June 19, 2020
By Jason Gallo
As network technologies shift from rigid components to flexible, multipurpose software platforms, routing transcends the router and physical data centers yield priority to securely distributed centers of data. This new technology dynamic is ripe with software-defined wide area networking (SD-WAN) opportunities for channel partners such as resellers, integrators and service providers, opportunities that are fueled by customer demand for application performance, cloud/software-as-a-service and Internet of Things.
To effectively advise customers on SD-WAN opportunities, channel partners must align themselves with vendors that offer secure, scalable, intent-based networks. Customers want an SD-WAN solution that provides protection for users, devices and applications, whether deployed on premises or in the cloud. Customers want an SD-WAN solution comprehensive enough to scale to, and interact with, multiple network domains. They also need an SD-WAN solution that has intelligence through automation, and API programmability. This allows their channel partners to tailor the solution to their specific business intent.
For channel partners, once they understand customer’s needs and identify the technology vendors who offer a comprehensive, intent-based network, they must then self-assess their competencies and gaps. This requires them to examine their skills beyond technology competencies. They must also courageously take on transformational change beyond the comfort of their historical business models. Transformations like this require a clear understanding of three key steps to building out an SD-WAN Channel Partner Practice. (See figure to the left).
Source: Cisco Global Partner Organization
Various practice components require considerations of technology road maps, account delivery and control, operations and, ultimately, how customers want to consume the technology over time to achieve their desired success. Furthermore, specific to SD-WAN, many analysts believe customers will prefer to purchase this technology as a managed service.
For many partners, delivering a managed service compounds the transformational challenge they already face in learning the SD-WAN technology.
Inherent to offering a managed service is the channel partner’s readiness to take on the customers’ risks. That’s in exchange for a committed service level agreement. Assuring a customer’s service continuity despite force majeure — shifting global economics, major technology feature evolutions or unexpected global pandemics — is a lot for a channel partner.
However, with risk comes reward. The benefit of SD-WAN managed services for partners is predictable long-term recurring revenue. Moving from one-off, project-based revenue streams to ongoing recurring revenue streams has a fly-wheel effect. You can reinvest and grow practice resources more predictably.
SD-WAN Partner Business Models
The good news is channel partners don’t have to transform all at once. There are multiple business models they can leverage to methodically increase SD-WAN practice capabilities over time while continuing to meet the customer’s requirements. This spans from basic solution resale with the lowest time-to-market requirements to a full managed service offer with large initial investments and time-to-market, but the highest profitability in the long run.
Once channel partners decide which model fits their objectives, they can then team with …
… third-party providers and vendors to augment their capabilities along the journey.
Source: Cisco Global Partner Organization
Resell – A common model for SD-WAN, especially for large enterprises, is for customers to deploy and manage SD-WAN in their network environment with their own IT staff. Partners look for a global vendor that can offer long-term stability as well as layered, integrated security available on premises or in the cloud. With this customer do-it-yourself (DIY) model, channel partners focus on reselling the best vendor’s technology. They also often pave customers’ migration to SD-WAN by delivering consultative design and implementation services.
Resell “as a Service” – While many channel partners want to offer an SD-WAN managed service for their customers, teaming with a third-party provider who may even offer it as a white-labeled service is a faster path to market entry. These arrangements are more solution-oriented and, due to the managed capabilities, feature roll-out can be accelerated because of infrastructure standardization. Furthermore, investment in and distribution of continuous innovations fall to the third party. This model gives partners an initial entry point offering managed services to their customers while reducing their time-to-market and risk.
Co-Deliver – Similar to the “as a service” model, channel partners can work hand-in-hand with vendors that offer a managed service. In this model, partners co-manage the SD-WAN managed services alongside the vendor; they often taking on more of the services risk for the customer. These channel partners have more mature services capabilities, are more hands-on in traffic optimization, segmentation policy design and implementation. In addition, these partners often have a life cycle management team who works closely with the vendors’ customer success organization.
Build – In this model, channel partners fully build and operate their own SD-WAN managed service practices. They become the managed service provider, offering subscription-based services to customers while establishing recurring, predictable revenue streams. Customers buy SD-WAN as a managed service bundled with highly advanced service integrations and network connectivity options. This reduces their own IT staff needs associated with DIY deployments. Here, the partner takes on a high level of risk with the customer, but realizes several key economies-of-scale benefits.
As channel partners align themselves with vendors that offer secure, intelligent, multipurpose and scalable technology platforms they must also take steps to improve their practice capabilities and expand their business models toward more managed services. My channel partners now realize a four-times multiplier of sales pull-through from SD-WAN as it drives new opportunities across network domains — campus, branch, IoT, security, data center and cloud. The fast movers will best position themselves for the long-term win across the entire intent-based networking infrastructure market.
Jason W. Gallo is global senior director of enterprise networking for Cisco Global Partner Organization where his application of financial knowledge fused with technology is a trademark of transformational initiatives. He has participated in various analyst panels and has been a key speaker for Cisco global partner events. Jason is an executive sponsor of the Cisco Connected Black Professionals and co-founder of the Alpha Phi Alpha Endowed Scholarship at RIT. He received his MBA from The University of Chicago, and a master’s degree in engineering from Washington State University. He has a bachelor’s degree in electrical engineering from the Rochester Institute of Technology. Follow him on LinkedIn or @JasonWGallo on Twitter.
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