CRN Exclusive: Cisco's Bruce Klein Talks HP, Software Push And What's Coming At Cisco Partner Summit

Software-Focused

With more than 2,200 Cisco partners flocking to Montreal next week for the 2015 Cisco Partner Summit, CRN was able to speak with Cisco global Channel Chief Bruce Klein about the networking giant's focus leading up to the event.

Klein, senior vice president of Cisco's worldwide partner organization, told CRN about the San Jose, Calif.-based company's goal to steer channel partners to build out software practices and increase their services offerings around software.

He also gave CRN an update on Cisco ONE software progress, his thoughts on competition from Hewlett-Packard and a few key areas that will be highlighted during the conference. Edited excerpts of the conversation with CRN Executive Editor Jennifer Follett and CRN Associate Editor Mark Haranas follow.

How pervasive does the push toward software need to be throughout the Cisco channel partner base?

More than 50 percent of the partners need to be selling this way, because, if you look at where the market is going, we talk about digitization, and you can't digitize a company without software. We talk about cloud and hybrid IT. More and more of the software offerings are going to be coming out in the SaaS model. … [We're] recruiting more of those SaaS providers on our cloud and [we want] them to connect with those software plays. … There'll be software that will come out of Cisco, both [on-premise] software and SaaS software. We want more than 50 percent of our partners to really work a Cisco software practice into their business model.

Is this a shift in identity for Cisco solution providers from hardware-focused partners to software-focused partners?

I think it's a shift in identity of how partners need to shift in general. It's not just software, I think they need to shift. They need to have competence in [hardware, software and services]. … The balance is shifting: Customers want you to come in with end-to-end solutions delivered in the way that they want to buy hybrid IT, on-premise and in the cloud. ... We do see these tremendous growth opportunities and profitability opportunities in software. It's just an evolution to us with our partners to bring new innovation to them that will drive new growth opportunities and help them deliver what customers are asking for, help deliver more end-to-end solutions that have a return on investment. That's what we're doing.

Is there still a place in the Cisco partner ecosystem for a solution provider that doesn't what to move in this direction?

Absolutely. Customers are still buying technology and there are partners that are going to stick that way. It's a question of time. … Will they thrive today? Will they still grow today? Yes. [Although] over time, they're going to have a harder time winning business, a harder time creating that relationship because the value comes more in the solution selling than it does in the technology selling.

What is going to be discussed at Cisco Partner Summit to help solution providers shift toward software?

[Partners] will hear some new things that they can bring for on-premise and hybrid solutions that can help them grow their business.

We're going to talk about what Cisco is doing around software and what they're going to see from us and how they could bring that to market to really drive more explosive growth aligned to what customers are really asking for around delivering outcomes and helping them become digital.

We'll be discussing some things that we're doing around program enhancements and tools that will also help improve their profitability. We'll talk about these skills, next generation skills that are going to be required.

We'll talk about InterCloud and the progress that we've made in InterCloud -- that's a big part of the discussion as well, from a cloud perspective.

What will partners hear from CEO John Chambers?

You'll hear John really set it up, around digitization and how customers are moving more and more to become digital companies. You're starting to see the information age morphing into the digital age. We see it all the time. You see the Ubers and the Spotifys and all these companies that are coming into the market in a digital way disrupting the old way of offering services and delivering value to their customers.

We are all in this journey with our partners to make sure that we're arming them to drive that conversation around how customers will be coming digital, and software's going to be such a big component of it.

Isn't digitization a threat to Cisco given that a lot of those companies, such as Facebook, are looking for more of a white-box network solution?

No, we don't see it. What we really hear from customers is deep down when they look at making that shift, it's about thinking through what we have invested in and innovated in over the last couple of years and bringing it all together. You've got these point product solutions, yes, but think about what's No. 1 on their mind -- it's security.

What we've done around ACI, what we've done around the data center, around collaboration tools -- you think about all the different areas that we're bringing together and have these … technology solutions work together to solve or help them digitize. There's no other company in the world that can bring this to market in the way that Cisco's bringing it to market.

What about Hewlett-Packard?

I think HP has its own challenges in what it's doing, obviously. There's a lot going on with HP with the split-up of the company. We'll see what they come out with.

If you look at what they're doing, what they're focused on, and you take a step back, and you think about what Cisco is doing about bringing all of these components that we've been working on together, and even what we've done around being bold and reorganizing the company and our engineering teams to create new divisions that are focused on putting these horizontal solutions together -- made up of all the different business units' technology to help our partners deliver these integrated suites and integrated solution sets -- and how our services teams are offering more services offerings for our partners, I don't think anybody is delivering that to our partners like we are.

HP is making a lot of moves in the same markets you are. Does it seem like this is now a Cisco vs. HP world?

Well, I think we have a lot of competitors, right? We look at it as "competition is good." It keeps everyone on their toes. It keeps everyone focused on how do you differentiate and how do you bring the right solution to market. … We're not just focused on one competitor. We're focused on what we can bring to the market that truly solves what the customers are asking. I don't think anybody in this market does it better than Cisco. … We've got a track record that proves it. All the predictions we made around voice, around data center, around Internet of Everything, it's all come to reality. … We have not steered [partners] wrong. They have continually grown their business with us. I think that, from a partner perspective, I would not bet against Cisco.

What's been the uptake of Cisco ONE among your partner base?

We've got about 176 partners [globally] that have been trained and are building practices around selling Cisco ONE. We've been doing a lot of training and workshops, and more and more partners are coming onboard through the training and the workshops. … We're seeing partners driving about a 60 percent uplift in revenue over a five-year period and about a 70 percent uplift in partner margins around selling software this way. We're starting to see a tremendous amount of value and a lot of wins starting to pop up. … When we look at this market potential, in the software features, this is about a $14 billion market. Today, with our partners, we capture about $100 million of that market. There's tremendous white space here in taking this to market. I'm just talking about Cisco ONE itself.

Cisco's been encouraging solution providers to team up with other partners. Is that really happening?

One of the big topics is talking about what we have built over the last few years around the partner ecosystem. More and more we're seeing partners teaming with other partners. This is the value of the connected partner ecosystem. They're starting to connect with consultants. They're starting to connect with software companies. They're putting their own solutions together.

When we thought about it three years ago, some of the partners were looking at me and going, "Really? I don't get it. I don't see it. I don't see us connecting with other partners." Although today it's happening. Time and time again our partners truly are partnering with other partners to deliver new solutions and outcomes to customers. We're going to talk a lot about where our partners are seeing their growth and revenue come from, that profitable growth.

Which day is going to be the best day at Cisco Partner Summit?

The best day is every day.