Cisco Network Leader On How CCIEs And Channel Partners Need To Reinvent Themselves With The New Network Subscription Model

Cisco Enters The Subscription Era

For the first time, Cisco is creating a network software subscription model designed to change the sales motion for its 70,000 channel partners. Based on its Digital Network Architecture (DNA) and Cisco One software, the San Jose, Calif.-based networking giant is preparing to launch a pilot program with partners and customers in the next four quarters to provide a new way of consuming network technology.

In the slides ahead, Jeff Reed, senior vice president of Network Infrastructure and Solutions at Cisco, takes a deep dive with CRN into the software subscription transition, the impact it has on channel partners and the Cisco Certified Internetwork Expert (CCIE) community, and the question of whether the need to sell hardware will eventually go away. Read on for a look at that conversation.

How will this new software subscription model impact the CCIE community? What's the transition for them?

This is a great opportunity for the CCIE community. What we're trying to do is [figure out], how do we automate the mundane tasks that the CCIE has been doing and allow them to focus on really helping their customer become a digital business? We are working hand in hand with the CCIE and with our customers on making this transition and getting feedback in terms of, what are the analytical capabilities that they want to see on top of the network to improve assurance [and] to improve security?

So you don't see the need for CCIEs to decline at all?

No. DNA will make them more powerful. They'll be able to focus on, how does a network enable business outcomes? We can do more intelligence security profiling in the network. So there's a whole host of things that enriches the types of capabilities the CCIE can deliver.

Has Cisco made any investments around the transition for CCIEs?

We've been investing very significantly on learning and development areas, new courses and modules for CCIEs and CCNAs [Cisco Certified Network Associates] . We're in the process of changing the certification process and adding capabilities and requirements around moving to a digital network architecture, controller base, programmable, etc. So really exciting changes. CCIEs, with the skills and capabilities they have, it's going to be a journey, and we're working hand in hand with them.

Will this be the first time that Cisco's ever had a software subscription model around its core install base?

Yes, that's true. It's about all this capability we're building on top of the networks. A key piece is on the analytics and assurance. A great example of what's on the truck now, is what we've done with StealthWatch. We've talked about the idea of Network-as-a-Sensor and really leveraging the visibility from the network to improve the security architecture for customers -- huge traction here. You're seeing this increase in software value of these assets that sit on top of the network infrastructure itself.

A great thing that partners do like with [the] APIC-EM [automation platform] is you have this ability with plug and play. The idea is, how do we minimize the cost to the partners to deploy Cisco networking infrastructure? This is one where I'm seeing a big uptick from partners saying customers are using this capability.

The Cisco One software, will it now be sold through an ELA model or a subscription-based model?

Actually both. So there's a pilot for Cisco One [enterprise licensing agreement] and then we will also introduce a subscription-based set of offers on Cisco One as well. There's customers that will want to consume this in different manners and we want to be able to provide a full range of options for them through this journey, but clearly, we think there's a ton of value as we move these capabilities to both ELA and subscription models over time.

How will Cisco help partners shift to these models?

It's a big shift. This is different from how we've gone to market in the past, and we need to work with our partners to make sure the whole program is ready and we can scale this and go forward and prosper. It's also incumbent on us to continue to deliver really incremental value in these software layers on top of the networking infrastructure. That's my job -- ensuring we've got a really interesting value proposition around automation, analytics, around service management that we can deliver that form factor.

What made Cisco feel the need to transition to a software-centric company with this new network subscription model?

DNA is at the core of what we're doing here. What we're seeing is, the network is going to play an even more critical role in the future than what it's done to date. That's driven by when customers are digitizing their business and the impact of all the things that are happening at the edge -- [the Internet of Things], mobility, how I connect users and things to the applications -- and with DNA, we fundamentally rethought about the pillars of how we build the network. The things … we're looking at here really drives us to more software.

How will you get to a recurring revenue stream on top of the core infrastructure?

