Cisco Systems' Wendy Bahr: Digital Transformation Arrives -

Sometimes when you travel a few thousand miles into unknown territories, you wind up blazing new paths forward. Just ask Wendy Bahr, senior VP of Cisco Systems Inc.'s (CSCO) Global Partner Organization. Bahr has spent 16 years at the networking giant. She's held U.S., Americas and global channel positions. But one chapter in her Cisco career was anything but typical. Indeed, Bahr was senior VP of Cisco's global and transformational partner organization from 2010 to 2012. Take a closer look, and you'll discover that Bahr essentially explored how cloud, mobile, big data, recurring revenues, digital, social and other technology shifts would potentially redefine partner models. "That global role allowed me to speak with partners worldwide; partners who were looking pretty far into the future," recalled Bahr during a ChannelE2E interview ahead of next week's Cisco Partner Summit 2016. "They were trying to understand how the landscape would change as these new technologies transformed the market. It was a great rotation." Then, she added: "It was one of the hardest jobs I ever had. There was no roadmap. There were no guardrails. There were no guidelines." That two-year journey allowed Bahr to really explore how Cisco and partners could jointly grow together amid multiple market shifts. The work triggered some pilot programs. Some took flight. Others failed. But the journey allowed Bahr to spot the coming need for corporate IT to transform into a service provider. And she knew corporate IT and line of business (LoB) managers would require partners to succeed in that transformation.

Cisco Partner Summit San Francisco: Setting the Stage

Fast forward to present day. Bahr is now Cisco's global channel chief. Cisco Partner Summit 2016 kicks off November 1 in San Francisco. The theme: Full Speed Ahead. Cisco leveraged the same theme for the company's fiscal 2017 sales kickoff gathering in August 2016. That's by design. The summit's partner messaging, after all, was timed to align with Cisco's internal sales messaging.

But that's not all. During our interview, Bahr drilled down into numerous topics. Software. Security. Recurring revenues. Digital Network Architecture. And more. Here's a sampling of the conversation.

ChannelE2E: One of your stated goals for the summit is to achieve alignment between Cisco’s sales motions and those of your partners. Are you on track to achieve that alignment?

Bahr: Absolutely. In fact what you’ll hear from Chuck : It’s very much the messaging we gave to our sales teams during our sales kickoff. It’s a time when Cisco and our partners are focused on the same priorities using the same taxonomy. It’s a time when the partners are accessing the same tools that we’re using to enable our sellers. This is all happening simultaneously. We’re not making our moves first and then going out to our partners with these capabilities. We’re actually learning together.

ChannelE2E: Are new types of partners attending the summit, or are your existing partners evolving their models?

Bahr: It’s a bit of both. We are seeing partners on the transformation journey. They are evolving from a close-to-the-box, hardware-only integrator to acquiring mobile application capabilities, developing consulting arms and more. They’re playing a big role in helping customers understand a hybrid IT environment. They’re developing best-in-class private clouds. They’re working with us on CliQr and our Enterprise Cloud Suite. And even our products for public cloud -- whether it’s a Cisco Powered partner cloud or Azure or AWS or a cloud services broker like Ingram Micro. We’re also seeing some emerging partner types. I’ll talk a bit about the success we’ve had with moving from traditional resale to the multi-partner ecosystem. We started that journey about three years ago. Our most profitable partners are engaging in a multi-partner solution that drives an outcome for the customer -- particularly a customer that may sit outside of Corporate IT… A line of business customer. We’ll unveil some new routes to market as well because you can’t stop with multi-partner engagements. There are two or three additional routes to market that we need to prepare for. And we’ll prepare our existing partner types and new partner types. I’ll talk more about that at the conference.

ChannelE2E: Where does Cisco software fit into these existing and new routes to market?

Bahr: It plays well for our existing partners and new partner types. We have over 2,700 partners who have sold Cisco One. We have over 14,000 Cisco One customers. And our Digital Network Architecture, which we announced only eight months ago, is all about monetizing the Cisco One software suite for partners. The customers are seeing the software presented in a way that’s easier to consume. It gives them greater flexibility and value. Partners are seeing Cisco One’s value and relevance because they can turn on the technology with rich feature sets and make it come to life. It creates the outcomes customers are counting on. We’ve seen a big uptake. Then of course we have our other software -- for example, OpenDNS in security. You’ll hear a lot about security at the summit. Everyone from our managed services providers to our traditional customers and partners are looking at security as a foundation for the conversation. Despite whatever architecture you’re discussing to produce a customer outcome, security is by far the most profitable and most relevant part of the discussion with partners.

ChannelE2E: Umbrella, as a brand, seems to be taking more and more of the security spotlight. Is Umbrella the security brand going forward?

Bahr: I don’t want to steal anyone’s thunder at the conference but I will tell you that Umbrella as a brand is absolutely a focus going forward.

ChannelE2E: What other market segments represent major opportunities for partners?

Bahr: There are several. We will continue the security, security, security mantra. Very closely following that is the success we’re seeing with partners who are working with ISVs. Applications are so critically important to customer outcomes. Remember we’ve been on a journey with the ISVs for three years now. But this year we’re going to really highlight those partners who have been successful in this endeavor. We’ll highlight small partners, larger partners -- sometimes I get feedback that our ‘go to’ partners are quite large. So we’re making an effort to highlight those smaller partners that have really changed the course of their businesses. Continue to Page 2 of 3 for: Big Data, CapEx vs. OpEx and Recurring Revenues... Welcome to page 2 of 3, featuring ChannelE2E's conversation with Cisco Channel Chief Wendy Bahr

ChannelE2E: You touched on multi-partner opportunities. How does life change for partners in the multi-partner environment?

