As we approach the end of Cisco’s 2024 fiscal year, it's a good time to reflect on the significant events of the past 12 months.
Cisco completes the acquisition of Splunk for $28B – its largest acquisition ever (May 2024).
Cisco’s Q3 financial reports show a 13% decline in total revenue (slightly better than expected) and a 19% decline in product revenue (April 2024).
Cisco announces the “Cisco Partner Incentive” initiative designed to reward partners with rebates for driving the transition to more software and services-based offerings (November 2023).
Cisco's historic year highlights some pivotal changes for the company. Despite the decline in revenue, there is a sense of optimism within the organization, driven by a strong push towards subscriptions and recurring services rather than traditional hardware and perpetual license fees. As Cisco introduces new subscription products and incentives to their sales organizations, we want to remind clients there are several important considerations for managing strategic relationships with Cisco and their Cisco Partners.
As a customer, what are my options?
Cisco Enterprise Agreements
If your organization’s Cisco footprint is substantial and you're struggling to manage contracts, software license timelines, support footprints, and hardware refresh cycles, an Enterprise Agreement (EA) might be worth exploring. These agreements allow clients to consolidate their Cisco environment under a single agreement, often with better-itemized discounts.
However, Enterprise Agreements can sometimes pose challenges. Issues can arise with product bundling, lack of competition (Enterprise Agreements are very sticky), or significant cost increases at renewals due to insufficient investment in new products. Navigating these agreements isn't always straightforward.
Green Cabbage Recommendations:
Obtain detailed discounts: Ensure you get itemized discounts that include SKUs, descriptions, quantities, list prices, and unit prices for each enterprise bundle you consider.
Plan new product investments: Schedule investments in new products, such as software expansions, hardware refreshes, or enhanced support, around your Enterprise Agreement renewals.
Recognize the stickiness: Understand that Enterprise Agreements are inherently sticky, and you'll start to see more value—such as product bundle discounts and financing incentives—when you invest more.
Understanding the Cisco Partner Program
For anyone unfamiliar with the Cisco Partner Program, here is a quick rundown:
Cisco Partners: These are qualified companies that act as an extension of Cisco, selling, implementing, and even developing solutions using Cisco products (VARs the fancy title of “Cisco Partner”)
Your Partner Choice: Think of them as specialists. You choose the partner role(s) that best fit your needs:
Integrator: Installs and configures Cisco solutions for you.
Provider: Manages your Cisco Systems and services on an ongoing basis.
Developer: Creates custom applications that interoperate with Cisco platforms.
Advisor: Provides expert advice on selecting and implementing the right Cisco solutions for your business.
During their 2024 fiscal year, Cisco announced their “Cisco Partner Incentive” program, which outlines a gamut of new incentives for partners:
Partners can earn up to 30% blended margins on Cisco security offerings.
Doubling VIP rebates in key security-related areas.
Incremental discounts between 4-7% on new products registered with a commitment to return used hardware.
In addition to margins, Partners receive 2% back-end rebates from Cisco (while not new, is important to know…).
Understanding the incentives Cisco gives partners is critical for end customers because it allows them to grasp the financial motivations of their partners, which can help them negotiate better pricing and services. Additionally, this knowledge enables customers to ensure they are getting the most value from their purchase by choosing partners who are likely to offer more competitive deals due to the incentives and rebates they receive from Cisco.
Splunk Splunk Splunk…
With the largest Cisco acquisition in the books ($28B), customers are asking Green Cabbage how the Splunk acquisition changes the vast Cisco landscape.
Integration Synergies: Expect enhanced data analytics and security features as Cisco integrates Splunk into its product ecosystem.
Leverage Transition Period: Use the initial transition phase to negotiate favorable terms.
Explore Bundling Opportunities: Look for cost-saving bundles with other Cisco products.
Prepare for Pricing Changes: Lock in current pricing or negotiate flexible terms to manage potential future changes.
Plan for Integration: Prepare for Splunk’s integration within Cisco’s ecosystem, including staff training and workflow updates.
Stay Informed: Keep up with updates from Cisco and Splunk to make timely decisions.
In the coming months, we suspect substantial changes will come; for now, we recommend staying diligent by evaluating historical pricing and terms and remaining informed (via Green Cabbage).
Green Cabbage is dedicated to assisting you with your Cisco negotiations. Our Cisco Subject Matter Experts (SMEs) are ready to help.
Are you ready to begin with a team of experts by your side? Click here to request a demo!
Written by: Pete Boyer Director of Market Intelligence, at Green Cabbage
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