How Cisco Software Is Like Leasing a Car
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The way we buy, service, repair and maintain our vehicles has changed over time. For many years, paying cash or financing a car to eventually own it outright was commonplace.
While there is still market appetite for car ownership, leasing has become more prevalent. The same can be said for software and the industry's shift to subscription-based offerings. Taking a closer look, you can draw more parallels between the two to better understand Cisco's software strategy.
Let's start with a refresher. What is software licensing? Why is it an important topic? And what are the various license models available today?
Back to basics: Licensing 101
Simply put, a technology license provides licensees access to software and services from licensors.
Why is licensing a relevant topic of discussion? In the same way a car enables you to get to your desired destination, a software license is the vehicle that enables businesses to reach their desired outcomes, which in turn allows them to drive competitive advantage.
As organizations embrace digital transformation to reinvent their business models, deliver value and provide excellent customer experiences — licensing is a catalyst to these initiatives and a focal point of discussion across executive agendas. Unlike hardware, software can constantly evolve, adapt and be improved, allowing businesses to pivot on demand to maximize market opportunities or quickly react to changes in consumer trends in a world where 'adaptability' is the new norm.
Back to basics: License models
Perpetual
Historically speaking, Cisco would sell a license that was node-locked to a particular machine. Purchasing that license incurred a one-time expense, followed by an annual maintenance fee (SWSS) to keep it eligible for version upgrades and allow Technical Assistance Center cases to be opened on its behalf. When the machine was refreshed, a new license was required for its replacement. This is effectively the "perpetual" license model as we know it today. For much of Cisco's software lifespan, this was the preferred license delivery model.
Going back to our analogy, it's like buying a car outright and having to regularly pay for service, repair and maintenance. Today, with the speed of technical advancements, data volume fluctuations and evolving online threats, software needs to be updated more rapidly and iteratively to remain adaptable while reducing risk. Inherently, perpetual licenses have a short lifespan and become obsolete within a few years due to out of date hardware cycles and end of support announcements. With the advent of Cisco ONE, Cisco decoupled hardware and software to allow for license portability, but by and large, perpetual licensing is now a thing of the past.
Subscription
When the speed of software innovation began to outpace that of hardware platforms, customers' desire for immediate access to new software products, features and versions without a coinciding hardware refresh became overwhelming. Cisco's answer, like other OEMs, was a migration to a subscription-led business model. Customers pay an ongoing fee as part of operational expenditures to access the license with maintenance, upgrades and technical support included.
In the world of cars, it's similar to leasing a vehicle from a dealer while making periodic payments for the right to use the car, including regular maintenance and repairs.
The subscription model offers quicker accessibility to the latest Cisco innovations and acquisitions, more predictable cost structures and allows customer to modify agreements on the fly — leading to enhanced IT agility. With a lower initial investment, access to the latest software and expert technical support embedded in the subscription, your resources can worry less about internal infrastructure and focus more on providing value to your customers.
What are my purchasing options?
Customers have the ability to buy licenses in a transactional (a la carte) fashion or through an enterprise agreement (EA).
Transactional
Here, companies buy individual, standalone licenses (or bundles) on an ad-hoc basis that are perpetual or subscription in nature.
Think of it this way — if you wanted to change your own oil, you'd need a filter, the oil itself, a funnel, an oil pan, a wrench, gloves and a jack — you could buy each of those parts independently or shop for an 'oil change starter package' that bundled those items together at a more attractive price point.
Technology is no different — single feature licenses only solve single use cases and are not solutions to achieving wider business outcomes. Cisco offers a la carte licenses as well as many popular 'bundles' such as DNA, Collaboration Flex and ACI suites. Transactional license purchases equate to multiple subscription end dates, ignoring potential economies of scale (lower) discounts and exposure to list price increases.
Transactional purchases are appropriate for point solutions or department/geographic-confined deployments.
EA
Where many of WWT's customers across industries have realized commercial and operational benefits at scale is through consolidating their Cisco licensing estates into an EA.
Cisco's EA is a purchasing program with flexible buying, deployment and billing options that gives businesses access to subscription licenses at scale across a portfolio of networking, data center, collaboration and security solutions. The program is unique to others in the market as it was built to lower costs, reduce complexity and increase business agility for organizations that meet certain price minimums and enterprise-wide deployment criteria. This is embodied in the 3 easy's of the EA.
1. Easy to buy
- Financial predictability: You are given a fixed license cost at the start of your EA that is locked in throughout the term with flexible payment options.
- Cross-architecture access: A single method for accessing all Cisco technologies across architectures to simplify purchasing with Common Terms & Conditions.
- Unique program offers: The EA program gives you access to enrollment-specific incentives and promotions that lower your TCO, such as better together pricing, 20 percent growth allowances, free appliances or deployment ramp discounts.
2. Easy to manage
- True forward: With growth, you are not retroactively charged for that year's extra usage. Instead, payments are revised at the beginning of the next billing period.
- On-going innovation: With maintenance fees included, patching updates give you access to continued software upgrades and releases throughout the term of your EA.
- On-demand deployment: Get access to additional required licenses the moment they are needed through the Cisco Software Portal. No need for additional procurement cycles or purchase orders.
3. Easy to deploy
- Flexible deployment options: With the ability to choose from on-premises, hosted or cloud deployments, organizations can mix and match the best deployment method for their business needs.
- Co-termination of subscriptions: With Cisco's EA, customers save time managing renewals and more easily manage utilization.
- Holistic entitlement management: Powered by Cisco Smart Licensing, organizations can monitor EA consumption through their Cisco Smart Account and EA Workspace with single-pane-of-glass visibility.
Available EA enrollments
"Intent-based networking (IBN) built on Cisco DNA takes a software-delivered approach to automating and assuring services across your WAN and your campus and branch networks. Cisco DNA can help you to streamline operations and facilitate IT and business innovation."
"Get cloud, on-premises, and hosted collaboration in a user-based subscription. You can buy meeting, team collaboration, calling, and contact center services for all employees, or simply purchase what you need today and grow at your own pace. With the Flex Plan, one agreement includes software, upgrades, and support."
"Security simplified. Budgets augmented. Response times shortened. Cisco's security buying programs help do all that. They can simplify the way you buy security products, help your company's resources go further, allow for instant portfolio access to help you respond faster as new security challenges arise. They even offer predictable payments spread over time."
"Cisco's Data Center enrollment is made up of 7 core software suites: Cisco Data Center Networking, Hyperflex, Intersight, CloudCenter, Container Platform and MDS, and Cisco Workload Optimization Manager. These technologies enable customers to deploy, run, and manage their data center needs everywhere."
Maximizing your ROI with WWT
At WWT we take a lifecycle approach with all of our customers, known as EA+, which packages WWT's business capabilities alongside dedicated resources who support you at every stage of your software journey.
The first step is to engage with our Software Advisors who will work in partnership with you to align your technology strategy, objectives and goals to the Cisco EA program. By assessing your current install base, accounting for future growth expectations and considering financial constraints, our advisors produce a customized proposal that quantifies all the benefits of the EA program into a pragmatic commercial agreement for your organization, supported by a robust financial justification.
It doesn't stop there, WWT will continue to work with you following EA signature to maximize your software investment. Our Customer Success teams are specialists who will work alongside you to provide concierge onboarding services, establish an adoption plan that puts you on the road to success and operationalize the plan to support you in driving towards your desired business outcomes.
To jump start you on this journey, contact one of our Software Advisors today.