“The biggest risk is not taking any risk. In a world that’s changing quickly, the only strategy that is guaranteed to fail is not taking risks.” – Mark Zuckerberg, Founder and CEO, Facebook
If you’ve been avoiding risk or waiting for the right time to take bold action in reducing both your reliance and cost structure with Cisco – the wait should be over. The market readiness to reduce or eliminate your Cisco dependence is at an all time high with suppliers who are stable, reliable, innovative and eager to win your business. Below we’ll outline how:
- The Cisco ecosystem is set up to work against the economics of its own customers
- Why their costs are wildly sub-optimized
- Present three bold strategies to overcome the market disparity and put you on the path of savings and transformation
Change is difficult for human beings in general, but especially for IT professionals charged with protecting network assets.
Like any ‘incumbent’ monolith, Cisco’s actions are primarily designed to protect their market position and maximize revenue from their install base of accounts. They certainly are not in the business of lowering their customers cost and reliance on their (Cisco’s) own products. This has been working out very well (for them anyway) as Cisco’s 2019 GAAP net income was $11.6 Billion USD. Powering the incumbent machine is a sales and marketing juggernaut aimed directly at the enterprise IT buyer. Out of all their major operating costs in 2019, Cisco sales and marketing led with $9.5B USD spent, versus $6.5B USD for R&D. $12.4M alone went to compensate Gerri Elliot, EVP and Chief Sales and Marketing Officer. The rest of that budget is aimed directly at you in trying to build fear, uncertainty and doubt in doing business with anyone but Cisco.
Direct Sales vs Channel Partners
Keeping customers at a distance using channel partners and resellers, works to their advantage in minimizing and even eliminating direct commercial discussions. So, in addition to Cisco’s cost, you are now factoring in channel partner margin which further compounds market inequities and the efficiency of doing business overall. Who are the first to see Cisco product updates, development roadmaps, and sales strategies? It’s probably not you. Speaking at a Cisco roundtable June 18th, 2020, Oliver Tuszik (Cisco SVP Global Partner Organization) said:
“It is very clear that partner profitability remains our No. 1 priority…. This is not only for this time, it is also for the future.”
The point being that Cisco has a global organization dedicated to supporting its channel partners in maximizing profit on their products and services - at your expense.
How would that quote read if you substituted out ‘partner’ for ‘customer’?
Nowhere is this lopsided market relationship more apparent than in their maintenance and support costs. Cisco relies on the mindset that support from them is compulsory and a foregone conclusion. When any company enjoys that kind of passivity from its customers (influenced by a $9.5B sales and marketing budget), there is a direct correlation to market sub-optimization. There are now many viable alternatives available in the marketplace that are not only equal to Cisco but exceed their capabilities at a far lower cost.
Now that we’ve outlined a few of the reasons why it may seem impossible to migrate away from an all Cisco environment, lets discuss the bold strategies you can employ to get you started.
Bold Strategy One: Eliminate Cisco as much as possible.
Transforming your infrastructure to eliminate areas of Cisco’s product set is essential to lowering costs. While there are complexities in every network environment, there are also opportunities to substitute suppliers and maintain or exceed current performance levels. There is strong competition in all areas of Cisco’s product domain, and we have worked with many of them to provide alternatives to our clients that empower them to make decisions with ‘their profitability as the number one priority’.
Bold Strategy Two: Managed Services.
Its not just about price discounts on products and services. There are bold changes to be made to the way in which infrastructure is managed. Managed Services can play a role in not just reducing cost but can lead to increased performance and enterprise experience. There are several market players ready and able to execute on partial or entire management of infrastructure. In the past it may have been hard to find alternatives that had the expertise, hardware replacement availability, and depth of resources to supplant Cisco – but not anymore.
Bold Strategy Three: Take advantage of the timing.
Given the recent global pandemic(s) and civil unrest, companies are re-thinking the ‘new normal’. The new normal likely does not include massive office buildings and congested workspaces in the foreseeable future. This provides an excellent opportunity to reevaluate infrastructure and build for the future. This future network should transform in such a way that leaves decision makers with as many options possible down the road, rather than handcuff them to inflexible and expensive market options provided by one supplier.
To summarize, you need a bold strategy to reduce costs on Cisco, and now is the time.
NET(net) has done this for many of its clients, and we can help you too. There are three immediate ways we can assist:
- Cisco Strategic Optimization Guide: Learn from our Subject Matter Experts the inside information on how to navigate Cisco options and come out with a transformational savings plan. Click here to learn more.
- Case Study: If you would like a detailed guide on how to capture these savings, you can download our case study called: A Bold Strategy for Reducing Costs on Cisco.
- Cisco Savings Cloud Basic Benchmark Engagement: Subscribe here to our Savings Cloud Basic level, and receive a custom analysis bespoke to your environment, along with a benchmark report that will show you the market optimized pricing that will compare: What you pay, what the market pays, and what NET(net) clients pay.
- Contact Us: Contact us directly to have a conversation with a subject matter expert and help decide the best course of action.
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