Cisco Simplifies Licensing Model

Aiming to make it a lot simpler for more organizations to consume a portfolio of products that have considerably expanded over the past several years, Cisco today announced it is expanding the number of products covered under its enterprise licensing agreements in the expectation that such contracts will have more broad appeal.

Mark Hill, vice president of digitization for Cisco, says Cisco is now making available three- and five-year enterprise licensing agreements that span most of its product portfolio, including Cisco security and collaboration offerings. Previously, Cisco enterprise licensing agreements only applied to products included in a Cisco One program spanning Cisco network and data center infrastructure products.

In addition, Cisco is now making it simpler to transfer software licenses during a product upgrade or when moving a product from an on-premises environment into a cloud deployment.

Finally, Cisco is giving customers considerably more room for error. Instead of being billed for going over any portion of the enterprise licensing agreement, Cisco provides customers with a 20 percent allowance for going over the terms of licensing contract. In addition, rather than forcing customers to pay for going over that 20 percent range, Cisco will adjust the contract terms to reflect that usage when it’s renewed, says Hill.

Hill says Cisco has about 18,000 customers participating in a Cisco One program that enables IT organizations to transfer software licenses across products. As part of this effort, Hill says, Cisco is trying to increase the amount of recurring revenue it can count on in the years ahead.

“Recurring revenue now is about 31 percent of total Cisco revenues,” says Hill.

Of course, a big part of that Cisco strategy involves making it much simpler for existing customers to acquire new Cisco products and services versus making the effort to acquire products and services from competitors. Because Cisco customers can transfer licenses, the cost of switching for many Cisco customers just got that much higher. The issue now is to what degree those competitors will similarly simplify their licensing models as well.