Assessing the needs of MSPs, integrators and other organisations and the challenges they face when sourcing quality third-party professional project and technical services for Cisco technologies.
The United Kingdom voted to leave the European Union on June 23rd and we’ve heard all about the impact on International stock markets, multi-conglomerates, worldwide economies and not very much about the little guys – small businesses.
Much doom and gloom has surrounded the Brexit vote, primarily due to the multitude of legal and financial uncertainties. There is no doubt that the UK leaving the EU carries risks, but counteracting those risks are an equal amount of opportunities.
This blog will explore the influence of the Brexit vote on an SME in the IT sector offering Cisco Professional Services. We will objectively explore any negative and positive impact the Brexit vote has had on our company, our finances and business operations.
As a Cisco Professional Services organisation, 4CornerNetworks specialise in the provision of Cisco Engineers making our business model dependent on market prices in the recruitment of Cisco Engineers. We operate Internationally, often employing Engineers from the EU and USA where the performance of the Pound Sterling causes both negative and positive currency fluctuations.
Post Brexit vote in the UK caused major currency fluctuations on the Pound Sterling against the US Dollar and Euro. Let’s look at the currency fluctuations of the Pound Sterling vs the US Dollar and the Euro from June 23rd, the day of the Brexit vote.
£ Pound Sterling to the $ US Dollar
$1.48 to £1 23/06/2016
$1.33 to £1 03/08/2016
$1.29 to £1 08/07/2016 = 28.12% fluctuation from 23/06/2016
The pound reached its lowest point on 8th July trading at $1.29 to £1 and its highest point of $1.48 to £1 on the 23rd June resulting in a 28.12% fluctuation. Today the price is $1.33 to £1 where the fluctuation from 23rd June is 22.2%.
£ Pound Sterling to the € Euro
€1.30 to £1 23/06/2016
€1.19 to £1 03/08/2016
€1.16 to £1 06/07/2016 = 18.2% fluctuation from 23/06/2016
On June 23rd the Pound fluctuated by 14.3% against the Euro against today’s price of €1.19, and reached a low of €1.16 to £1 on July 6th resulting in a 18.2% fluctuation.
Price of Doing Business
The average salary of a CCNA in USA is $72,039. At the current exchange rate of $1.33 to £1 is £54,165. On 23rd June the exchange rate was $1.48 to £1 meaning the same CCNA Engineer would cost £48,675 which is a cost of £5,490 for the salary of a single Engineer. (source: http://www.payscale.com/research/US/Certification=Cisco_Certified_Network_Associate_(CCNA)/Salary )
A CCNA in Europe (Take Germany as an example) earns an average salary of €45,562. At the current rate of exchange €1.19 to £1 is £38,287. On 23rd June the exchange rate was €1.30 to £1 meaning the same CCNA Engineer would cost £35,047 which is a cost of £3,240 for the salary of a single Engineer (source: http://www.payscale.com/research/DE/Certification=Cisco_Certified_Network_Associate_(CCNA)/Salary )
However, fortunes are reversed when we receive payment from organisations in Europe or USA. If an invoice for $10,000 was received on 23rd June, this would have been worth £6,757 but the same $10,000 invoice today would be worth £7,519, a surplus of £762.
A €10,000 invoice on 23rd June would have been worth £7,692 but the same €10,000 invoice today would be worth £8,403, a surplus of £711.
The currency fluctuations can be equally negative as they are positive which results in the solidification of uncertainty and therefore a cautious approach must be taken when dealing with international clients, currencies and projects. Operating in volatile market conditions is a business challenge we must accept face on, but remain equally cautious.
Any International growth ambitions small businesses have must now be placed on hold, but for how long? Planning to set up new offices, employ new staff and trade internationally with multiple currencies fluctuating by up to 30% in a matter of weeks presents too many unknowns and a period of stability must be reached before the UK’s small businesses can shake off the shackles and grow. It all depends if you see the glass Half Full or Half Empty?
*Please note the rate of exchange is at 03/08/2016 and will vary
Back when computers ran off cassette tapes and plugged into your spare TV, it was generally the least cool kids in school who spent time in the IT suite – or as it was known in those simpler times, the computer room. The terms “geek” and “nerd” were coined to describe these unloved adolescents, and were used as playground insults by schoolboys of all ages.
