CRN: Are partners moving too slowly for your liking with their professional services moves?
Peres: I don't think so. Actually, if I look back 13 years ago when I came to Cisco, the average partner had about 5 [percent] to 10 percent of their mix in services. Today we're seeing as high as 50 [percent] to 60 percent. So we've seen a dramatic change in the last 10 to 14 years with partners evolving their business model to be much more managed services- and professional-services-related. I think we're probably all experiencing that.
Chavez: I completely agree with Edison that services are where the margin is. That's the way that our partners are getting to differentiate themselves -- through services -- whether it's professional services or the services of maintaining and managing these environments. We also work on specializations. That's what we promote to our partners -- that they should specialize in services; it's embedded into all of our programs to make sure that partners know that when they do become specialized there is a services component and that, in fact, they get compensated for delivering on those type of services. So we're also seeing an increase in our partners on the services piece and have dramatically started seeing that going from 10 percent to 20 percent to 30 percent for those partners that are actually going through the programs and taking advantage of those programs.
Now the key thing is advising and transform. You know that takes a lot more for some of these partners to make the transition to the advisory type of capabilities. But I think as they start focusing more on software and these cloud services and implementation services, that drives them more to kind of being the advisory component that delivers more margins to these partners.
Bates: We do see the MSP business model as one of the most rapidly growing business models for our partners. Whether it's here at XChange or [other events], we really talked with partners about how that model enables them to build that recurring revenue stream, that annuity base stream. So at the end of the day when they retire, they have value in their company. So I think that that is definitely the direction that we're seeing significant strength in.
Rauch: With us, it's fairly simple: we really don't have bodies. We need our partners to be more engaged than ever in services. So when you look at what we're doing in the market right now, whether it's software-defined data center or any of the other things, basically it's all about services. And we believe there's a window of opportunity right now. We want to be able to accelerate through that window of opportunity.
Duncan: You asked the question earlier about 70 percent of a partner's business being with a single vendor. Where we're seeing that not be the case is our partners that have really grown their services arena. And so we support that. We cheer it on because, again, that's what makes a really healthy partner and I think everybody up here has said that. So we want to offer as many opportunities as we can for those partners to cultivate their own professional services around the things we bring to market.
Also, as we see the partners that have shifted from traditional hardware into a bigger software mix, we see the amount of professional services go up with that. So each one of those things offers an opportunity for them to customize. We'll provide guidance, we'll provide education, we'll provide all kinds of enablement for them to get the skill, but we're also a little bit careful that we don't get too prescriptive in that because that's really where their differentiation and their competitive advantage is.
Vitagliano: I couldn't agree more. We as vendors have to be really careful about how we're driving that or not driving that [expansion]. Because at the end of the day, the thing we've got to remember is we're spending a lot of time talking about what the vendor thinks, what the solution provider thinks, but it's really important what the customer thinks. And when the solution provider is sitting there trying to figure out what their model looks like and what they need to do, it's all based on how do they satisfy their customer. And if we forget that, none of us needs to be in this room.
The two things that I've seen over the years that have caused partners to totally screw it up is when they've either gotten too aggressive in the acquisition space and kind of gotten themselves in a position where they weren't capitalized properly and they couldn't manage it, or they got away from their core competency. And when you get away from your core competency because we as vendors might force them in a certain direction, that's when they are in trouble. So I think what we have to do as vendors is we have to recognize what's out there. Recognize sort of the trends and then help them as much as we can but not prescribe certain directions where they go or how they go.