A Smart move for Cisco?
ChannelWeb talks to Cisco's European services boss Nick Earle about the vendor's plans to shake up the market
The best way to address the ever-expanding market for services was high on the agenda at Cisco's recent partner summit in New Orleans. Indeed, one of the event's biggest announcements was the launch of the Cisco Professional Services (CPS) programme, which the vendor bills as a "services-as-a-service" package to allow partners to branch into services provision.
ChannelWeb caught up with Nick Earle, vice president of Cisco Services for European markets, in the Big Easy to learn more about the vendor's approach to the services space and what it means for partners.
ChannelWeb: How would you characterise the services landscape among the major vendors?
Nick Earle: About four years ago we realised that the direction in which the network was going - data, voice and video - was invariably going to involve a services play. HP and IBM solved [how to get into services] by buying a services company. I don't think that is channel friendly. We made a choice that we were not going to buy a services company. People asked: ‘How are you going to manage this catch-22 situation of being in the services business, but not being a services business?'
So, how does Cisco propose to offer services?
We are going to use software to disrupt the services business, by giving partners software to help them sell into these huge markets, which means they do not have to have as many people. What used to take five people now takes two. It frees Cisco Certified Internetwork Experts (CCIE) for customer-facing activities.
How does it work?
In the network business, 50 per cent of the install base is Cisco. We have this knowledge database that we have never talked about before. Our maintenance business takes 800,000 calls a month from customers around the world. In 83 per cent of cases, they disclose the problem to a software programme.
We have an intellectual capital database that we have built up over 20 years, which has knowledge of every product we have ever made and every phone call we have ever received. That is a wonderful thing that we have only ever used reactively. We have software-enabled it for our channel partners, so it becomes a proactive service.
What are the benefits of Smart Services? What kinds of packages will you be offering?
We are offering a smart service that will allow you to create a video practice, cutting the time needed [to develop a practice] from 128 hours to two hours. The most expensive [Smart Services] package is $35,000 (£21,900) and the cheapest is $2,000.
We are enabling partners to create consulting practices through software. This makes the channel's total available market (TAM) substantially bigger. We are making a play to disrupt the services business using software, rather than people. This means we do not to have to buy a services firm, [whereas] our main competitor has 200,000 mouths to feed.
How large is the opportunity for services ?
There is break-fix maintenance, which has a $20bn TAM. Operate and manage services is $85bn and professional services is $70bn. Most
partners are in the maintenance business. I need more operate and manage and more professional services partners.
How far has the average partner delved into the services space?
Five years ago, 20 per cent of partners' business was services. Today, it is 40 to 50 per cent. That is massively encouraging. They make three times the margins on services that they do on product.
Does the CPS programme apply primarily to smaller resellers?
Broadly speaking, the answer is yes. The initial CPS will be very relevant to medium-sized companies. The relevance is to do with the size of the end user and the complexity of the network. Does that equate to medium-sized companies? Some big partners sell into SMBs.
How does the programme apply to non-reseller partners?
We are opening access to our intellectual capital of APIs. We can involve examples of non-hardware partners like ISVs. I believe that will be an even bigger story than hardware resellers. As everything moves to the network, there will be companies that build and monitor buildings using programmatic access to Cisco intellectual capital.
So we can see that this will not just be a benefit to traditional hardware resellers.