Bahr: We’ve been providing a lot of enablement tools, especially around DevNet as an example. We’re making the connections within our ecosystem easier for partners. When you’re in a multi-partner environment the go-to-market motion changes. That’s a big deal and we’re teaching partners about those realities. We have to enable that, and you’ll hear me cover that at the conference. But my three values remain unchanged. We need to simplify everything we do, align as tightly as we can, and evolve our value exchange. We’re providing value through this kind of multi-partner enablement. Whether it’s enabling the new go-to-market, whether it’s enabling the connections or enabling the ability to program into the applications. I really want to point out that we’re enabling and seeing higher degrees of profitability, higher customer satisfaction, more relevance, and more pull-through of the the traditional Cisco portfolio. It’s been a journey and we’re still on that journey. But we want partners who haven’t engaged in these models yet to embrace what we’re providing.

ChannelE2E: You mentioned ISVs. Cisco has done considerable work with big data software companies like Hadoop providers. Are your partners waking up to those big data and analytics opportunities?

Keep An Eye On: Rowan Trollope, SVP & GM, IoT & Applications

Bahr: Absolutely. That’s how we got started. Those sticky ISV relationships allowed our partners to understand the value of these opportunities. We started with the big data ISVs. For two years in a row we ran workshops worldwide. We showed partners how they could more deeply penetrate their existing accounts with these new types of opportunities. We’ve since expanded into companies like Purple WiFi, TurnStyle and we’ve been getting more into the vertical application ISVs. Big data started horizontal but we’re started more on verticals. Whether its healthcare, finance, manufacturing or retail there are big data opportunities and it requires multi-partner engagements. You’ll have an application provider that takes that big data and does something with it in a vertical manner. It allows for differentiation, relevance and value. Now, you have to have a secure, digitally ready network to deploy all that. But that’s not the start of the conversation. You lead with the outcome.

ChannelE2E: Let's shift to CapEx vs. OpEx. How far do you think the pendulum is swinging from CapEx to OpEx -- and how is Cisco performing in that journey? (ChannelE2E’s own bias: We don’t think everything will transform into a service.)

Bahr: Early in my career I sold PBXes and many of those were sold on leases. It was interesting for me to learn when and why customers wanted to acquire an asset and depreciate it vs. when they wanted to be on a monthly lease. It feels like deja vu sometimes. I’m with you. I don’t think everything is going to go 100 percent to the cloud, and I don’t believe all on-premises gear will disappear. And I don’t believe everything will go from CapEx to OpEx. But I hear from customers and they want choice. They want flexibility. They want different consumption models. To do that, we’re really leveraging one of our best assets: Cisco Capital. We have two programs that our customers and our partners, frankly, have been positive about. The first is the Cisco Capital Easy Pay financing model. We discussed that at the San Diego conference earlier this year. It’s a simplified purchasing of products included in our Digital Network Architecture. It’s a three-year, fair market value, zero percent lease. All the products within DNA are included in that. You pay 90 percent of the cost over three years. That gives customers predictable monthly payments. Some customers really want that cash flow management. At the end of three years they have an option: They can keep it, return it or refresh it. Or they can purchase the assets for 10 percent of the original price. For a customer who may not know how fast they’re going to grow, this is a great option. We also introduced Cisco OpenPay. That’s a variable consumption financing model. That brings the scalability of cloud to the enterprise customers. Customers receive equipment with more capability than they need at the time of acquisition.But they pay for only what they use. This allows a business to address seasonal demands, for instance. And we’ll continue to build out the Cisco Capital portfolio for our partners and customers. Continue to Page 3 of 3 for: More clues about software, new partner roles and a call to action... Welcome to page 3 of 3, featuring ChannelE2E's conversation with Cisco Channel Chief Wendy Bahr

ChannelE2E: We've covered a lot of ground. But what ground did I miss?

Bahr: In addition to security and DNA being at the core of the network, I think the key topic is really about software. And it’s not just Cisco One. It’s not just OpenDNS. It’s Spark. It’s WebEx. And it’s the recurring revenue model. If you listen to our earnings calls you know we’ve said that we’ll get to 38 percent to 40 percent of our revenues coming from software over the next few years. Recurring revenues, as our MSP partners have told us for a long time, are a real blessing because you get a pretty predictable book of business. We’ve introduced new roles like Lifecycle Advisor and Software Integrator. We’ll talk about what we’re doing to enable our partners to really look at the journey past landing the deal. We really have to focus -- collectively Cisco and our partners -- back on that alignment message. And we need to be aligned on adoption, expansion and renewals. There’s a tremendous amount of opportunity and profitability. We need to make sure what we sell generates the outcome by turning on the right capabilities. If we do it right then you get to expansion. You expand at renewal because you get a 1.1, 1.2 or 1.3 times opportunity vs. the original 1.0 sale. And that’s good for everyone.

You’ll hear us talk about core and DNA. That will be front and center. You’ll hear us talk about software -- especially from the recurring revenue perspective. And you’ll hear us talk about security.

ChannelE2E: Fast forward to then end of the conference. What's the call to action for partners?

Bahr: I want them to know: By continuing to partner with Cisco, the opportunities for profitable growth have never been greater. Our commitment to them has never been greater. We’ll continue to focus on the principles of simplicity, alignment, and improving and evolving our value exchange. They need to know that securing a digital-ready network is not an “option.” It’s absolutely mandatory. And developing lifecycle services capabilities are going to help partners differentiate and compete. Digital transformation is happening right now. Stay tuned for more. ChannelE2E will be blogging live from Cisco Partner Summit, seeking updates from the executive team on a range of additional topics including: Virtual networking, hyperconverged data centers, the end of so-called spin-ins, and coopetition.

Cisco Systems’ Wendy Bahr: Digital Transformation Arrives