Cisco To Partners: These Five Things Could (And Should) Be Changing Your Business Models4:00 PM EST Wed. Apr. 17, 2013
Over the past decade or so, Cisco and its channel have been tasked with navigating a number of technology shifts, ranging from the rise of VoIP to virtualization. But those shifts, according to Cisco, were the easy part.
The real challenge today is that business models are changing, and these transformations are often a lot trickier for partners to warm up to than shifts in technology itself.
"This is the first time, in the history of all the transitions [Cisco and its partners] have gone through, that our actual business models are being challenged," said Edison Peres, senior vice president of worldwide channels at Cisco, speaking at Cisco's seventh annual Marketing Velocity event taking place this week in Cannes, France.
According to Peres and other members of Cisco's channel team speaking this week at Velocity, there are five key trends changing the face of the solution provider business. Here's a look at what to expect.
Formerly a trivial means of killing time during our lunch breaks, social media sites like Twitter and Facebook are now very real -- and very powerful -- marketing tools that partners must embrace to stay competitive, according to Cisco. "If you're not in the digital world, positioned properly, you are not going to be seen as a forward-looking company," said Cisco's Peres at Velocity this week.
Cisco drove this point home by highlighting a number of startling (and, frankly, kind of frightening) statistics. In 2007, for example, the number of tweets a day averaged 20,000. Today, that number is a staggering 400 million.
But while social media clearly represents a marketing goldmine, not many companies take advantage of it. Cisco noted a Google study that suggested 80 percent of shoppers prefer to interact with a company through its Facebook page before making a purchase, but only 42 percent of marketers consider the site to play a significant role within their broader marketing plans.
While technical know-how will always be a valued skill set for solution providers, customer conversations driven entirely by specs and speeds are becoming less and less effective.
According to Cisco, that's because much of a company's IT decision-making or budget is shifting from the CIO office to the lines of business (LoB). For solution providers, this means there is a real need to change the nature of their client conversations, and being able to hone in on the specific value-adds their solutions will deliver to each unique LoB in an organization.
"[Solution providers should ask] how do you market to all those lines of businesses, what do they care about, what are the things that are going to make them choose what my company has to offer over what [a competitor] has to offer," said Cisco's Peres.
Another business transformation solution providers should expect and embrace is breaking down the silos between their marketing and sales organizations.
The idea, Cisco said, is to encourage marketing and sales to work together and communicate more about items like sales pipelines and goals. This means, though, that marketing teams will need to start being held accountable for items like revenue forecasting and revenue goals, just as sales teams have in the past. Meanwhile, marketing and sales should collaborate on items like lead rating and scoring.
"So what that means is you have to really rethink how your sales and marketing partnerships are changing, and what we have to do to encourage our teams along this journey," said Karen Walker, senior vice president of marketing at Cisco.
In addition to arming partners with new opportunities related to networking, infrastructure and analytics, the emerging Internet of Things trend also could transform the way solution providers do business internally, suggested Sherri Liebo, Cisco's newly tapped vice president of partner marketing.
Namely, Liebo said the emergence of the Internet of Things, along with big data analytics, will present new ways for partners' marketing professionals to get a better sense of their customers and their customers' buying behaviors. But to realize this value, partners will first need to wrap their arms around these enormous -- and still somewhat foreign -- technology trends.
"In the era of big data and in the world of the Internet of Things, there are devices that are going to be everywhere and recording our purchasing behaviors," Liebo told partners. "And for the marketing professionals in this room, it's both an exciting and a bit of a daunting time."
On the surface, the recurring revenue streams solution providers can tap into by selling cloud or managed services is a no-brainer. They mean consistency, stability and, in the long haul, a more lucrative business. But for most solution providers, recurring revenue also means a complete overhaul of their existing business models, with questions of how they'll continue to regularly pay their staff and cover other expenses. "Cloud is scary. Not because technically we can't make it work -- that's the easy part," said Cisco's Peres. "The hard part is transitioning business models to move to a recurring revenue game."
Despite their fears, solution providers need to embrace the cloud and these new business models to succeed. Peres suggested partners take small steps toward this recurring revenue model. "If [solution providers] go too fast to managed services, they won't have enough cash. If they move too slowly, they're not moving with the market," Peres said. "The biggest challenge they have is the balancing act, or managing the mix of moving to recurring revenue while optimizing the cash-flow implications on their business."