How Cisco's new ONE Software pricing model will affect customers
For Cisco customers, the process of buying network infrastructure has always been to buy a device and pay a bundled price for hardware and software. This means in year zero (at purchase time), customers need to lay out a huge chunk of money to pay for the products. Then the customer would use the products for anywhere from two to seven years, depending on what it is, and then go through the same process at refresh time.
This traditional pricing model is something we have all become accustomed to, but it does some have some challenges, including the following:
- Complexity of managing and ordering licenses. Many companies have to buy, manage, and upgrade hundreds or even thousands of individual software licenses. This is one reason why ZK Research data shows that large organizations often run over 30 different software images across the network (disclosure: I am an employee of ZK Research). Also, the broad range of software features are typically sold a la carte, meaning customers must determine the right set of features for every device in the network. This leads to inconsistent features, which can result in problems down the road when trying to set security policies or optimize applications.
- Lack of software agility. With traditional pricing, each device has its own software license, meaning the software is not portable at all. If the hardware is upgraded, new software needs to be purchased. Many customers ZK Research have interviewed say that they often delay upgrades because of the cost but are concerned with missing out on new business opportunities.
- Lumpy spending patterns. The periodic refresh of network infrastructure leads to spikes in capital expenditure. The lumpy spending patterns make budgeting difficult and the network spend can be highly inconsistent from year to year.
Cisco recently introduced a new way to purchase network infrastructure with a model called "Cisco ONE Software." The pricing model is a flexible way for customers to buy infrastructure. Cisco ONE Software decouples the acquisition of the software from the underlying hardware platform, which has the three distinct advantages over traditional purchasing models:
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