It starts at the [operating system] level. We're really driving this idea around virtualization. So how do we take all the goodness in IOS to deliver in both a physical form factor but also in a virtual form factor, and really allow customers to be able to deploy this in the best place in their network on the appropriate hardware across their infrastructure?

Where is Cisco's innovation focus around this new software push?

The key thing we're driving is automation. We have to simplify the network -- that's a huge focus area for us and it's driven by what we're doing in a controller perspective. It's that control and automation, combined with analytics and visibility. This combination of analytics and automation, and to be able to create a closed loop between those, is really important, because as we look at the scale of what's happening on the edge of the network -- billions and billions of devices being connected -- the network needs to be able to react and be able to understand what's going on, and then change to ensure we're delivering the appropriate experience.

[Another big piece] is what we're doing on the service management [side] -- tying the network into the broader IT service management life cycle in a more foundational way as well as delivering that through a cloud-delivery model.

What's on the truck today that partners can sell?

A number of key components. Clearly we've done a lot of work on the automation layer. I'm the enterprise guy, but the same vision [and] architecture really pulls through to what we're doing in data center as well. The first thing is look at the controller -- APIC in the data center, APIC-EM in the enterprise environment are available today. Thousands of APIC controllers out there. We've seen close to 1,000 customers that have downloaded APIC-EM on the enterprise side.

When they download APIC, is that free?

That is free and the core controller itself is free. Then we've got a set of applications that will be on top of that. Right now, Cisco One, when we talk about ELA or subscription, we are piloting a set of ELA programs for Cisco One and we will shortly be delivering subscription capabilities for Cisco One as well.

When will that be?

It will be in the next couple of quarters that we will bring in Cisco One subscription capabilities.

What's available on Cisco One today?

We have Cisco One suites for the access layer, for the wide area network, the data center, etc. Then we have tiers as far as foundation and advanced security -- that's available today. Those are available in the currently perpetual model.

The perpetual licensing model is a very limited model, versus going to a broad ELA and software consumption. How big of a change is that for partners?

I can't quantify it. A large percent of the customers I speak with would prefer moving to a subscription-type model. We think it's going to be hugely impactful and frankly, it makes sense. Part of the value that we can drive here is that if you get on Cisco One, you have access to new capabilities that we deliver in that suite. So there's a real powerful message to customers – "Get on Cisco One, then as new capabilities come out … you are automatically entitled to those."

As we move to perpetual to ELA and subscriptions, that will just increase the number of customers and the ease of which they can get into this model.

It seems that most customers want the subscription model, not the ELA. How important is the software subscription model?

The majority of customers would be very, very interested in a subscription model. I don’t want to say the other models are dead. We have customers where that fits their budgeting process or the consumption model. So we will definitely provide choice. It's really exciting, because this takes Cisco to a new place, both from … how we deliver capabilities, as well as a consumption model that changes how we transact broadly with our customers and through our channel. It's going to open up huge opportunities.

Does the need to sell hardware go away?

I don't see a big change near term or for the foreseeable future on the hardware refresh. There's a lot of old gear out there that [doesn't] have that visibility, that can't support these new capabilities we're enabling in DNA, and so it's going to be a huge focus of the Cisco field and the partner community that drive that refresh going forward.

Will network hardware demand diminish?

The demand on the network is going to be increasing, so there are hardware capabilities that are fundamental around enabling the packets to flow across the network. It's also about how we instrument these network devices to provide better visibility for assurance, security, etc. Those are things we're doing in the ASICs, in the hardware and those are the hooks that then we provide the software capabilities on top [of] that can take advantage of that rich visibility.

As more of that hardware is able to take advantage of software, do you see that refresh cycle lengthening?

Right now, there continue to be real key capabilities in the hardware that enable those software capability functions on top. I don't see that changing in the foreseeable future. We're looking at the next generation of ASIC -- What more can we do in there to provide better visibly to improve segmentation? There's a whole host of things that will continue to drive more real value in that hardware layer as well.