Cisco Talks The ‘Risk And Opportunity’ Of The Cloud Marketplace

‘It could be diluted, it could mean revenue shift from one to the other, or it could mean growth. I’m in the latter camp, to be very frank. But I also know there’s risk associated,’ one Cisco executive says of the cloud marketplace route to market.

Cloud marketplaces, an increasingly popular route to market, require a different setup and incentive structure than Cisco has historically offered to partners and customers in the past. Those changes won’t happen overnight, and they may not come without disruption, according to Cisco.

“We are not naïve to complexity of solution, of the telemetry, or the cloud migration motion itself and we know our channel partners in particular need our support, said Nick Holden, vice president of global strategic partners and co-sell for Cisco, during the company’s Cloud Hyperscalers and Marketplaces roundtable hosted on Wednesday.

The cloud marketplace, said Cisco Channel Chief Oliver Tuszik, is becoming the new standard for businesses in the market for software as IT buying habits change. The cloud marketplace forecast stands at $8 billion for 2022 and is projected to expand to $50 billion by 2025, according to Bessemer Venture Partners’ 2022 State of the Cloud report.

Cisco is committing to the cloud marketplace as a core delivery model and is working with partners to co-sell new cloud offers. Customers want an easy and fast way to buy solutions and software based on consumption, and Cisco needs to be where customers are buying technology, Holden said.

“We are committed to building and delivering solutions that will be present in hyperscaler environments [and] we want to provide more access to our technologies through the cloud marketplace as a procurement engine for our customers,” he said.

[Related: Cisco Isn’t ‘Demand-Constrained’ Amid Supply Chain Pressures]

The Opportunity

Amazon Web Services, Google Cloud, and Microsoft Azure are supporting Cisco as it builds out its cloud marketplace sales motion and expands its cloud offerings, Cisco executives said.

In addition to collaborating with the three cloud leaders, Cisco’s also consulting with one of its largest channel partners, Presidio, on the best approaches for procurement of their SaaS and software offerings through marketplaces to meet customers where they want to buy, Chris Cagnazzi, senior vice president and general manager of cloud and managed services for Presidio said in a statement.

“SD-WAN and [full-stack observability] are key pieces of the tech puzzle that customers need when shifting to cloud-first business models. We continue to deepen our partnership with Cisco and leverage their cloud offerings to help our mutual customer solve the most critical business needs,” he said.

Channel partners today are already helping customers navigate through the complexities of private, public, and hybrid cloud strategies. These partnerships will be critical as Cisco pursues the delivery of its solutions on the cloud marketplace, Holden said.

The San Jose, Calif.-based company is already offering Cisco ThousandEyes, AppDynamics, and Intersight via the AWS Marketplace. Some Cisco partners, including ePlus, already have their own services listed on cloud marketplaces, which is creating a “synergistic” opportunity for both Cisco and its partners, said Jason Gallo, vice president of Partner Go-to-market Acceleration.

“Cisco and our partners are not only discussing this as a purchase option -- going through the hyperscalers’ marketplaces -- but that our software value remains very relevant and differentiated because we really understand the use cases, and partners become an integral part in that as the customers go through things like cloud migrations, or other use cases that we have out there,” he said.

Cisco and its channel partners also need to make sure they’re equipped to accommodate this new route to market from a financial perspective. “The way we pay our salespeople and how we pay our partners need to adapt to this consumption logic and different structure,” Tuszik said.

At the same time, Cisco is making changes on the back end to its systems and tools to inject more automation into the process. Automation, said Tuszik, is key for cloud marketplaces.

“You will hear more from us in the next months and years on how [we are] making it easier for our partners and customers to utilize APIs. And I’m not talking about the development on top of our platform. I’m talking about automation within our platform for the automation of ordering,” he said.

The Risk

The cloud marketplace carries some risk for distribution and the channel.

“It could be diluted, it could mean revenue shifts from one to the other, or it could mean growth. I’m in the latter camp, to be very frank,” Holden said. “But I also know there’s risk associated and we’re evaluating as we go forward and make our investments as a company … it’s risk and opportunity at the same time.”

The company is working with its “non-traditional” partners to figure out how it can add value to them and how they can add value to Cisco. Customers are looking for business outcomes, whether it arrives through a SaaS offering through a license, a marketplace, a distributor, or small, regional channel partner, said Holden. The process may require changes to Cisco’s selling and delivery methodologies, as well as its business processes.

“We’re going to figure that out as we go forward. We’re not at scale with this yet, to be candid,” he said. “This is a new motion for Cisco, in many respects, at scale, but it is one that we’re peeling back every single day to understand how to optimize for our customers, for our partners and for Cisco as well.”