Cisco revamps EA model to create ‘premium and simplified’ IT buying

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Cisco revamps EA model to create ‘premium and simplified’ IT buying

Cisco Systems has unveiled its simplified enterprise agreement (EA) licensing model, Cisco EA 3.0.

The brand new EA offers one set of terms and conditions for whatever a customer buys from Cisco’s five portfolios: Applications Infrastructure, Networking Infrastructure, Collaboration, Security, and Services, Cisco revealed on Tuesday.

The revamped EA will “radically simplify” Cisco’s various product categories and offerings into one agreement that customers can use to expand and evolve from one generation of IT to the next, Todd Nightingale, senior vice president and general manager of Cisco’s Enterprise Networking and Cloud Business, told CRN USA.

“It’s just so much easier for partners to go run a sales motion around one enterprise agreement across three technology areas, instead of having three separate agreements,” he said. “It’s time to break down the silos.”

Based on customer demand and changing buying behaviours, partners have been asking for a simpler way to transact across Cisco’s vast portfolio of solutions, Nightingale said.

The company is in the midst of its biggest business model transition in its history with a goal of pulling in half of its revenue from subscriptions by 2025. Robbins said that the new EA will help partners evolve their own compensation plans and sell more software and subscriptions.

“The more we get our customers into EAs, the more it creates a stickier environment overall,” said Ron Temske, vice president of cybersecurity, network and collaboration solutions for Cisco Gold partner Logicalis.

The revamped EA will help partners sell in a “cross architectural” way, which will simplify IT buying for customers and give partners the opportunity to easily add new technologies or services to a customers‘ license, Temske said.

“Customers never liked that they needed one EA for collaboration and another for security -- they always just wanted one,” he said. “The changes make the EA more flexible, because upon signing, you may not know what your consumption is going to look like.”

Importantly, the new EA also lowers the barrier of entry to an EA for midmarket and smaller companies, which is key for partners, Temske said. The new EA threshold starts at US$100,000.

“Even if you go back three years ago, EAs were only for the largest customers because the barrier to entry was fairly high. And if you wanted to do multiple architectures, you had to meet that barrier each time” he said.

The EA includes “Value Shift” for networking customers, a feature that lets them shift committed spend across Cisco DNA software and Meraki software, Cisco said.

Cisco’s pivot toward software is paying off, with 31 percent of revenue coming from software and subscriptions accounting for 79 percent of software revenue in its most recent fiscal quarter. John Moses, vice president of Americas Partner Sales for Cisco, called the company‘s software business the “best-kept secret” right now in the market.

“EA 3.0 is really [giving us] a differentiated position and making sure that we have one agreement and one experience across the board to make it operationally earlier for partners and more flexible across the various product families,” Moses said.

The current Enterprise Agreement programs will remain available to customers and partners. The transition to the new Cisco EA will happen during the first half of Cisco’s fiscal 2022. To date, more than 10,000 customers have purchased software and services via the Cisco EA.

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