When Cisco Systems recently delivered Q3 2016 earnings results, CEO Chuck Robbins pointed to the company's ongoing transition from hardware to software and subscription services. Dig a little deeper and you'll find Cisco's channel leadership evangelizing a similar message -- pointing partners to profit opportunities in the software market.
"We continue to make great progress in transitioning more of our revenue to recurring with increased emphasis on software and subscription offers," Robbins said during a May 18 earnings call. "Our software subscription deferred revenue balance continues to exhibit accelerated growth this quarter up 36%. We have a number of strong proof points of how we have executed successfully against our objective and the potential to apply the same model to the rest of our portfolio."
Cisco's Software Profit Strategy for Partners
Indeed, the Cisco ONEe software strategy has been gaining momentum. And partners have at least three clear ways to generate more software profits, according to Jason Gallo, global director of collaboration and software at Cisco. They include:
1. Expanding your software and solution sales motions: Here, Cisco is calling on partners to stretch beyond the Cisco WebEx, unified communications, security and analytics solutions. He points to opportunities selling infrastructure software within the Cisco ONE initiatives.
2. Offer Lifecycle Advisor Professional Services: Here, partners can manage how customers adopt, expand and renew licenses and subscriptions. I suspect a potential path forward involves Cisco Impact -- based on the recurring revenue platform from the MaintenanceNet acquisition.
3. Develop Custom Software Integration Capabilities: This is a tricky step for many partners, especially those that lack API experience and DevOps know-how.
Gallo offers more details on each of the steps and strategies in this blog.
IT Laggards and Leaders
Of the major enterprise hardware providers, Cisco's revenues and profits have been holding up better than many rivals. Certainly the company's focus on security has helped. And customers continue to depend heavily on network infrastructure even as some server infrastructure shifts to the cloud.
Still, some credit for Cisco's recent performance certainly involves software and subscription services. And recent acquisitions -- particularly the Jasper Technologies IoT cloud purchase -- should help to accelerate that subscription service momentum. Robbins explains the IoT cloud strategy in this video from Cisco Partner Summit 2016 in March:
Next up for Cisco: Keep an eye on this Cisco Live 2016 conference, set for July.