How times have changed: Thanks to the pioneering efforts of some of those early IT engineers, computers became slick and fun, and soon they were essential to business too. More and more clever people saw where things were going and learned about IT; then they found more applications for it and built highly successful businesses using the new technology. Before we knew it, the terms geek and nerd were no longer pejorative, but used in a kind of awe of those who had mastered this world-changing technology. Nevertheless, most of us still prefer the term engineer.
IT engineering has been a desirable career for some time now, and yet there is still a shortage in many specialities. In terms of Cisco Engineers, the shortage is particularly acute, while at the same time there is also a pressing demand from companies who need their networks to work smoothly and cope with an ever larger and more business-critical level of usage. Given the fact that these are well paid roles, economic theory suggests that more people will chose IT engineering as a career and that the gap between demand and supply will close. However, that theory would under-estimate the quality of people needed to set up and maintain the ever more sophisticated networks in use.
To get an idea of the kind of people involved in Cisco Engineering, just take a look at the astonishing array of companies that have been started by former Cisco employees and engineers – this link gives just a few examples: http://www.networkworld.com/article/2988547/cisco-subnet/18-companies-launched-by-former-cisco-people.html
The fact that these engineers are of such a calibre and ambition that many seek to set up their own ventures further explains the shortage of skilled workers available to the average business, which doesn’t have the resources to keep specialists in all Cisco disciplines – if any – on its staff, let alone enough to cover all its global operations. In fact, Cisco itself has had problems retaining its best people, and adopted an extraordinary policy of encouraging ambitious employees to develop “spin-in” businesses that it would then buy from them, often for millions of dollars. This policy had the added benefit of keeping entrepreneurial innovation at the heart of the firm even after it had grown into a global giant, and of course made the job of building, maintaining and updating its systems even more demanding as they incorporated the innovative and disruptive technologies developed through the spin-in process.
Many were surprised to hear that Cisco is apparently ditching its spin-in programme last year, although reading between the lines it appears that the policy will essentially be retained in another form: http://www.businessinsider.com/ciscos-new-ceo-ditches-spins-ins-2015-11 This is just as well, as the flow of new IT and network applications which comes through this system has helped drive growth and profitability across many industries around the world. For ambitious businesses wanting to remain part of that growth story and keen to retain a leading position in their sector, access to Cisco Engineers is essential – and they must not only be suitably qualified, but thoroughly up to the job of working with cutting edge companies in many industries and helping them to innovate where necessary as well. That is why 4CornerNetworks exists: to supply those professional services.
We specialise solely in Cisco Professional Services, because although the hardware for the systems is essential, it is not in such short supply. We believe that access to great engineers is important for businesses to thrive and grow, and we understand that different firms have different needs in terms of the amount of help they need. Unlike most of our competitors, therefore, we don’t set out to win customers by selling managed services packages that charge them for things they don’t need. At 4CornerNetworks, we just provide access to great engineers, when and where you need them. That way, all our clients have access to the full range of skills available – as if they have a full set of Cisco Engineers on their staff, all over the world.
In the IT channel, Strategic Partnerships are commonplace, most notably with the recent collaboration between the two technology giants, Cisco and Apple. The Apple & Cisco partnership is a perfect marriage, Apple gain access to the Enterprise market, whilst Cisco benefit from iOS and facilitate Apple’s entry into the Enterprise arena. But, what exactly is a Strategic Partnership?
Price Waterhouse Cooper define a Strategic Partnership as:
“A strategic partnership involves some shape of formal agreement between two or more parties that have agreed to share finance, skills, information and/or other resources in the pursuit of common goals.”
Before a Strategic Partnership has been formalised, firstly ensure that all parties share the same expectations of the outcome of such partnerships. Start by clearly defining shared business objectives, you both might want to achieve A or B, but can you achieve them together? Strategic Partnerships are generally triggered by the existence of shared objectives. For example a Managed Services Provider or Cisco Channel Partner may need Cisco Technical Resources worldwide due to a lack of in-house specialist Cisco Network Engineers. Therefore there exists an implied shared objective, prior to a formalised agreement being signed.
As highlighted in the PwC definition, a successful Strategic Partnership can only be achieved by sharing resources, finance, information and skills. Each company will have a unique strength which the other lacks, therefore combining capabilities allows both partners to access new markets, increase product/service offerings, increase revenues and embark on a mutually beneficial knowledge sharing relationship. Strategic Partnerships are a viable alternative to traditional growth strategies including organic growth, angel investors and borrowing.
