The Cisco Enterprise Agreement (EA) is a cross-portfolio buying program that offers a three- or five-year agreement that gives customers a simple way to procure software, services, and support across Cisco’s software portfolio. Customers can choose from either a single architecture enrollment or construct a cross-architecture agreement with multiple enrollments.
Enterprise Agreements represent significant value exchange between Cisco, the partner seller, and the customer. The customer is making an enterprise-wide commitment to at least one enrollment of Cisco software over a three-to-five-year term. In exchange, the customer gets an easy way to buy, consume and manage their software footprint with Cisco at the best pricing available.
Why Cisco Enterprise Agreements?
Put simply, EAs help us accelerate the customer’s digital journey, enabling Cisco and our partners to deliver innovation and value through software that can be continuously updated and upgraded.
According to IDC, and as shown in Figure 1, from an industry wide perspective consuming enterprise software has historically created challenges for many enterprise customers as they report:
- 25% additional costs [i] because of the complexity in managing multiple contracts from multiple vendors
- 75% say their software deployments are out of compliance [ii] due to the complexity in trying to manage the multitude of licensing terms
- 20% say they struggle with unpredictable and spiraling costs of over $1 million per year 2
- 93% of enterprises say they waste money paying for software they don’t use 2
This drives a never-ending, resource-consuming merry-go-round of negotiations and renegotiations, as 30% of enterprises plan to renegotiate their contracts.[iii]
The Cisco Enterprise Agreement addresses these challenges.
Significant value for customers
To begin, it’s easy to buy Cisco software with a single EA. When software is purchased a-la-carte and licenses are added over time, it can become difficult for customers to manage all their point purchases, such as keeping track of several renewal dates. Enterprise Agreements alleviate this complexity by bundling all software with Cisco into a single contract with a single end date.
In addition, the customer gets the best price point for Cisco software licenses regardless of any additional incentives or promotions Cisco may be providing. Pricing is fixed and predictable over the term of the agreement. And if the customer has recently purchased Cisco software, that subscription is bundled into the EA and credited to the customer for any remaining term.
Software consumption with an EA is managed through a unique capability we call a “true forward”. A true forward is an annual audit of the customer’s consumption that reviews, among other things, if they have over-consumed licenses. Unlike other vendors that offer EAs, Cisco looks at billing from a moving-forward basis within the term of the agreement. For example, if a customer downloads licenses in year two, they only get charged for those in year three, as there is no retroactive billing.
Partner Benefits
In parallel, Cisco channel partners also derive numerous benefits by selling Cisco Enterprise Agreements. For one, EAs often result in two to three times higher revenue per customer compared to transactional deals. The yearly true forward event can also motivate strategic conversations between the channel partner and the customer to identify additional business needs leading to upsell opportunities.
Similarly, software-buying programs provide standardization with EAs across different architectures and serve as a single platform for partners to cross-sell additional Cisco software. For instance, let’s say a customer today has security in their EA but now needs to bring in technology to support remote workers. In this case, we might bring in Cisco collaboration products into that same EA with the customer.
Finally, Cisco partners can attach their own lifecycle value-add services to the EA, providing a vehicle with which to build and monetize their own services. By attaching their own value-add services, Cisco partners can further differentiate themselves and sell a more holistic solution.
Delivering business outcomes
A key attribute to the EA is that it covers the customer’s entire enterprise. Typically, the enterprise is viewed in terms of the number of devices or number of users a customer has that will be using the software.
In addition, Enterprise Agreements are viewed as vehicles to deliver customer outcomes, as shown in Figure 2. In other words, during a typical sales motion, Cisco sellers and partners first need to understand what use case-driven business outcome their customers need help addressing. Next, Cisco sellers need to discuss what Cisco software can help deliver those outcomes. From there, they can discuss if there is a way to bundle the needed Cisco software into an Enterprise Agreement or other buying program that would best meet their customer’s business outcome requirements.
In other words, sellers are encouraged to lead with the value of features and capabilities provided through the Cisco software. From there, Cisco hardware will likely get pulled through as part of the customer’s overall solution. For example, if a customer can benefit from the value of Cisco DNA Assurance, then the Cisco hardware that DNA Assurance runs on can be added as part of the solution.
Enterprise Agreements: Great for customers, great for partners
Enterprise Agreements make it easier for customers to gain value from Cisco software, offering best pricing, simplified license consumption and centralized license management. For partners, Enterprise Agreements enable more strategic discussions with their customers while upselling their services throughout the product lifecycle. No matter how our customers’ needs evolve, and the market landscape changes, Cisco Enterprise agreements represent an important way we help our customers and partners remain future ready.
Interested in learning more? Visit Enterprise Agreements.
If you’re a Cisco partner and have not worked with Enterprise Agreements before, become authorized to sell Enterprise Agreements today.
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[i] IDC Software Licensing and Pricing Predictions 2016: Top 10 Predictions. 2016, IDC.
[ii] The State of the (Software) Estate: Waste and Risk Running Rampant in Enterprises. A 2016 Key Trends in Software Pricing & Licensing Survey Report. 2016, Flexera.
[iii] Cisco Enterprise Agreement: Meeting the Challenges of Shifting Business Trends. How Product and Service Purchasing Must Evolve to Meet Modern IT Requirements. 2017, ESG
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