Last year, Cisco announced its commitment to becoming net-zero for greenhouse gas emissions by 2040, and net-zero for global Scope 1 and 2 emissions by 2025. This includes programs for customers and channel partners to renew networking equipment to optimize power consumption, refurbish older systems, and recycle outdated and defective units.
Cisco relies on its channel partners to work with their customers to provide these solutions. During this year’s Channel Partners Conference, Andrew Sage, VP, Global Distribution Sales at Cisco, highlighted several programs to help channel partners work with their customers to reduce power consumption, recycle their equipment, and improve sustainability efforts.
We had the opportunity to talk to Andrew Sage. The following is a transcription, edited for clarity.
The Channelist: Good morning, Andrew. Thank you for taking the time to talk to us today … Data usage and transmission have grown exponentially during this century. New technologies like 5G networks and new equipment are more efficient but cannot compensate for the rapid increase in data traffic. Therefore, it is critical to update infrastructure. How is Cisco, through its channel partners, helping industries optimize their communications equipment?
Andrew Sage: From a pure technology standpoint, every new version of a technology is designed to consume less power. We need to do this because [Cisco has] committed to, by 2040, we will be net-zero for all the products we ship to our customers.
To do that, the first place we must start is the solutions. Are we shipping solutions to our customers that consume less energy? And the answer is yes.
For example, we have a platform called “Silicon One”. Silicon One is in many products that run in the world’s data centers and consumes a fraction of the energy that the previous generation of silicon produced to deliver the same outcome.
As we move more of our intelligence away from the on-premise equipment into the cloud, we can run a lot of those capabilities in our own data centers, and our own data centers will be 100% net-zero carbon emissions by 2025. So, the more we can move to the cloud and the more we can use advanced silicon in our technologies, the more we can reduce power consumption in the data communications industry.
We [also] want our partners to be able to use our technology to help their customers reduce their greenhouse gas emissions. For example, a customer operating a building or a series of buildings, can we sell them a smart building solution that uses technology to maximize the efficiency of that building?
Those are the areas of focus: Number one, driving technology that uses less energy. Number two, working with partners to bring technology solutions to customers that help them reduce their consumption. And number three is working on the circular economy aspect of all of this.
The Channelist: Thank you. I want to ask you about the current challenges in the supply chain. Do you have any thoughts about what the channel can do to keep or regain customer confidence when it is difficult to fulfill their expectations of availability and delivery?
Andrew Sage: [It’s] definitely a challenge for us and all of our peers in the industry, and it’s driven by the fact that we see unprecedented demand for the technology. We continue to grow the number of solutions we’re shipping, but the demand is just much higher than our expectation coming out of COVID.
As a result, we have a backlog of $14 billion at Cisco.
At its root, it’s a component issue. Cisco’s products have between 150 and 10,000 silicon components in them. And if there’s a single one missing, or a handful of these components missing, like a power management chip, for example, we can’t ship that. We’re seeing the silicon manufacturers unable to keep up with the demand from companies like us. Our supply chain is doing everything to mitigate this impact on our customers and our partners.
But for some time, we will continue to see delays in some of our product families. So, what are we doing for our partners to help them with this? Well, you had a great question: how do we help them with the conversation? How do they talk to customers?
First, we’re very transparent about the expected ship dates of our products to our partners, so they have very clear visibility of that. The real challenge is that sometimes the product will ship outside the window the customer needs for a project. In that case, we try to look for some alternatives.
For example, we have some customers who needed wireless access points, and they wanted the latest and greatest; those are going to take longer than they needed. So, we positioned an older family of wireless access points, and, at least, they could get their business up and running. The second alternative is to look into our refresh program, which is the program where we bring back equipment from customers that is no longer in use. We refurbish it. We put new software on it. We provide a warranty, and we put it back on the market.
The current situation challenges our partners. It’s the number one topic of conversation. And we’re trying to be side by side with them in managing customer expectations as we move through it. And hopefully, we’re going to start to see some easing as we go into the beginning of the following calendar year.
The Channelist: Going back to the sustainability part, do you believe that today, just coming out of the pandemic, many organizations are ready to invest in more sustainable equipment? If so, what can the channel do to steer them in the right direction?
Andrew Sage: We do see our customers wanting to work with us on the topic of sustainability. So, we’ve created a benefit for the customer and the partner and the sustainability outcome of getting that equipment back.
To describe it very briefly, we have a specialization program that trains our partners on how to use our free take-back service, where Cisco will come and pick up from any country used equipment that is no longer in commission at the customer and take it away, and either refurbish it, put it back into our refurb program, or we’ll properly recycle it so that it doesn’t go into a landfill. That’s the sustainability outcome. It’s free for the customer and the partner.
But there is an additional incentive for the partner. It’s an extra discount, up to seven points, if the partner registers a deal with us and says they will get back the equipment installed at that customer.
As an example, if they’re going to upgrade a network that has 20 switches and 10 access points in it, they’ll tell us at the deal registration that they’re going to do that, we’ll give them the extra discount, and then we’ll expect them to send back that equipment to us in a reasonable time.