Cisco has introduced the Enterprise Agreement (EA) concept, one it says provides a more flexible method for how customers purchase, deploy and adopt Cisco technology—furthering its software-centric business model vision.
Customers that adopt the Cisco EA can use the products and services they need in the near-term, then scale and add more capabilities as they grow, without being charged a penalty.
Offering a choice of three- and five-year contract terms, the Cisco EA spans infrastructure, security and collaboration portfolios:
Collaboration: This includes Cisco Spark Flex Plan, Cisco Unified Communications Suite, Cisco Meeting Server add-on Suite, Cisco WebEx On-Premises Suite, and others.
Infrastructure: Cisco’s infrastructure and data center technologies are delivered through Cisco ONE Software suites, including switching, wireless, WAN, data center networking, and data center cloud and compute.
Security: Cisco will offer its e-mail security suite, cloud and web security suite, policy and visibility suite, and Security Essentials suite.
Cisco plans to bring on additional software capabilities over time.
“The Cisco EA is a single, simple agreement that lets our customers easily consume the products and services they need today, in areas like collaboration, infrastructure and security, and to scale and add additional capabilities as they grow—simply and without penalty,” said Mark Hill, VP of digitization for Cisco, in a blog post. “The Cisco EA simplifies access to the latest Cisco products and services, and gives customers the ability to deploy and use products and services on their budget and schedule.”
A key focus of the EA is driving and rewarding customer growth.
The Cisco EA is designed to encourage customers to grow by providing a 20% growth allowance and what it calls a “True Forward” provision. It includes 20% extra software and software support services that customers can use toward unforeseen growth without purchasing more.
This is different than traditional “true up” approach billing model used by most software vendors, which conducts a periodic review of customer software usage and retroactive billing for over-usage. By implementing a “True Forward” provision, Cisco EA customers that grow beyond the 20% allowance will not be billed retroactively for any overuse of their entitlements. Instead, their contract is revised at the beginning of their next billing period.
EA plays off of Cisco ONE Software, which allows customers to consume infrastructure software delivered through suites. Over 18,000 customers—including 98 of the Fortune 100—have signed on to Cisco ONE since it was introduced in 2015. Additionally, 39% of Cisco ONE customers have already adopted new capabilities included in the suites, with another 50% planning to use new capabilities over time.
Pivoting towards software
The introduction of the EA is part of Cisco’s broader effort to focus on software-based solutions.
“Cisco EA is aligned with our strategy as we transform to become an increasingly software-centric company, transforming the way we make our software available to our customers,” Hill said. “This puts us in a unique position as we leverage our leadership in both hardware and software, and in the capabilities only we can offer as both work together to deliver customer value.”
In order to bolster these software capabilities, the vendor has been buying up companies with specialties in artificial intelligence and SD-WAN.
At the same time, the the transition to software has driven Cisco to cut an additional 1,100 employees from its workforce. This latest round of cuts, which announced during its fiscal third quarter 2017 earnings (PDF), come on top of the 5,500 layoffs Cisco announced in August 2016.