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As transformative CIOs take driver’s seat, partners go full throttle

As transformative CIOs take driver’s seat, partners go full throttle

Elevation of the IT department signals elevation of the ecosystem as partners prepare to maximise significant shift in end-user approach post-pandemic.

Dave West and Courtney Dodds (Cisco)

Dave West and Courtney Dodds (Cisco)

Credit: Cisco

As CIOs assume new positions of power within organisations -- a voice of authority on innovation and transformation agendas -- forward-thinking partners are repositioning to capitalise on a tidal wave of solutions, services and specialisations flowing through the market.

For the elevation of the IT department signals an elevation of the ecosystem as the channel prepares to maximise a significant shift in end-user approach post-pandemic.

“If you were a CIO before COVID-19, you were a cost centre and you were scraping for every project and investment,” observed Dave West, president of Asia Pacific, Japan and Greater China (APJC) at Cisco. “But now digital technologies have become boardroom conversations meaning CIOs are very much at the forefront of transformation.”

According to State of the CIO Research -- commissioned and produced by CIO.com -- 70 per cent of CIOs have been elevated in position, influence and power since the pandemic across Asia Pacific, with such heightened visibility within the organisation expected to continue.

Specifically, 86 per cent of CIOs are becoming more digital and innovation focused, with 84 per cent now leading transformation initiatives across the region.

“We remember pre-pandemic when CIOs were fighting day in and day out for investment and support,” West recalled. “And Cisco and our partners were fighting alongside whether it was ensuring the business understood the evolving cyber threats or the need to embrace digital to create better customer experiences.

“But now the market is moving rapidly and every CIO is talking digital transformation in the region. For example in Japan, they are creating a digital agency and working on cloud transition plans. Likewise in India, the focus is on 5G, digital and hybrid work.”

The domino effect of increased CIO authority is a rise in technology budgets, with 56 per cent of IT leaders forecasting a spike in spending across the region, while 39 per cent are preparing for the same level of investment as the previous year -- only five per cent of executives are bracing for a decrease.

For those set to expand the budgetary purse strings, key priorities include investment in new skills and talent (62 per cent) and upgrading outdated IT infrastructure (60 per cent), in addition to strengthening security (56 per cent) and spearheading product innovation (42 per cent).

“But there’s still a lot of confusion,” West cautioned. “There’s just so much work that is required to make a success out of hybrid work, application modernisation and digitising businesses. Digitisation is not just technology enabling services, it’s truly gaining the insights and visibility required to make better decisions and deliver better outcomes for organisations.”

Specific to the ecosystem, heightened demand at a customer level is creating new opportunities for partners to capitalise -- irrespective of end-user size, stature or sector.

“Our number one priority is partner profitability,” added Courtney Dodds, vice president of Partner Sales across APJC at Cisco. “Everything we do is through the lens of how can we boost profitability for our partners, that’s key.

“We’re investing to achieve this by helping the channel build new capabilities and capitalise on new opportunities in high-growth areas, such as hybrid work and security. Digitisation has rapidly evolved for our customers and our partners have had to evolve their practices as well, to keep up with the market.”

In short, Dodds -- appointed to run the regional channel in June 2022 -- said the digitisation drive with customers would not be possible without the support and specialisation of partners.

“Think about some of the problems we're trying to solve,” he stated. “Whether it be hybrid work or evolving the cyber security practices of our customers, we need the help of partners.

“Or think about achieving true hybrid cloud and multi-cloud, we need our partners to pull all of those pieces together. We’ve been working closely with our partners to jointly build their capabilities in this space and they continue to be a great asset for us as we help our customers evolve.”

To capitalise on changing customer requirements and accelerated software adoption, Cisco has introduced six new partner solution specialisations aligned to “fast-growing market opportunities”, expanding capabilities via the channel.

Unveiled at Cisco Partner Summit 2022, the additional offerings span Full-stack Observability (FSO); Hybrid Work from Office and Secure Access Service Edge (SASE), in addition to Hybrid Cloud Computing; Hybrid Cloud Software and Hybrid Cloud Networking.

“Customers favour this approach because they are ultimately getting more value from the technology they purchase,” Dodds said. “And partners benefit because this approach is rich in services and more profitable. We continue to see our ecosystem embrace these types of specialisations -- they’ve been asking for more and more in the region.”

In response, Dodds said Cisco will “ramp up” enablement specific to the new solution specialisations via the vendor’s Black Belt Academy, a partner enablement initiative built in-region.

“We still lead the world with that,” Dodds added. “We trained over 6,000 of our partners, teams and individuals through the program during the past 12 months, and are now looking to reach 7,000. Of course, we still need our partners to understand individual products as that’s important but we continue to evolve our solution areas to maximise the new opportunities ahead.”

Making strides in software

Continued CIO confusion is creating partner opportunity in the months ahead, with West acknowledging that the market is “leaps and bounds ahead” in relation to digital adoption, compared to pre-pandemic levels. Increased digital focus is also paving the way for accelerated software adoption, mirroring a global trend as recurring revenue takes centre stage for customers.

“The speed of transition is a little different depending on the market,” West outlined. “But whether developed countries such as Australia or developing countries like Thailand, Malaysia or India, recurring is at the forefront of everything.

