Partners Expect New Cisco EA Licensing Model To Drive More Software, Subscription Sales

“If you‘re going to be known as a software vendor, you have to go this path,” one partner told CRN after Cisco CEO Chuck Robbins teased plans to revamp enterprise agreements (EAs) to help partners sell more software.

Cisco Systems is set to unveil a simpler enterprise agreement (EA) licensing model at its upcoming partner conference that is “necessary” to drive more software and subscription sales through the channel, partners told CRN.

Simplification of Cisco’s enterprise licensing structure and the creation of an all-encompassing EA – which will be unveiled at the Cisco Partner Conference in two weeks - is “necessary” for Cisco to remain competitive, the tech giant’s partners told CRN.

“If you’re going to be known as a software vendor, you have to go this path,” said Joe Berger, senior director of World Wide Technology’s (WWT) digital workspace practice. “It makes a licensing simpler and makes ordering and support simpler. We’re glad to see Cisco do it -- we’ve seen other vendors go this way, like Microsoft. I think it’s definitely time for Cisco to have this option.”

Businesses want to consume software in an EA-type model, Berger said. “I think Cisco‘s got all these different business units that sell a little differently. And I think by creating an all-encompassing EA, it’s going to make it a lot easier for business to consume from Cisco.”

Cisco CEO Chuck Robbins told partners at CRN parent The Channel Company’s BoB Conference earlier this month that the licensing evolution will be one of the biggest pieces of news that will come out of November‘s virtual Cisco Partner Summit.

The new enterprise licensing model will go a long way towards simplifying what has been a historically complicated licensing model, said Robbins. He said the overhaul will inject more much-needed flexibility and consistency into the payment structure, he added.

“It’s a lot of work; a massive amount of work. It was a whole lot easier when you just sold the product, sent an invoice, and got paid and sent a thank-you note,” Robbins told an audience of solution providers.

Cisco is in the midst of its biggest business model transition in the company’s history with a goal of pulling in half of its revenue from subscriptions by 2025, Robbins told partners.

“We went through a lot of technology transitions and now we’re going through the most significant business model transition with our partners that we’ve ever had. If we get it right, it’s better for both our business models--[it provides] more predictability. But we have to get it right, because it’s complicated to figure all that out,“ Robbins said. ”One thing I’ve told the team all along is I don’t know what the solution is, but the answer is we have to do it with our partner community, and that’s just the way it is.”

A simplified EA will help partners evolve their own compensation plans for their sales teams, said Faisal Bhutto, president of Cloud and Cybersecurity for Cisco partner Computex Technology Solutions.

“Cisco is a big engine. As things are moving towards consumption, consistency is going to be very important, because you’ve got to train your sales team and it has to be easy enough for them to understand,” Bhutto said. “If there’s a uniform way of doing subscription-based services through an agreement, and it‘s across the entire Cisco portfolio, for partners like us, it makes it a whole lot easier to develop compensation plans supporting these.”

Regardless of the technology, such as networking or security, the buying vehicle should be consistent, he added.

“If you look at [Cisco] Meraki, nobody asked the question of how to do a three-year, or five-year license, but when you‘ve tried to sell security or UCaaS, or voice stuff in the past, you practically needed a specialist who wrote the secret code,” Bhutto said.

Cisco, for its part, would rather its partners “not waste their time” figuring out how an order need to be structured for a customer and instead, focus on understanding the clients’ needs, Jeetu Patel, Cisco’s executive vice president and general manager, security and collaboration business units, told CRN.

“If we can take away the busy work for [partners] so they spend their time on higher value work, that is only a good thing. All these enterprise agreements and the flexibility that we bring over there is, at times cumbersome for the partner,” he said. “We want to make sure we take out the friction for the partners.”

For Long View Systems, a Calgary, Alberta-based Cisco partner, software is a critical piece of the portfolio. A revamp of the EA will give solution providers the opportunity to offer additional Cisco services to customers, said Lane Irvine, network business solutions director for Long View Systems.

“Definitely with enterprise agreements, I think the more we can tie in multi-architecture EAs, the more we can sell you,” Irvine said. “We‘re going to be able to be more value to clients and be able to get them connected and make it much easier to transact.”

During Cisco’s recently completed fiscal 2021, 31 percent of its revenue came from software. Subscriptions, meanwhile, accounted for 79 percent of software revenue.

“I think we recognize we‘re on this journey together that software, with Cisco becoming more of a software company,” Long Views’ Kent MacDonald, senior vice president of Strategic Alliances. “We need to evolve that EA experience to help customers use and adopt software.”