Cisco Capital Exec Urging VARs Toward 'New Normal' Of Financing

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One of the most frustrating aspects of the current financing climate is that CFOs, despite seeing profits, are neither spending, nor hiring much. And as a result, the business economy has been sluggish, says Maryann Von Seggern, director of worldwide channels development for Cisco Capital, the networking titan's financing arm.

"In many segments of the market, we've seen very large profits," said Von Seggern. "But we haven't seen a huge ramp-up in spending. CFOs are holding on to a lot of their cash.

"Two years ago was a very frightening time for all CFOs, and they're experiencing high profit now because they looked inward and became a lot more efficient and drove their costs down," she added. "But they're not necessarily spending like you might have expected, or hiring the way you might have expected, based on profits."

That's part of what Von Seggern, who met with CRN during Cisco's Partner Velocity conference in Barcelona this week, agreed is the new normal. It's also something solution providers need to understand as they seek to employ financing to close deals of all sizes, she explained.

At a macro level, U.S. financial institutions are lending again, not at the $750 billion in new loans that happened during the high point of lending in 2007, but in the range of the $140 billion or so seen in the first quarter of 2010. The difference now, she noted, is that banks are charging a lot more in interest.

"Free money is gone. The banks will be charging for it," she said. "We've seen the lending pick up, which is good, but certainly not to the levels we saw in '05, '06 and '07, and not in the places that necessarily need it the most, which are the small businesses. The lending criteria's gotten tighter, the price has gone up. But they are lending again."

That kind of climate has prompted many solution providers to better understand the role of financing in winning deals, and also, according to Von Seggern, what has spurred Cisco to offer greater and more comprehensive programs through Cisco Capital.

Next week, Cisco will debut a Cisco Capital Marketing Kit, Von Seggern said, which much like the technology architecture and marketing kits Cisco provides to channel partners, will contain resources to help VARs close deals using financing. Within the kit will be customer decks, value links, training materials, copy blocks and information specific to sales theaters and international sales.

Whereas before Cisco Capital information was relegated to the architecture or marketing kits themselves, this is the first time it will see standalone treatment, Von Seggern explained. It's a 50-page kit solely on financing.

"This is how to get the order in these new times," she said. "This is how to change your conversation."

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Cisco and BMC in fluffy IT chase

/03/16/cisco_california_launch/page2.html">UCS server launch back in March 2009, uses BMC's BladeLogic tool to provision, patch, and manage the operating systems and software stacks running inside of virtual machines atop hypervisors in the blade and rack servers. VMware's ESX Server hypervisor and Cisco's Nexus 1000V virtual switch are the preferred virtualization layers for servers and networking inside the UCS machines, but Hyper-V, KVM, and Xen hypervisors are also supported on the machines.

Being heavily involved with selling networking gear to services providers, Cisco is obviously very keen on selling them virtualized server infrastructure and converged networks with all-singing, all-dancing multi-tenancy so service providers can transform from more static hosting to a more fully virtualized cloudy infrastructure. And thus, Cisco today announced an even deeper partnership with BMC, which will see Cisco use even more BMC wares.

The two companies are cooking up something called the Integrated Cloud Delivery Platform, which is a funky way of saying that Cisco's network management wares for CRS-1 carrier-grade routers, Nexus 7000 end-of-row switches, and the UCS converged servers and top-of-rack switches that are controlled by UCS Manager, have been integrated to work with BMC's Cloud Lifecycle Management tool.

The CLM tools I an amalgam of several different business service management tools that BMC rolled up specifically for cloudy infrastructure and launched in May 2010. It pairs a self-service portal for multi-tenant clouds with a policy driven service catalog that can personalize virtual infrastructure offerings for each customer of the service provider on the outside of the firewall or for the system admins managing server slices on the inside of the firewall.

The CLM tools already include some elements of the BladeLogic tools for provisioning compute, network, and storage capacity as well as and application software in a cloud, but BMC was missing tools for provisioning databases, which is why it snapped up GridApp Systems late last week to add this capability to the CLM suite. BMC seems to be keeping one step ahead of acquiring things that Cisco or VMware might want to snap up to build up their cloudy wares. In addition to supporting BMC's Cloud Lifecycle Management tools in conjunction with its routers, switches, and servers, Cisco is also going to resell a collection of tools lumped under the Service Assurance and Compliance umbrella as an option on the UCS machinery.

Financial details of the collaborative integration and sales agreement between Cisco and BMC were not disclosed. The two companies are working to align their respective product roadmaps for infrastructure and service management so they mesh. They will also do joint marketing and sales as well as joint testing and certification to ensure everything works together.

The resulting Integrated Cloud Delivery Platform will be available through the "Acadia" partnership between Cisco, EMC, and VMware, which peddles integrated stacks called Vblocks that are sold in a preconfigured fashion like Oracle's Exadata and Exalogic clusters for data warehousing and OLTP or Web application serving, respectively, IBM's CloudBurst Power or x64 clusters, or Hewlett-Packard's BladeSystem Matrix cloud-in-a-box offering.

You might be wondering why Cisco doesn't just buy BMC and get it over with. Well, Cisco doesn't want to be in the systems and service management business, and it certainly doesn't care about mainframe or Unix boxes. It wants to crush them. So Cisco would have to think it could make a lot of money peddling its own servers using BMC tools before it would spend untold billions for BMC, which has a market capitalization of $8.16bn as El Reg does to press. If Cisco paid the price that BMC might command, with its $1.9bn in revenues and very tidy profits of $504m in its fiscal year ended in March 2010, the cost might be on the order $12bn to $15bn.

That would put a big dent in that $$38.9bn cash hoard that CEO John Chambers is sitting on and the company's shareholders would probably freak out. Especially after the shock that Cisco gave Wall Street a month ago when the networking giant missed revenue targets in its first quarter of fiscal 2011 by $500m and said growth was only going to be in the 3 to 5 per cent range for the second quarter.

If these four Acadia players - and why isn't BMC now a formal member of the alliance to sell Vblocks, anyway? - wanted to scare the living daylights out of everyone in the IT industry, they would not try to buy each other or partner, but go all the way and merge. The odds of that happening are infinitesimal, of course. But that sure would shake things up a bit in IT Land. ®

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