Cisco’s focus on services and software requires a profound transformation for its partners in Latin America. This change in the market will bring new opportunities and poses threats to those partners, but those that understand this game change and move first are the ones more likely to thrive.
Cisco presses ahead with its strategy to drive software and services revenues up
Cisco is pushing ahead with its strategy to grow its software business and its focus on recurring revenues including services. The way this is reflected in its regional strategy in Latin America is via an increased push for rewarding partners on software sales and recurring revenues instead of only hardware. As such, alongside redesigning its commission program, Cisco also renewed its networking portfolio with services to introduce new initiatives to strength the relationship with partners, including in R&D.
Under the “Network Intuitive” branding, for instance, Cisco indicated that on top of the traditional hardware, it is adding new functionalities, such as security, automation of network management and machine learning to predict performance, among others in order to offer a portfolio of services that will enable partners to increase cross and upsell opportunities. The Cisco services organization has also added new partner resources to address the market below its top customers which provides another opportunity for partners.
Cisco is planning to strength the relationship with partners by supporting them establishing what it calls “customer success practices”, essentially, a structured way of supporting sales teams to drive services sales opportunities adequate to the moment customers are in their lifecycle.
Cisco is also scaling up its R&D initiatives together with partners, and will do so by not only keeping the investment in the Innovation Centers, one of them located in Rio de Janeiro, but also by doing more joint R&D investments with selected partners, which can drive innovation in regional partners. Cisco will also add resources in its services business unit to train and certify partners to go after the many customers below the Fortune 500 which include many in LATAM.
Finally, the company is also getting more aggressive in its plan to become a relevant player in the Smart Cities market, the company announced in 2017 a US$1.0bn fund to be applied in Smart Cities projects, funding is one of the main roadblocks for such projects, especially in Latin America, where such projects have limited regulatory mandates and financing options. A private fund for IoT can be a powerful tool for Cisco and its partners to succeed in this market. All this provides some opportunities for the partners in LATAM who may be one of the best ways to reach many customers willing to adopt and purchase Cisco’s new software and services offers.
"IoT Latin America CSP Survey, 1Q17", TE0009-001655 (June 2017)
Ari Lopes, Principal Analyst, Latin America,
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