The News: Cisco recently held its fourth “In the Know” session, hosted by Oliver Tuszik, SVP Global Partner Sales & GM Routes-to-Market along with Emma Carpenter, VP, Global Security Sales Organization. The topic of the discussion was the evolution of Cisco’s security strategy to meet the changing customer needs.
Cisco Security Strategy: Making Partners’ Lives Easier and More Profitable
Analyst Take: Cisco’s “In the Know” session centered around the evolution of Cisco’s security strategy as it continues to laser in on customer needs.
A key statistic shared during the sessions was the fact that 81 percent of the world’s traffic traverses on Cisco switches, which is impressive although not surprising. Today, security is top of mind for most organizations and, as such, it makes perfect sense for Cisco to capitalize on its large installed base and put more wood behind the arrow on the security front for many reasons. These include:
- Large & High Growth Market: The security market is large and expected to grow faster than traditional IT over the next several years. The category has also been more resilient over the last several months as many companies have scrutinized budgets implying security is and will remain top-of-mind for most organizations.
- Many Partner Ecosystems: Cisco has a massive reseller partner base that touches many vertical and sub-vertical markets along with different business stratums. Cisco is also one of the key linkages (or centers of gravity) for many partner ecosystems, whether it’s a critical power reseller, ProAV reseller, or DCPOS reseller just to name a few. As an example, many partners use its campus LAN access switches’ power-over-ethernet (PoE) capabilities to power up surveillance cameras, (physical security resellers) IP phones (collaboration partners), access points (education partners) and much more. In fact, many of these partners are in markets that have congealed due to network convergence.
- Robust Product Portfolio: Cisco has a robust networking portfolio and existing installed base of campus LAN access switches (e.g., Catalyst 2960s), Adaptive Security Appliances (ASA) 5500s (NGFWs), Internet Access Points (IAPs), and more deployed by partners. As a result, partners can continue ripping and replacing old security appliances and update the campus with new ones such as the FirePower 1000 series targeted at small businesses or branch offices.
- Evolving With Partners: Partners continue to transition to managed service models and cybersecurity is one of the key market segments that is personified by the partner being constantly entangled in their client’s infrastructure. As mentioned, Cisco has had an excellent installed base of its Adaptive Security Appliances (ASA 5500s) and Meraki MX series dotted throughout the channel. In fact, if you look at the popular managed service provider (MSP) or managed security service provider (MSSP) lists, if you look at the partner vendor portfolios on that list, you will find a good proportion has Cisco on their line cards.
Market Observations from Cisco and its Partners
During the strategy session, Cisco provided feedback on what its customers are echoing to them, along with having CDW and SHI provide additional color on what they are seeing in their end-user environments. These observations include:
- Worker Shortages & Layoffs: Due to workforce shortages and reduction-in-forces, there has been an uptick in staff augmentation along with wrapping more consulting services around their pre-existing portfolio. The managed side is in high demand and more pronounced in mid-market companies versus Fortune 200 which have more mature organizations.
- Vendor Consolidation & Familiar Vendors: Another notable point was that customers continue to gravitate toward known vendors. Organizations want to work with vendors they know will be around for a long time and whom they can count on to provide excellent support, along with a product with excellent features. Often, CIOs will gravitate toward vendors that receive excellent rankings in popular benchmarking reports, which should continue to bode well for Cisco.
- Security Remains Top-of-Mind: Most conversations have a security component regardless of the conversation. Thus, security remains front-and-center across all business stratums, as no business size and type is immune from an attack. In fact, these conversations should accelerate even further as geopolitical tensions can likely be expected to manifest in more attacks in the future.
Cisco Partner Strategy Updates
Cisco’s partner evolution is key, as the company already has a robust partner ecosystem that includes Tier-1 resellers (e.g., CDW, SHI, GreenPages, etc.) and Tier-2 distributors (e.g., Ingram Micro, TDSynnex, Dicker Data, D&H Distributing, etc.) who touch thousands of reseller partners serving millions of end-user businesses across the globe.
Cisco continues to receive excellent marks for its channel program, where it is constantly striving to evolve with partners and enhance their collective profitability as they continue to transition to as-a-service models. Cisco has a robust networking portfolio with a massive installed base of switching, routing, wireless access points, next-generation firewalls, etc.
Cisco reiterated that partners are a critical ingredient to its success on the security front and shared that they are working on several areas to accelerate that growth (e.g., reducing complexity, etc.). These include:
- Focus on partner profitability: The team at Cisco is continuing to innovate and drive programs that drive increased profitability at the front end, the back end, as well as through life cycle incentives. From my point of view, I would absolutely underscore this area since Cisco, and other vendors are clearly striving to move partners into as-a-service models and are also starting up new practices for their strategies. Ultimately, this can be disruptive to the partner’s traditional model in the short-run and need better incentives to start up, and train engineering and business development talent. Fundamentally, like other organizations of all sizes, they are all trying to incubate areas that are high growth and higher margin, while making other areas that are large and lower-margin more efficient since they generate a significant amount of revenue and cash on the balance sheet.
- Diversity of Procurement: Cisco is trying to delight its partners in many ways, allowing them to meet their end-users wherever they want to buy in the future, whether it’s a cloud marketplace or managed service provider. Full speed ahead into public cloud marketplaces is the name of the game.
- Simplified Pricing Programs: Cisco is addressing pricing by offering more simplified pricing programs, making it easier for the partner to support velocity and scale.
- Investments in Training: Cisco is continuing to make investments in the latest and greatest training to ensure its partner base has the training and content needed to help them go to market much more efficiently.
Wrapping it up, Cisco is a networking juggernaut with a massive partner base with thousands of products installed across all verticals and business stratums. Cisco’s security strategy is clear: the company is hyper-focused on expanding its presence in the security market, either organically or via M&A activity (e.g., Valtix, Duo, etc.). The company is also intent on simplifying its channel programs, and making its platform that much simpler for its partners to both manage as well as to tack on additional services that are more profitable for them. Cisco’s key security strategies involve securing the base, securing the platform, securing the SoC, and securing the application. Cisco recognizes that organizations are using multiple clouds and its latest (and future) acquisitions will help companies manage that more effectively in the future.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.
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