2021 — because of managed services, he added.
Logicalis Group, a Cisco Gold partner has been working with Cisco “hand in glove” as it’s been shifting its business to focus on customer outcomes over the last 3-4 years. The company is seeing very consistent demand for managed services as a result, said Michael Chanter, COO of Logicalis and former Logicalis Australia CEO.
The firm, which comes from classic VAR roots, is driving toward earning 50 percent of its profitability through managed services. Roughly 20 percent of Logicalis employees are focused on building global managed services offers and delivering these solutions in a consistent manner, Chanter said.
“Some of our offerings have growth well in excess of 100 percent year over year,” he said.
Technology and platform innovation, however, is still going to come from Cisco, Chanter said. “It’s our job to build on top of that.”
Cisco said it has more than 400 new provider partners that have joined its ecosystem since the introduction of the partner types in 2020. The company has doubled its investments in the Cisco Partner Investment Fund to align certain activities with its provider partners.