Culture & Values
A 2013 CIPD survey showed that 60-70% of Strategic Partnerships fail, often triggered by a mismatch in culture and company values. The lesson learned from this statistic is to choose your partners based on common shared values and company culture. If your company has an aggressive sales culture who earn their competitive advantage via low prices, then your ideal partner isn’t a company who values quality of service over price.
Achieving a cultural fit where both parties share values, should not be underestimated. A written agreement will specify relevant KPI’s including volume of sales, quality of service and conflict management. However, in the blink of an eye, the days and months of negotiations can be destroyed with a cultural faux pas. Obvious cultural differences occur when partnering with an international partner in body language, linguistics and beliefs. However, more subtle factors like equality, gender balance and employee & stakeholder engagement can contribute to a failed or successful Strategic Partnership.
Ease of Integration
After agreeing on shared objectives, resources and culture, integration is the next step before the partnership is good to go. The theory of how companies form a partnership is the easy part, now it’s time to fit the final pieces together.
Integration is the point where 2 (or more) companies in a Strategic Partnership become one entity. What type of information is shared between parties? What processes should be implemented to directly deal with joint customers? What systems are implemented to process enquiries, sales and communications?
When a Cisco Channel Partner or ICT Provider, needs to book a Cisco Network Engineer from a Cisco Professional Services partner onto a client site, there needs to be a unified and coherent system used by both parties. A scope of work will be agreed along with timescales, prices and quality standards. Mapping systems would be in place so all partners can identify where Network Engineers are working and how and when to book the next available one: all contributing to a seamless synergy between Strategic Partners.
Have you experienced a Strategic Partnership where only 1 party truly benefits? Have you been involved in a Partnership where you value quality of service but your partner values low price more? Tell us your horror and success stories 🙂
Cisco Systems Inc. is an awesome company to be affiliated with. Market leaders in Networking Equipment, thought leaders in the world of IT, innovators and disruptors – yet their partnership model may deter companies who’d otherwise be a perfect partnership match. If a company wishes to specialise in delivering Cisco Professional Services rather than Managed Services, Technology Solutions or the Networking Infrastructure – Then becoming a Cisco Partner may prove to be more restrictive than progressive.
Cisco set strict criteria to prevent poor quality vendors being affiliated with the Cisco Brand, a commendable approach to ensure Brand consistency & quality of service. However in an era dominated by Technology, might it be feasible to consider that people and not technology may be at the heart of some business models? If a business places a greater emphasis on people (Professional Services) over technology (Managed Service Provider/ICT), then the Cisco partnership model just doesn’t fit.
For example if a company wishes to deliver Cisco Engineering resources in a number of regions, then that company MUST have at least 1 employee with a Cisco ID in each region they operate – If you want to offer Professional Services Internationally, be prepared to pay for employees you don’t need, but Cisco say you do. Some Professional Services companies operate in a variety of international regions, and do so successfully without the need to have an employee with a Cisco ID in each region. In fact employing someone with a Cisco ID in all the regions they operate may help to satisfy the Cisco partnership criteria, but would result in a tremendous increase in operating costs and may even turn a profitable company into a loss-making one. Cisco Engineers can be deployed from a remote location using a retainer or contractor model, so why the need to have a Cisco employee in each region?
Partners also need to have at least 1 specialisation linked to a Cisco product/solution – What if your specialisation isn’t related to a specific Cisco product or suite of products? Often Engineers are faced with a network comprising of HP Server Blades, Cisco Routers, Switches & Firewalls and F5 Load Balancers. Cisco’s rhetoric with partners is focused on providing solutions across the entire network infrastructure, but there’s often a need to have a multi-vendor approach to the network lifecycle. Offering solutions in Unified Communications & Collaboration, Wireless or Security is part of the business model for most IT Professional Services organisations, but if the solution offered is Certified Cisco Engineers, that’s not recognised – only hardware/software is a recognised solution, not people.
Hannah Breeze in a recent CRM article wrote that Cisco admitted their current partnership model & annual audits “Caused Partners a lot of hassle” and that the overwhelming consensus from existing Cisco partners asked Cisco to “Ease Up”. Enduring annual audits and submitting 10 customer satisfaction survey results twice annually soon starts to take a toll on your employees, time and capital.
