Cisco Capital operates where traditional lessors have not operated previously, helping to reinvent business processes, operational efficiencies and customer service innovations with our partners. As Cisco’s partners are transitioning to managed services, Cisco Capital has also evolved to meet the financial challenges and sales opportunities associated with this. Managed Services is a $180B market growing at 9.2% CAGR.
Customers are asking to pay in different ways for technology to address their business needs. They are demanding more multi-cloud and subscription solutions that they can pay for over time without owning or operating any of the IT that is enabling the business outcome. In keeping up with the marketplace, Cisco is offering flexible consumption models in the data center, as well as in networking. This is a more agile and scalable way of paying for technology and services solutions in which the risk of use is significantly reduced for both partners and customers.
For example, many of Cisco’s solutions are centered around the data center. For customers who are interested in a data center solution, they can use Cisco’s servers for a period of time during which they are committed to pay for base on a quarterly basis, and the rest is metered and varies on actual daily usage. This helps customers scale to the demands of their business, presumably driven by sales, business activity and customer demand.
Partners can more easily transition to selling managed service solutions by using a Cisco Capital financial program. This eases cash flow and credit risk challenges for partners that are associated with selling managed services. Cisco Capital takes responsibility for funding partners up front for investments needed to turn on the managed services revenue stream, the partner remains in control of designing, pricing, contracting, implementing, and delivering the managed service to the customer. In short, partners continue to own the long-term relationship with the customer with Cisco Capital providing financial enablement in the background.
Cisco is using its incredible financial strength to help partners more easily transform and make the transition from classic net-terms reseller models to the consumption models that provide customers with the buying model choices they are demanding in today’s pay to use economy.
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As a company, we have been focused on adjusting to a new subscription based revenue model. Great to hear that Cisco understands this is a transition for our customers as well, and Cisco Capital is providing the means to make it a smooth transition.
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