Cisco – Will IT Services investment make it the Number one IT company?

Cisco, as much as any other entity, is 100% in alignment that it is non-negotiable that If Cisco is going to come close to achieving it’s well communicated corporate goal of becoming the “Number One I.T company”, it must successfully and significantly invest in the entire ecosystem of service and solution delivery.

Reflecting this, Cisco recently held an industry analyst event in Seoul, Korea for leading Asia Pacific based IT services analysts. The event purely focused on the increased investment and services capability of Cisco, rather than the hardware and network equipment portfolio. As anyone who knows the Cisco business model is aware, the focus and executive energy towards services has typically played a back seat to product. Furthermore the fundamental (and successful) focus has been on service development and delivery by partners.

If the strategy and delivery process highlighted at the briefing, alongside separate discussions capioIT has had with clients and partners are any indication, some increased capability and respect for Cisco services has already been achieved. In reality, Cisco will freely admit it is still just past baby steps on the transition, it will take several quarters and iterations.

A key outcome from the event is that from a services perspective, Cisco is clear that it is looking to engage with the CIO and CTO roles. Whilst this is not the “dream” of always engaging with the business that other vendors may aspire to, it meets the business goals of Cisco and deals with the customers in Asia Pacific organisations that know it the best.

Key enhanced capabilities for Cisco in the services space include:

  • Development of Asset based IT services, labeled as “Smart Services”. These can be delivered by Cisco, or partners depending upon client engagement. It is ironic that the two leading and successful provider of Asset based IT solutions are hardware or software firms, (Cisco and SAP), not services firms.
  • Investment in a multi-vendor service delivery capability. Cisco does not want to be associated with the word “outsourcing” in terms of services capabilities, but it is increasing investment and capability in multi-vendor support, that some may define as outsourcing. This is a clear requirement particularly with the growth of the server business, and will enable it to provide a deeper portfolio of services and engage with for customers and engage in more discussions.
  • Network optimization analytics.
  • ServChange Management
  • Services dice Provider services capabilities

Clearly in the push to shift to a more services inclined business (and maintain margins for both Cisco and partners), Cisco needs to overcome some challenges. These include

  • Change Management Services (Cisco cannot rely on partners for this)
  • R&D for services (Labs need to evolve in a similar fashion to IBM highlighting industry outcomes)
  • Defined guidelines for Partner and Cisco delivery and client engagement
  • Opportunity and Ambition Creep  (Services must be defined, and the boundaries adhered too regardless of how essential adjacent opportunities may appear in sales teams eyes)
  • IT Service Management (Cisco partners can struggle with this for service delivery)
  • Increased education in skills development for internal Cisco and partners.
  • Industry or vertical based capabilities.

Future investments in software are going to be the under estimated yet essential part of the capabilities for Cisco, particularly as it automates. I expect a number of small acquisitions in the software and services space to help automate and industrialise services delivery and provide the opportunity to maintain services margins.

Capture Point

Cisco services has been a sleeper business for several years now. Cisco struggled to shift strategic priorities to services, and as a result, faced significant corporate challenges. It is clear that with the investments that Cisco is making, it is looking to overcome these mistakes and provide services capabilities for itself and partners to ensure that it remains at the centre of IT conversations in the future.  It will not be easy, but Cisco has proven detractors wrong in the past, and I suspect will continue to do so with services. 

About capioIT - Phil Hassey

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world. +61422231793
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1 Response to Cisco – Will IT Services investment make it the Number one IT company?

  1. Oh I could talk about this for a long while. I was in Cisco Services for nearly seven years. Another key barrier to overcome, which actually trumps the lot, is goaling.
    For example: sales compensation for product teams to include services. Currently Cisco is two companies, product and services, and they clash with one another because compensation systems at the seller-level of services and products guys are mostly in goal conflict.
    Another example: they want to sell services or ‘as a service’ offerings, but their product teams aren’t appropriately goaled (ie. commissioned) on them, so they’ll sell hardware instead in the traditional net-30 way.
    The groups distinct from this issue is Global Enterprise Theatre (the biggest clients), and their Transformational Accounts, where the product sales guys get ‘dollar for dollar’ goal retirement from services sales.

    So, the gap and thing to solve for Cisco is between vision (idea) and its execution (seller-level).

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