Cisco Debuts Software Licensing Bundles, Which It Plans To Sell As Subscriptions

Cisco Systems unveiled its Cisco ONE software licensing program Wednesday, which lets customers buy the vendor's latest and greatest software features and functionality in a way they haven't previously been able to do.

Cisco ONE is rolling out three software license bundles that cover its data center, WAN and network access software. And later this year, Cisco will let customers buy these bundles as a subscription for the first time. Customers can also buy them as perpetual licenses or in enterprise agreements if they prefer.

The Cisco ONE software bundles -- which include hundreds of features that used to be priced and sold separately -- all run on Cisco's networking and UCS server hardware. The data center and WAN-focused bundles include ties with Cisco's Application Centric Infrastructure (ACI) and Intercloud offerings, while the access bundle does not.

The goal of the bundles is to group software into solutions aimed at specific business use cases, Bruce Klein, senior vice president of Cisco's Worldwide Partner Organization, said in a blog post Wednesday timed to coincide with its Cisco Live conference in Milan, Italy.

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"We have taken literally hundreds of disparate SKUs and condensed that down into a very simple solutions-oriented approach," Klein said in the blog post.

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Cisco's software licenses are now portable, which is a big change from the past when customers that upgraded their hardware also had to buy new software. Now, customers can move their existing software licenses to new hardware when they upgrade, saving money in the process.

Customers can continue buying Cisco software a la carte, but Cisco says the bundles are the best way to take full advantage of advancements in its server, networking and cloud products.

Marc Duvoisin, vice president of the Software Services Organization at Dimension Data Americas, said grouping software into bundles is an important move that will make it easier for customers to buy Cisco software.

"Cisco ONE is a big step in the direction of uncoupling software from hardware assets in the networking infrastructure," Duvoisin told CRN in a recent interview. "As they add new functions, Cisco ONE customers will get them for free and other customers will have to pay more to get them."

Cisco isn't talking yet about how much the Cisco ONE bundles will cost, but they'll be sold by Cisco's sales force as well as by its channel partners.

Cisco partners will see deal sizes that are 10 percent to 20 percent larger when selling the Cisco ONE bundles, Klein said in the blog post. The subscription option will also get partners familiar with recurring revenue and the predictability that this model brings, he added.

Cisco, San Jose, Calif., is focusing more on software and developer outreach because these are crucial to its plans for ACI and Intercloud, according to partners. Cisco first started talking about its shift to the Cisco ONE subscription model last March.

While Cisco is known as a networking hardware vendor, it's already got lots of momentum on the software side. Cisco is currently the world's fifth-largest software vendor in terms of revenue, and the third largest SaaS vendor, John Brigden, senior vice president of software strategy and operations at Cisco, said in a blog post Wednesday.

"Our software business is growing fast. As we deliver more capabilities, software becomes a critical component that pulls our systems and architectures together into solutions for our customers," Brigden said in the blog post.

Cisco is realizing that to be the most effective provider of technology, its software needs to be customized and integrated, Brian Ortbals, director of advanced technology at World Wide Technology, a St. Louis-based Cisco partner, told CRN.

"A box that stands alone doesn't do nearly as much for a business and workflow as one that can be tailored," Ortbals said.

Software development is also becoming a bigger part of WWT's strategy, according to Ortbals. "We're investing heavily in software development to more effectively embed things like ACI, automation and orchestration," he told CRN.