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Cisco Introduces Enterprise Agreement for Software

Cisco today launched the Cisco Enterprise Agreement (EA), an enterprise-wide license agreement to help organizations streamline the process of purchasing, deploying and adopting Cisco technology.

The new Cisco Enterprise Agreement model arrives as the company strives to accelerate its shift from hardware and software sales toward recurring revenue subscriptions.

The Cisco EA enables organizations to leverage the Cisco products and services they need and scale and add capabilities as they grow, according to Cisco. It spans Cisco’s collaboration, infrastructure and security portfolios, the company said, and other Cisco solutions will be added to the agreement over time.

Also, the Cisco EA enables organizations to deploy software on-premises, in the cloud or in a hybrid model, Cisco said in a prepared statement.

“We’re offering a software license agreement that means customers will not have to buy all of our technology at once,” Allen Boone, director of strategy & planning for Cisco’s offer monetization office, told ChannelE2E. “We’re providing our customers with flexibility and aligning to their needs.”

How Does the Cisco EA Reward Customer Growth?

The Cisco EA provides a growth allowance and “True Forward” provision, Cisco stated.

Many software vendors use a “true up” billing model that requires a periodic review of customer software usage and retroactive billing for over-usage, according to Cisco.

Comparatively, Cisco EA customers that grow beyond a 20 percent allowance will not be billed retroactively for any overuse, Cisco indicated. These customers instead will have their contract revised at the start of the next billing period.

The Cisco EA is available in three- and five-year contract terms, Cisco said, and customers can add software suites to their contract and transfer licenses from their existing hardware to new hardware as needed.

This agreement may help Cisco partners become trusted advisors as well, Jason Gallo, Cisco’s global director of enterprise networking & software partner GTM, told ChannelE2E.

“From day one, this agreement was built with partners in mind,” he said. “We are leading with partners and want to scale through our partners.”

Cisco Business Model Evolution

Cisco earlier this month released its earnings report for the third quarter of fiscal year 2017, and some of the company’s financial results included:

  • Generally accepted accounting principles (GAAP) revenue of $11.9 billion, down from $12 billion year over year.
  • GAAP net income of $2.5 billion, up from $2.3 billion in Q3 FY16.

Areas of strength include Cisco’s cybersecurity business, in which revenues grew 9 percent from the corresponding quarter last year. Still, the company’s overall transition to subscription services remains a work in process. Amid that reality the company announced plans to cut an additional 1,100 employees.

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