While Cisco's ongoing corporate restructuring has put many of its investment priorities on the back burner, one area to which the networking titan is devoting serious time and resources is in the growth of its services organization, particularly the professional services programs it offers through channel partners.
To hear its services team team tell it, the reason for doing so is clear-cut. Cisco wants to put some distance between Cisco's services programs -- already some of the most highly regarded among tier-one channel vendors -- and those of competing vendors like Hewlett Packard and IBM whom Cisco says don't offer nearly the rewards or potential for partner profitability that Cisco does.
Services now account for more than 50 percent of Cisco partner revenues -- a substantial jump from roughly 10 percent as recently as four years ago. That kind of growth means Cisco services has to be a global channel priority, Nick Earle, senior vice president of worldwide services sales and channels, said. He added that Cisco's strategy around "smart services" is the most partner-friendly in the industry.
Earle was promoted to the role as part of a number of Cisco executive changes this summer, and he serves as the field chief for all of Cisco's global services organizations, with the various Cisco services sales leaders in each of Cisco's sales geographies now reporting to him. Cisco Chief Operating Officer Gary Moore, Earle's manager, retains P&L responsibility for the services business, which is about a $10 billion contributor to Cisco's more than $43 billion revenue pie.
Earle's charter is to make clearer how Cisco expects services field engagements to take place, to offer partners more access to Cisco intellectual capital as they build their professional services organizations, and to leverage development and also acquisitions Cisco's made to automate the delivery of services using software.
The last point is huge, said Earle, who said that Cisco has reached a point now where 93 percent of all the services support calls it receives can be handled using software. And that isn't merely automated call center responses, he said, it's the potential to diagnose network problems -- such as a needed upgrade to a later version of Cisco's IOS software -- remotely.
"The moment you have this capability with software, the first benefit is your margins go up, but the second benefit is you can take those software capabilities to your partners," Earle said. "Everything that we have in smart services we make available through partners. They're accessing our capital and they wrap their own unique value around that, whether that's multivendor support, or Microsoft capabilities."
More services also enable more product sales. Cisco claims that partners who sell Cisco's Smart Care service -- a network maintenance and monitoring package for SMBs -- end up selling more hardware than partners who don't.
"If a customer's network is more stable and everything's working, they'll buy advanced capabilities and put them on top, such as video," he said. "Partners that are smart services-enabled are selling more hardware. That's a fact."
Next: How Cisco Separates From HP And The Services Pack