Thanks to the cloud, XaaS (everything as a service) is becoming the way many companies prefer to buy software (SaaS), IT infrastructure (IaaS) and even business platforms (PaaS). But, while the IT channel acknowledges recurring revenue as the Holy Grail of building a successful recurring revenue business, many solution providers struggle to sell IT as a subscription.
The top obstacles to selling services—complexity and cost
To understand partners’ challenges, let’s consider some of the big challenges their customers are facing. First, there’s the complexity of choosing from hundreds of software options along with various licensing models (e.g., annual, perpetual, bring your own). Many software products have features that overlap with others, plus not all products can be easily integrated with other software. Then, there’s the issue of budget constraints. Many companies—especially small businesses—are under enormous pressure to do more with less.
Recurring revenue growth starts with a software focus—and simple IT strategy
Cisco is making massive changes to its product lines in response to changing customer requirements, including reinventing the network to be software-focused and driving security across the entire network. Two platforms where partners will notice significant changes include:
- Meraki, which is a cloud-based and cloud-managed networking platform that enables partners to bundle various subscription-based services
- Cisco Catalyst switches, which now include the ability to detect malware in encrypted traffic and are sold as a subscription
Cisco’s software emphasis can be seen across all major technology categories, which are aimed at making IT simple, such as:
- Cisco Umbrella (security)
- Cisco Meraki (networking)
- Cisco Webex Teams (collaboration)
- Cisco HyperFlex (hyperconverged infrastructure)
Cisco’s research shows that channel partners who lead with software see bigger deals, with 54% of profit coming upfront and the rest from follow-on services. Software also allows easier management of customer accounts and leads to renewal opportunities. Cisco also finds that software-focused partners receive more than $6 in services with every $1 in sales.
Here are a few ways Cisco is helping its partners boost their recurring revenue:
Cisco ONE. Cisco ONE comprises various software suites that provide a cost-effective and flexible way for customers to acquire software for their data center, routing, switching and wireless needs. Instead of choosing from hundreds of separately priced software features, partners sell a single Cisco ONE Software product. And instead of a single perpetual license tied to the lifetime of a specific hardware appliance, customers gain flexibility with a choice of licensing options. Not only can licenses be transferred to new hardware, they can be deployed on physical and virtual machines.
Lifecycle Advantage. This program and tool set help partners land, renew and expand their businesses with customers by combining analytics, automation and personalized content to help digitally manage customer relationships. Using a combination of Cisco and partner data, Lifecycle Advantage automatically sends personalized, cobranded messages at specific milestones over the life of the customers’ purchases. By contacting customers with relevant information about solutions they own at the appropriate time, they’re more likely to realize the full value of their investments and become more loyal. In fact, partners who’ve participated in Lifecycle Advantage and other programs have seen their renewal rates increase by nearly 33% and upsell (i.e., expand) opportunities by 10%.
SuccessHub. This one-stop portal guides registered Cisco partners to establish a best-in-class customer success practice. Featuring a rich and comprehensive library of tools and resources—videos, webinars, white papers, playbooks, best practices and more—partners can learn how to build recurring revenue while creating long-term customer relationships.