You Don’t Need Tin To Win
Cisco Systems are market leaders in the provision of networking hardware, but not everyone wants or benefits from selling it. For a company specialising in Professional Services the lure of a 1-2% profit margin when selling hardware vs the profit margins available on deploying Engineers, making the decision to “bin the tin” is a no-brainer. Of course Cisco hardware is essential for the provision of Cisco Engineers, clients continuously demand the best networking hardware, and Cisco duly obliges. However for a specialist Professional Services Company, selling hardware is simply an exercise in generating revenue rather than profits – vanity over sanity.
Power to the People
Cisco Systems Inc. is renowned for their market leading position in the provision of networking equipment, their innovations with smart cities and the Internet of Everything – but the key strength of Cisco is their people. No other vendor offers qualifications held in such high-regard across international borders, everyone knows and values Engineers with a CCNA, CCNP or CCIE certification. Cisco Certified Engineers have an excellent understanding of multiple vendors, their equipment and the network infrastructure – all a result of the quality of training and examination needed to earn a Cisco Certification.
Regardless if you offer Professional Services, Managed Services or Networking Solutions, the essential ingredient is Cisco Engineers – the people. As an organisation Cisco Systems create their own industry – distributors selling hardware, colleges selling certifications and partners selling Finance & Services. Diversification and growth is achieved through careful acquisitions and Cisco is a darling of the NYSE – their plans for the future are solid. However a plan is useless without successful implementation and this is where Cisco excels. Achieving the vision of the future with the Internet of Everything, hardware needs to be installed and maintained, Consultants need to design networks and the Cisco wheels need to keep churning – There is no future without Cisco Engineers.
Sitting on the Fence
For organisations choosing to specialise in Professional Services, sitting on the fence may be the best strategy to adopt. Becoming a Cisco Partner may result in dangerous levels of exposure, too many employees, too much capital expenditure or being forced to adopt a precarious infrastructure that lacks the flexibility to respond to market demands. Therefore by electing to be a Cisco-centric company, but not becoming a partner ensures continued success. If close affiliates to Cisco can create and prove a profitable business model, with exponential growth which is outside the realms of their partnership criteria, then reciprocation is needed to establish a functioning partnership.
The purpose of this blog article is to open up debate surrounding the Cisco partnership model. Do you think Professional Services as a business model can work without being a Cisco partner? If you’re a Cisco partner what would you recommend? Feel free to comment on this article – musings, rants and opinions are all welcome.
White Labelled Services is when a product or service from a manufacturer/producer is repackaged and sold by another company who then applies their own brand to it, and re-sells as their own service. The end client assumes the seller is selling its own product. The procurement of White Labelled Cisco Professional Services is predominantly from VAR’s, Managed Service Providers, ICT Companies and Cisco Partners who often require additional Cisco Engineering support to deliver their core services.
To be a successful provider of White Labelled Services, the key is to appear to not exist at all – be the invisible company.
As a company purchasing White Labelled Cisco Professional Services, it is vital to choose your partnering company wisely. The first rule is to ensure there is no conflict of interest. The White Labelled Service Provider should not have business relations with your end clients or any of their close competitors; it must be a non-competitive relationship.
A partnership isn’t a partnership unless there is a genuine mutually beneficial relationship between both parties. It is essential that the white labelled provider develops an understanding of your strategy and culture. What do you demand from your existing employees? Do you have a code of conduct you issue to existing staff? What core values do you empower your staff with? – By integrating company strategies, cultures and demands the quality of service received by the end client will always be impeccable.
Capital, skills, knowledge and certifications are all tangible resources shared between the collaborating parties which result in a successful partnership. The white labelled provider bears the costs and time of employing the Cisco Engineers. Certifications, passports, CV’s and references all need to be verified – quality of staff = quality of service.
Branded By You Delivered By Us
If you’re the company purchasing outsourced White Labelled Cisco Professional Services, it’s important that your end client thinks “what outsourcing?” The client shouldn’t be fooled, but if they notice 2 different companies, if they notice a difference in the quality of staff and service, then you’re not delivering truly exceptional white labelled services.
How else would your company gain access to ALL the Cisco certifications available? You’ll need Cisco certified Engineers in ALL of your international & regional offices, those Engineers will need to be experts in R&S, Wireless, Security, Collaboration, Service Provider and Data Centre. If you can’t afford to employ Cisco Engineers in all your offices, then at some point you’ll be sending them on an all expenses trip around the country/world – shame on you for your impact on the environment!
