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Transition Now to a Recurring Revenue Business

May 17, 2017

One of the prevailing themes that came out of this year’s Cisco Partner Summit was Cisco’s growing focus on software-based subscription services and recurring revenue. Kelly Kramer, EVP and CFO, Cisco, articulated this message in her keynote presentation, pointing out key acquisitions over the past year, such as network security company OpenDNS and IoT platform provider Jasper Technologies — both SaaS businesses.

“All of [these acquisitions are] helping us accelerate our transformation in these strategic areas that we need to position ourselves,” said Kramer.

She also pointed out how partners who can make this same transition can realize multiple benefits. Kramer used the example of an IT solution provider that does $10 million a quarter in revenue. “If you’re 90 percent recurring revenue, you already have $9 million in the bag each quarter. Your sales force only has to worry about getting $1 million to get flat, and anything on top of that is growth. If you have 0 percent recurring revenue, on the other hand, your sales team has to refill the entire sales bucket every quarter.”

Investors prefer to work with solution providers that have recurring-revenue businesses because of their higher growth potential, which is another bonus. Currently Cisco is at 28 percent recurring revenue, Kramer shared, which is more than three percent higher than a few years ago when the company started focusing on the transition. 

One tool Cisco partners can use to overcome customer budget objections and increase recurring revenue is Cisco Capital Financing, a Cisco subsidiary that enables partners to offer more flexible networking infrastructure software offers. Unlike a bank, Cisco Capital Financing is closely aligned with the Cisco technology teams and has a deeper understanding of the business IT sales pipeline. Consequently, it has low-interest and other incentives customized for the channel, such as:

  • Cisco Refresh, a refurbished-product incentive program that allows partners to sell certified used Cisco gear backed by the same warranty as new equipment.
  • Open Pay, a more responsive way to acquire Cisco Unified Computing System (UCS) solutions and select converged-infrastructure storage solutions to meet both anticipated and unanticipated demand spikes.
  • Easy Pay, a 36-month, 0-percent financing program designed to help partners transition to the digital network with Cisco Digital Network Architecture.
  • Big Data Low Rate Financing, a program offering 1.9 percent financing for data center projects.

Capitalizing on all the programs and incentives Cisco offers can be daunting, but Ingram Micro is here to help. We offer a variety of training topics which includes our “Essentials” series designed to provide a foundation of knowledge on Cisco market trends, processes, and opportunities. Participants will also learn how Ingram Micro can be their personal Cisco consultant, and they’ll be eligible for some complimentary Cisco certification trainings.