ick Earle, senior vice president of Worldwide Services Field Operations for Cisco Systems, delivered a dynamic and thought-provoking keynote address at TSW Service Transformations conference held this past October, titled “The Future of Services Sales.” Read on for highlights from his discussion, where he presented Cisco’s real-world journey into the future of services sales.
The Future of Services Sales―Cisco’s Journey
Earle opened up his keynote with a bold concept: When discussing the future of services sales, the reference to “the future” indicates that there is a problem with the way things currently are. And there is a problem―something is changing―which was a focal point of Earle’s presentation.
Cisco experienced tremendous growth from 2001 through 2011. Ten years of growth, in part due to the addition of consultancy-based advanced services to the Cisco portfolio (which increased gross margins by an astounding four percent). From a customer satisfaction standpoint, Cisco was on a roll and doing very well, indicated by their consistent achievement of notable industry-recognized awards and honors during that period.
So, when did things begin changing when it came to services sales?
We’re all very familiar with how business models have been shifting over the last few years―changes brought about by mobile, social, cloud, and information. The differing ways that we give and receive information is revolutionizing, which in turn is causing today’s CIOs to reimagine the way they invest in, run, and find business value through IT. Yet Earle says, “Now I disagree with that [notion], because the CIOs I talk to are completely panicked by all of this,” he argues. “They’re not ‘reimagining,’ they’re not looking at these changes as great opportunities. They are seriously spooked. IT folks are slowly becoming ‘the dinosaurs who are being pushed to the back of the cage,’ the existing IT infrastructure is now being called ‘legacy,’ and the users are taking control―and it’s never going to come back.” Users are thinking that they don’t need IT anymore.
To emphasize his point, Earle talked about Consumption Economics, quoting direct passages from the book:
If you’re a tech company, the most dramatic effect of megatrends like cloud computing, managed services, and the rise of consumer technology won’t be felt in your company’s product line.The true disruption will be to your business model.
Earle touched on many of the ideas that B4B co-author J.B. Wood discussed in his opening TSW keynote, noting the customer transition taking place―instead of being focused on the product, they are now focused on outcomes. And this transition boils down to one critical concept for Earle: “Everything changes, and I mean…everything,” he explains. “The ‘old new’ is the most fundamental change that has happened in the IT industry since the beginning.” Engineering, pricing and sales models, compensation structures, risk ownership, in-house IT, services―it’s all changing. And so all of this leads Earle to one conclusion: “The future of services is highly scalable software-enabled services. So it’s not people―it’s software-enabled services with people.”
So, where do we go from here, as the demand for new consumption models continues to rise? The creation of new operating models is an obvious answer. But there’s more that needs to be done, says Earle: “Success is defined by the ability of a company to manage its current business while simultaneously preparing for changing conditions.”
The focal point of Earle’s discussion was what he termed “Cisco’s exposé”―what the company is doing in its efforts to move to B4B, and how it’s going for them―both successes and challenges. It’s what Earle called “Cisco’s services journey and the role of extreme automation,” which he described as four-phased approach, shown in Figure 1.
Cisco’s Services-Enabled Journey to the Internet of Everything (IoE)
Walking the audience through the phases of Cisco’s journey, Earle began with the Solid Foundation, where most of the business is today―it’s all about extracting a yield from the solid base (with a focus on network analytics). Then the next phase deals with moving to Disruptive Capability, or “replacing” the IT department with processes (with a focus on process analytics). The next phase involves establishing Business Credibility, matching the business architecture to the technical architecture (with a focus on business analytics). And the final phase is the Amazing Opportunity, which answers the question: What happens when the number of “things” connected to the network becomes 50 times bigger? In other words, new monetization models for the “Internet of Everything” (with a focus on IoE analytics)
To see how Cisco has been forging ahead on this exciting journey to B4B, go here to watch Earle's keynote video in its entirety. It’s a complex, yet poignant journey that Cisco is on, as Earle stated in closing: “It’s a big, complex thing, but very exciting, when you really understand what it can do for a large business―and frankly [what] I think it can do for businesses [of any size].”
TSIA: With You on the Journey to B4B
TSIA is here to help you navigate B4B. Go here to watch Earle’s keynote in its entirety, and make sure to also view keynotes from B4B coauthors J.B. Wood and Thomas Lah. Visit TSIA’s research listings to read specialized reports on how the B4B model will impact the key discipline areas of technology services, and visit TSIA’s B4B Essential Resources page―your connection to “all things B4B.” We are here to help you evolve into the new B4B era―and it’s going to be going to be a great ride. Stay tuned for updates on all things B4B.