Chuck's Rx: Cisco's Prescription For Subscription

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Entering his second year on the job, Cisco Systems CEO Chuck Robbins is set to disrupt the status quo once and for all for the $50 billion networking behemoth and its partners. Cisco executives from the top down have spent much of the past two years talking up the company's software credibility. The executives point to its jump into software-defined networking; its existing subscription business, which is driven in large part by WebEx and Meraki; as well as a Cisco DevNet community of developers that's more than 300,000 strong.

Now Robbins is set to make a dramatic leap in morphing into a software company by introducing the subscription model within its bread-and-butter network infrastructure business for the first time, a move that fundamentally changes what it means to be a Cisco partner.

The high-risk bet will start small within the next three to four quarters as a pilot program that delivers a new intelligent network software subscription model through fewer than 100 solution providers.

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

"The way that the subscription model will emerge on the core networking platforms is that we will disaggregate the control plane, much like Meraki, so that you'll still have a CPE [customer premise equipment] component running an operating system. But what we will do is give the customer the ability to drive automation, policy, security and extract analytics that also influence policy back into the network and give them a simple methodology to deploy policy across data center and the enterprise network," said Robbins.

"That's the way we'll evolve, and we've begun that journey." The 19-year Cisco veteran knows a thing or two about software, having started his IT career nearly 30 years ago as an application developer for a North Carolina bank.

Robbins' ultimate goal is to convert tens of thousands of Cisco partners from experts at selling network routers and switches into application specialists.

His objective is to help customers drive business outcomes and in the process to sell intelligent network software subscriptions on a per-user basis or in the form of enterprise software licensing agreements. Robbins himself concedes that it is a tightrope walk of sorts that could have dangerous consequences for Cisco and the channel if it is not timed right.

"We have to do it commensurate with the pace of the market. I think that is the real trick, and I don't say that lightly," Robbins said. "We really have to make sure that we don't abnormally push our partners faster than the market is ready to move. There is an art in aligning that so that they're pulling the market a bit, but we're not shifting so hard that their profit models are misaligned with what is actually happening in the marketplace."

Push too fast and the vaunted Cisco channel will be left financially battered and bruised as solution providers struggle to adapt to subscription-model economics. Push too slow and that same Cisco channel will be left sitting on the sidelines of the digital application revolution being driven by the Internet of Things.

Even if all goes as planned, Cisco channel partners themselves predict that a good chunk of the Cisco channel will find it difficult to make the necessary investments for the software transition. More than a few longtime solution provider executives predict that about one-third of the Cisco channel will disappear, either through acquisitions or because they fail to make the transition and fade into irrelevance.

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