As the procurer of white labelled services it should be your logo, company name and quality standards that must be adhered to at all times, in essence it needs to be Branded By You, Delivered By Us.
As a White Labelled Cisco Professional Services provider you sacrifice the glory of gaining a prestigious client, you sacrifice the praise of delivering an exceptionally high quality of service. You truly are the invisible company, you don’t exist – and if you do your job right, being invisible is all you need to aspire to be.
With a market cap of $119 billion, 2014 sales of $48 billion and ranked number 12 in the world’s most valuable Brands, Cisco are the industry leaders in IT Networking equipment. The likelihood is that readers of this article will be working with or have worked with Cisco Network Systems. Therefore if your company is working with a Cisco Network System then you’ve faced the dilemma of choosing between outsourcing the need for Cisco Support or employing in-house Engineers.
As an SME, Enterprise or a non-ICT related company with a Cisco IT/Phone system, then you need to think about the level of Cisco Engineers you need to employ for your business. Whereas Managed Service Providers, Professional Services & Cisco Channel Partners need to think about the level of Cisco Engineers your clients require. Either way, outsourcing can provide your business with the specialist Cisco skills you need and at a fraction of the cost and risk of employing Cisco Engineers in-house.
1) Lower Operational Costs
In the UK Cisco Engineers command high salaries and rightfully so, they’ve studied and trained hard to achieve their status. Current 2015 average salaries for Cisco Engineers in the UK are:
Your Operational costs don’t end there, other costs associated with in-house Cisco Engineers are:
- Holidays & Sickness
- Salary benefits – Bonus, Shares, Pension, Health Care & Annual Pay Increase
- Additional Benefits – Company Car, Petrol Allowance, Laptop, Mobile Phone
- Maternity/Paternity Pay
- Staff Training
- National Insurance & Tax Contributions
- Portion of running costs – office, furniture, equipment, admin costs & consumables
- Cost of Employment – In-House costs or Recruitment Agency
Accumulating the additional costs of employing in-house, a CCNA salary can be well in excess of £50,000 per year or around £23 per hour. Compare this to the average hourly rate of a CCNA which is currently £18 per hour resulting in savings of 27.8% when outsourcing against employing in-house. Your wallet, your choice.
(Visit http://www.accountingservicesforbusiness.co.uk/calculators1/true-cost-of-an-employee/ to calculate the annual cost of your employees and http://www.itjobswatch.co.uk/contracts/uk/ccna.do for CCNA rates)
2) Access to Skills & Knowledge
The Internet of Things (IoT), mobile devices, smart cities, big data and the human fascination and dependency on technology facilitate the need for Cisco Engineers to specialise in certain tracks. You might have an in-house CCNA, or CCIE, but do they specialise in Unified Communications, Security, Wireless, VoIP, R&S and Data Centre? How many hours and years of training would be required to have access to such a varied and multi-skilled workforce in-house? How much would this cost your company?
Having access to the skills and knowledge of certified Cisco Engineers is the most significant reason to consider outsourcing your need for Cisco Support. Quality of service is often cited as a reason not to outsource, however if you focus on creating strict SLA’s and define a clear scope of work between your outsourcing partner, then you can achieve exemplary quality of service for your end customers.
If you outsource your Cisco Support then you simply pay for what you need and use. Replace outsourcing with employing the multitude of Cisco Engineers in-house and you’ll need to ensure you have enough work for the Engineers every day, 52 weeks of the year.
How much time and money do you think line managers and HR departments waste on frivolous staff issues? “Can I have a day off for the dentist?”, “I need to take my dog to the vet” and so on. Employees also are savvier with their knowledge of employment legislation and their rights – holidays, sick pay, pensions, maternity leave and more heavyweight issues such as unfair dismissal and equal rights. It’s not only your balance sheet at risk; it’s your Brand, reputation and credibility in your industry. Taking risks is part of business, but if you can avoid being exposed to such substantial risks then why wouldn’t you outsource.
Do you employ in-house or outsource and why? However opinionated you may be, please feel free to leave your comments.
+44 (0) 131 516 9771
88 Wood Street, 10th Floor, Wood Street, London, EC2V 7RS
0203 697 0353