Updated: Aug 23, 2021
In the last 18 months, we’ve seen support options that can be used to significantly drive down costs in a Cisco engagement. IBM, a Cisco support partner, offers a hybrid support model in which Level 1 and Level 2 support is handled by IBM while Level 3 and Level 4 requests are handled by Cisco in collaboration with IBM. This support model includes software updates, providing customers another viable alternative outside of 3rd-party support for cost reduction that does not result in compromising the integrity of your Network.
Retailer "A" Case Study: SMARTnet Renewal
We worked on this retailer’s prior renewal in 2020, which was a one-year deal. Their discounts over the last 12 months had been competitive from ClearEdge's perspective – especially for a one-year commitment.
The new deal started with a Cisco proposal for the 2021 renewal at a cost of $20M for three years. The retailer’s team went back and reviewed their inventory. They reduced maintenance levels where possible and removed maintenance from items that no longer needed support. They then bid the 2021 renewal to both Cisco and IBM.
Cisco responded with a deal for $27.2M, but IBM came back with a proposal for $22.6M. This accounted for roughly 17% in additional savings for practically the same level of support and updates the customer was receiving with Cisco's OEM support.
Retailer "B" Case Study: SMARTnet Renewal
This company had signed a three-year SMARTnet deal in 2017 for roughly $4M, with discounts ranging within a 5 point variance for all their support line items.
By 2020, the enterprise had nearly doubled their device count, and their SMARTnet costs had ballooned accordingly. ClearEdge suggested the client consider IBM, as we've seen other customers save significantly without losing Network patches and updates as part of the support model. IBM ended up pitching a deal option that was 10% less than Cisco's offer, which ultimately motivated Cisco to come back and drop their total cost by $1M to beat IBM's offer and retain the customer's business.
In both instances, buyer leverage was significantly enhanced by using IBM as competition. To learn more about working with Cisco, download our PDF guide on the Best Practices in Negotiating with Cisco or contact your ClearEdge representative.
- Corinne Boyles is a Senior Analyst at ClearEdge Partners.