Sabrina Lin, VP, Commercial Business, APJ and Greater China, Cisco talks about why the company is pushing the services agenda and how it affects partners.
CW: Cisco's recently concluded Annual Partner Summit was interesting in many ways, especially with a renewed thrust on services. Why was the messaging around services so strong this year?
Lin: More than 97 percent of our business is driven through channels. If you are so dependent on partners, you would want to ensure that partners also have reasons to work with you. Therefore partner profitability becomes very important to us. We have seen that partners who have built their services portfolio are much more profitable than the ones that have less value-add. We wanted to share this observation with our partners and want them to focus on services in order to have a successful business model. Infact, it's not something that we want them to do. This is what the industry demands.
CW: Clearly, Cisco expects its partners to transition to a service-rich model. Do you want your traditional partners to leave their old baggage behind and quickly adopt a new method?
Lin: We are not suggesting that they leave their old baggage behind. Our evolution is a good analogy here. Years ago, we started off with networking only. Today, we have evolved to be the largest IT provider. We knew that if we don't go through that transition and add more technologies to our portfolio, we will be left behind.
Similarly, our partners are not abandoning their traditional business. Those offerings are still profitable. It is just that they need to add on to increase their relevance to the customer because the customer demands are changing. Customers don't want partners to sell IT the way they sold it before. They want to consume IT as a utility. As a partner, if you can't offer that option, they are not going to choose you--it doesn't matter if Cisco wants you to sell boxes or not.
CW: Shouldn't it then be a gradual transition? Why was there a sense of urgency in that messaging?
Lin: Customers are looking at service partners who focus on their entire IT and charge them on usage basis. Earlier, we did not have any metering mechanism. But thats changing now and becoming more sophisticated. Customers want to measure your value based on the service level agreements you make with them. If you look at markets like Australia and New Zealand, cloud adoption is happening at a rapid pace.
Customers there prefer thecloud model over the traditional on-premise model. We believe that other countries will also migrate that way. Therefore, our partners also have to change and that is why there was a sense of urgency in our messaging.
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