Cisco Doubles Down on Managed Services, Fastest Growing Route to Market

Enabling partners to deliver Cisco managed services has become a primary emphasis of the networking giant’s investments in the channel. Cisco is doubling down to drive partner-delivered managed services because they’re the fastest growing route-to-market (RTM) opportunity.

Not only do managed services offer future growth potential, but Cisco has found they have become among the most profitable. Global channel chief Oliver Tuszik this week underscored Cisco’s accelerated managed services drive during a briefing with media and analysts.

Cisco’s Oliver Tuszik

“Products that are sold in a managed service model [are] even bigger than our overall [product growth], which by the way is a very important thing because we believe this part will last, but the product type on a pure infrastructure resell might come down,” Tuszik said.

Managed services represent a 45% RTM opportunity, according to research commissioned by Cisco. The company also is forecasting that by 2025, its total addressable market (TAM) for managed services will be $113 billion.

Tuszik said managed services sales growth is now outpacing overall revenue growth delivered by Cisco partners. During its most recently reported quarterly earnings, overall bookings from partners grew 27% year-over year. But product revenue from partner-managed services grew 31%, and among SMBs it rose 32%.

It’s a major win that small and midsize businesses are embracing managed services, Tuszik said.

“Where a lot of companies said managed services is nothing for smaller customers and our smaller partners, the opposite is happening and we’re heavily investing in the segment,” he said.

Delivering Managed Services ‘as a Service’

Alexandra Zagury, Cisco’s VP of managed services and as-a-service sales, said the 45% RTM for managed services compares with the overall business which “oscillates” between 20% and 30%.

Cisco’s Alexandra Zagury

“That is tremendous,” Zagury said. “When you look at this route-to-market opportunity, it’s also very key to the shift to as-a-service, because the best way to deliver an outcome right now is through a managed service. But as soon as you start adding the consumption model, as soon as you start adding the cloud-like delivery experience, you’re suddenly delivering a managed service as a service.”

Cisco has built and is expanding its service catalog. Also, the company can now measure partner performance and invest in those that are showing success.

“We have over 400 new provider partners, and we have 20% more [memoration-of-understanding]-based investments,” Zagury said.

Zagury said Cisco’s platform enables its managed services strategy. The company already has multitenant architecture technology as a foundation, she emphasized. Now, Cisco is working with its business units so that they are all managed-services ready, Zagury explained.

“We’ve actually unlocked the partner investment fund and doubled our investments in [it] to align certain activities with our provider partners,” she said.

Cisco also has more than 100 new service creation co-sell projects, in different regions, she added.

“That’s 100 new offers that are going to be deployed in our partner catalogs for us to jointly sell with our partners,” Zagury said.

Also, Zagury spoke about a framework Cisco developed that it calls minimal viable partner requirements (MVPR).

“This is all about making sure that it’s multitenant in nature, that we have the standard APIs [and] that we have the ability to export data into partner data lakes,” Zagury said. “We were going through our whole portfolio and really looking at …