“Customers are now annually looking at their spending innovation cycles. They have to be agile and move fast. And to do that, they need to examine what this looks like from a recurring basis and how they can consume services differently.”

For West, the question facing CIOs is focused on if the business changes overnight, how can organisations create the flexibility to be able to pivot in parallel?

“Recurring revenue becomes absolutely critical,” West said. “This transition to software is happening across APJC and just as fast as it's happening anywhere in the world.

“Our customers are looking at how they build their own recurring models, regardless of what industry they are operating within. If you’re in the business of creating refrigerators, you want a recurring monthly subscription model wrapped around those refrigerators.

“Customers want to become deterministic and move away from the old perpetual model. Think about it, we would go in as the vendor and provide customers with a bunch of products and then everything would stop. Five years later, we’d go back and renew the cycle.”

But during the sales gap, West said customers require additional services and capabilities from the partner ecosystem to continually evolve and transform, creating new recurring opportunities as a result.

“They need to stick with the pace and that’s the beauty of the recurring model,” he added.

West was quick to stress that such a shift does not signal a departure from the vendors “tried and trusted” infrastructure business”, rather a commitment to maximise software to “enable all of that”. Instead, Cisco is pressing ahead with plans to build software-as-a-service (SaaS) models around core offerings to help support customers transitioning to the cloud.

“This is all recurring business,” he noted. “The pace is different depending on the maturity of the market and even depending on the maturity of our people but it’s moving fast. I’m glad we started this journey seven years ago.”

Within the context of the ecosystem, Dodds said Cisco has a “big ambition” to grow recurring revenue via the channel, citing partners as “critical” in helping customers make the transition.

“We’re working to ensure that this is a solid business to participate in and that it’s profitable for partners while delivering a good outcome for customers,” he said.

“Managed services is a key route to market for us, notably Cisco technology embedded into partner-led managed services. Customers are demanding more as-a-service and in response, we’ve created more than 200 services and are looking to expand that further.”

A key lever to pull for partners making the move into as-a-service is Black Belt, added Dodds.

“Black Belt is a great program for our partners to expand into new areas of focus,” he said. “We’re helping partners differentiate in the market and remain focused on uplifting their capabilities aligned to delivering an outcome for the customer.”

An important part of that equation is bringing together different partner types, such as an internet service provider (ISP) with unique vertical expertise or a managed service provider (MSP) housing specific technology knowledge -- or perhaps even a traditional solution partner with an independent software vendor (ISV).

“We’re building a platform to connect these partners,” Dodds explained. “That’s what the channel will see over the next 12 months as we create a platform to help facilitate those conversations. Distributors will also play a big role in this given they have the visibility across the entire ecosystem and are best placed to add value and connect those dots.

“Our distributors play a critical role -- especially given the ongoing supply chain challenges -- and continue to enable a larger set of our partners. They remain a good litmus test of what’s happening in the market and as we look to create more collaboration within our ecosystem and move into new areas, they will be key.”

Strengthening supply chain operations

In looking ahead to 2023, spending on digital solutions and services will grow at 3.5 times the economy across the region. According to IDC, the move is stemmed by a desire for organisations to “establish a foundation for operational excellence, competitive differentiation and long-term growth”.

Delving deeper, IDC claims that the traditional recession IT budget playbook of cutting capital expenditure by extending PC and infrastructure upgrades, cutting contract staff and delaying new projects by one year will not be effective.

Instead, the recessionary playbook for 2023 will consist of adopting as-a-service delivery and operating models, leveraging contract staff to address labour shortages and focusing on high-impact digital business projects.

But naturally, customers will also need to “slice through storms of disruption” brought about by ongoing supply chain dynamics.

“The supply chain wasn't prepared and we weren't prepared,” accepted West, in looking back on 2-3 years of delivery difficulties. “We have faced a very challenging couple of years but the Cisco supply chain team has done an incredible job of managing this.

“A year ago, we were having tough conversations and we’re still going to face challenges, although we are managing that at the back-end. For our customers and partners, I'm seeing positive light at the end of the tunnel.”

As outlined by West, Cisco has diversified suppliers to boost delivery times, as well as assessing inventory controls and better managing forecasting to be “much more deterministic”.

“It took some customers a while to realise we were in a global supply chain challenge,” he added. “If a vendor struggled to meet the RFP delivery times, they would go to another vendor who also faced the same challenges. That was the ‘aha moment’ in the market.”

But despite improvements, roadblocks still remain. So, is supply chain a deal-breaker for CIOs?

“Customers have become much more strategic,” West explained. “Even our largest customers used to be very transactional and would issue an RFP with a request to deliver in 6-8 weeks.

“Now, our largest customers are talking about what the next 12-18 months looks like and the conversation has been healthier on both sides. We all have visibility on what is required and we’re preparing the supply chain team accordingly to be more deterministic on delivery.”

From a partner perspective, Dodds said the ecosystem continues to be a “strategic enabler” working jointly with Cisco to solve ongoing issues linked to the supply chain.

“Partners have been a key part of that conversation,” he added. “We've done a fantastic job of diversifying our supply chain over the last couple of years and continue to invest in our capacity. I think our partners are seeing that.”

James Henderson travelled to Cisco Partner Summit 2022 in Las Vegas as a guest of Cisco.


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