BroadSoft Changing the Game
While Cisco continues to flesh out its Webex story, it's giving new shape to its contact center strategy, too. This is in large part due to the finalization of Cisco's $2 billion acquisition of BroadSoft, closed in February. Since then, Cisco has brought BroadSoft's CC-One cloud contact center solution into is customer journey portfolio, rebranded as Customer Journey Platform, as shown in upper left of the below graphic. In fact, this development really marked the early stages of Cisco's growing emphasis on the contact center market -- one that Tom Puorro, VP and GM of Unified Communications Technology Group at Cisco, says will continue to ramp this fiscal year.
Cisco's strengths are traditionally in the mid-to-enterprise market, Puorro told me, and with BroadSoft traditionally targeting the low end of 0 to 200 seats, it opens up Cisco's market opportunity. With BroadSoft now a part of the portfolio, Cisco can better get its foot in the door with SMBs and grow its relationship as these businesses themselves scale up, he added.
Within and beyond the contact center space, Cisco is continuing to find "interesting" ways to use BroadSoft software, he told me, hinting at a host of new calling offers that will be coming soon. "The biggest challenge for the calling side of UC is going to be global rollout," he said. "Not everyone needs an office in Singapore, but some do, and to be able to offer a single bill and offer to customers is powerful. BroadSoft is in 12 countries today, and we're going to leverage that pretty hard."
2018 was all about integrating the BroadSoft technology and people into Cisco, and putting it in a position to accelerate in FY2019, he said. "We have really high hopes for BroadSoft in 2019."
Shifting to Software, Subscription, Cloud
As Cisco CEO Chuck Robbins continues to push all aspects of the business toward a software orientation, the Collaboration group continues to search for the right mix of hardware and software, Puorro said. "That doesn't mean decreasing total revenue in terms of hardware" – Cisco will continue to make phones and video endpoints, he said. "It just means more for software," with a focus on creating software-based services around hardware, SaaS, and licensing. "It doesn't mean we get out of hardware, but we spend more dollars on getting adoption of software to take off." And, as Rosenberg told me separately, that means enabling more incremental steps to cloud-based services.
That Cisco is executing on its vision to become a software and services company is clear, and the cloud collaboration space is a particularly compelling growth opportunity for the company, said Elka Popova, program director at Frost & Sullivan. However, it will take more time to see tangible results – Cisco can't "abandon mature revenue streams coming from established product lines," she added.
In fact, Gartner's Fasciani said this is why Cisco bought BroadSoft: to put it in the leadership position for cloud-based UC. "The first attempt with Spark Calling never got off the ground," he said. "Spark Calling never gained a footprint."
While Cisco may be better positioned now with BroadSoft as part of its portfolio, it has quite a way to go on its journey to become a leader for cloud-based UC. As Rosenberg told me, Cisco continues to sell a lot of on-premises gear. Roughly 10% to 20% of all calling sales today are cloud versus prem, and contact center sales are heavier on premises than cloud as well, he said. The strategy is to spend the next several years transitioning its prem-based installed base to the cloud. "Ultimately, all of them will go to the cloud," he said. "That's where the market is."
