Cisco is following its peers like Dell Technologies and Hewlett Packard Enterprise into the brave new world of selling everything – even data center hardware – as a service.
It’s made several acquisitions that are expected to help it stand out in this small crowd of old-guard enterprise IT giants, the most consequential of which in this context being its $1 billion takeover of the network monitoring company ThousandEyes last year.
Cisco’s new subscription-based model, announced at the end of March, will give customers the option to use its hardware, software, and security products on a “pay-as-you-go” and “pay-as-you-grow” basis.
Called “Cisco Plus,” the strategy is designed to give customers a cloud-like experience with Cisco’s products in their own data centers and offices. The vendor and its partners will offer optional equipment installation and management services.
“Some customers want flexible consumption, but they want to manage it like they are today,” Daniel McGinniss, senior director of product management for Cisco’s cloud and compute solutions, told DCK. “The other end of the spectrum is, ‘I want it as-a-service. I don’t want to manage any of the infrastructure underneath.’ We recognize both. This is what makes us unique in this space. We recognize that there is a varying degree of what customers need and want.”
There are two general components of Cisco Plus: data center networking, compute, and storage equipment, expected to become available as a service mid-summer; and new Network-as-a-Service (NaaS) solutions, slated for availability closer to the end of the year.
The first NaaS product will be a new Secure Access Service Edge (SASE) offering, which will combine Cisco SD-WAN technology and security applications with ThousandEyes network monitoring software.
Cisco said it will deliver orders within 14 days. Customers never actually own the equipment and are essentially renting it, McGinniss said. Contracts are typically three to five years, so customers can refresh their gear when they renew their contracts.
Everything-as-a-Service on the Rise in the Data Center
The as-a-service model gives enterprises two general benefits: it is elastic, meaning capacity can scale as needed to meet fluctuating demand; and it changes the IT equipment ownership, responsibility, and cost model, Omdia chief analyst Roy Illsley told DCK.
“The concept of everything as-a-service is gaining traction, and due to COVID-19, the appeal is even more attractive to business, as they look to match IT capability to business demand and pay for what they need and not what somebody thought they would need at some point in the future,” Illsley said.
HPE chief executive Antonio Neri said in 2019 that every product the company sold would be available as a service, under the HPE GreenLake brand, within three years. Dell launched its version of the model the same year and in 2020 introduced the Project Apex, promising a single interface for provisioning public cloud resources and its own on-prem products as a hybrid cloud.
VMware, a Dell subsidiary that’s in the process of being spun off, last month announced Cloud Universal, a subscription-based, pay-as-you-go model for consuming everything it has to offer in the cloud infrastructure software department.
Will Townsend, a senior analyst of carriers and enterprise networking at Moor Insights & Strategy, said growth in HPE’s GreenLake business was a strong indicator that the as-a-service trend was gaining momentum. “Look at HPE’s success with GreenLake and the last two quarterly earnings,” he said in an interview with DCK. “Customer adoption for HPE platforms has been quite strong, and that’s a great barometer for Cisco and Dell’s offerings.”
Large enterprises have expressed great interest in Cisco’s unified subscriptions, but the company believes the sweet spot for this model will be mid-market businesses seeking simplicity, Raakhee Mistry, senior director of marketing for Cisco’s Enterprise Networking and Cloud, told DCK.
Cisco Eying the Emerging Network-as-a-Service Market
As a subsection of the everything-as-a-service market, the NaaS space is still nascent, but its potential is huge, analysts say.
HPE began offering its Aruba networking equipment as a GreenLake service last year, Brandon Butler, IDC’s senior research analyst of enterprise networks, told us.
Financially, an integrated networking offering that combines hardware, software, and services in one subscription price could be compelling to customers, he said. But a bigger benefit is the solution’s agility and flexibility, he said, and Cisco’s decision to make outsourced network management optional may play an important role.
“Customers right now are just starting to learn about network-as-a-service,” Butler said. “They will be looking at these offers and evaluating them. We are starting to see big networking vendors talk about this. It’s a model that can work for a lot of customers.”
As the big incumbent in the networking market, Cisco is well-positioned to capitalize on NaaS, Moor’s Townsend noted.
Cisco Plus Hybrid Cloud
Cisco plans to make most of its product portfolio available as a service. The first offering is Cisco Plus Hybrid Cloud, which includes Cisco UCS and HyperFlex servers, Nexus data center and MDS SAN switches, as well as Intersight and Nexus Dashboard, its hybrid cloud management platform data center network management software, respectively, Cisco’s McGinniss said.
Customers will no longer need to pay for buffer capacity upfront. For example, if a customer needs 80 compute nodes for a Virtual Desktop Infrastructure (VDI) installation, Cisco will equip them with 100 nodes and won’t charge for the extra 20 until they need the extra capacity, McGinniss said.
“As your business grows, you pay us on demand,” he said.
The Cisco SASE NaaS
Cisco’s SASE NaaS offering will allow enterprises to securely connect remote and branch users to the internet and the public cloud, Mistry said.
The SASE offering will combine Cisco Meraki or Viptela SD-WAN technology with its cloud-based security services, including Cisco Umbrella (data-loss prevention, malware detection, and safe web browsing) and Duo multi-authentication.
The SASE service will also include cloud on-ramp capabilities and rich observability features through ThousandEyes, Mistry said.
“Say, remote users can’t access something, or performance is terrible,” she said. “The ThousandEyes technology will allow IT managers to go right in to see what is happening and quickly troubleshoot.”
Cisco’s decision to make SASE its first NaaS product is smart, because enterprises are interested in deploying SD-WAN and they want security integrated with it, IDC’s Butler said.
“SD-WAN is the most important technology that enterprises are considering today,” he said. “It’s a priority area for enterprises because it enables and optimizes connectivity to the cloud, for example.”
Cisco’s ThousandEyes acquisition and its effort to integrate the technology with its SD-WAN portfolio gives it an advantage over competitors in the NaaS market, Townsend said.
ThousandEyes provides network visibility and insights, allowing enterprises to proactively resolve issues, which in turn improves network reliability and performance, he said.
“You can argue that HPE has been at IT consumption longer, but from my perspective, Cisco wanted to get it right. It takes time to integrate acquisitions and waiting to integrate it into the overall solution puts them in a very strong position from a NaaS perspective,” Townsend said. “It makes their NaaS solution more attractive to customers.”
Cisco Plus Expected Availability
Cisco Plus Hybrid Cloud is in pilots now and will be available mid-summer. While the plan is to eventually roll it out globally, it will first launch in six countries first: Australia, Canada, Germany, the Netherlands, UK, and the US, Mistry said.
The Cisco SASE product be out in May through a traditional purchase model, but customers will be able to transition to the as-a-service offering at the end of the year, she said.