Cisco Systems is getting serious about distributor relationships again. And that's welcome news, especially for SMB partners. The latest move involves Ingram Micro Cloud Marketplace supporting Cisco Spark, the collaboration and video messaging platform platform.
Cisco is plugging into a rich ecosystem. Thousands of VARs and MSPs leverage Ingram's cloud to source various services. The system also manages provisioning, billing and more. Ingram is expected to announce additional partners and integrations this week at Ingram Micro Cloud Summit 2017 in Phoenix, Arizona.
Of course, Cisco has longstanding relationships with Ingram and other distributors. But during the past two Cisco Partner Summits, attendees have told me that the networking giant seemed obsessed with enterprise customers and needed to recommit to small business partners.
Cisco Shows SMB Commitment
I'm not saying Cisco agreed with that assessment, but the networking company has certainly flexed some SMB muscle in recent months. And in most cases, the SMB moves involved distributor engagements.
One prime example: Cisco in March introduced new wireless networking equipment specifically designed for small and midsize enterprises (SMEs). Now, the company is playing an encore with the Spark-Ingram relationship. That's good news for Ingram's cloud partners -- many of which serve SMB customers. But Cisco is quick to say this is more than an SMB move.
Julie Hens, Cisco's vice president of global distribution, says the Ingram relationship supports partners (and partner end-customers) of all sizes. Moreover, partners can bundle additional offerings like Cisco Umbrella for security services, she adds.
Ingram partners are already lining up to offer Spark, according to Ingram Micro Global Cloud Channel Senior VP Renee Bergeron. The first deployment involves a partner and several hundred Spark seats, she adds.
Cisco Spark: The Bigger Picture
Spark is one piece of Cisco CEO Chuck Robbins' larger strategy to lean more on recurring revenue and SaaS subscriptions. Cisco has been making progress but faces a long journey.
Roughly 31 percent of the company’s revenues were recurring as of February 2017, up from 26 percent when Robbins first became CEO in mid-2015. But those figures include Cisco’s services revenues. Strip out that information, and only 10 percent of Cisco’s product revenues are recurring. Moreover, Spark faces intense competition from Slack, Microsoft Teams and Skype.
Ingram, meanwhile, has been on a somewhat similar journey in the cloud market. The company still generates billions of dollars from hardware sales. But Ingram's cloud push has been a bellwether for the overall transition to cloud-oriented distribution services.
As of 2015, Ingram Cloud was a $200 million business that was growing more than 100 percent at the time, according to CEO Alain Monié. I suspect that means it's now about a $400 million business. That's relatively small compared to Ingram's top line revenues of about $43 billion back in 2015. (Ingram has since been acquired.) But I'm learned not to underestimate the Ingram cloud team over the past five years or so.