Software subscription vs. traditional a la carte model

[bonho]

It is clear that a communications system is a critical part of an enterprise’s business strategy. At whatever capacity the system is being used at (making phone calls, runing messaging applications, contact center environment), your communications system can increase efficiency and improve customer satisfaction. This is important in a tough economy.

We understand that customers who have a Cisco Unified Communications System want to keep their systems current to maximize their return on investment and lower total ownership costs. When it comes to upgrades, why should these customers consider a software subscription model compared to the traditional a-la-carte model?

In the traditional subscription model, customers are purchasing their upgrades separately and for individual products. This approach makes upgrades costly, access to help is limited, and if customers want the latest technology, there may be a longer wait period.

With a software subscription model, customers can keep pace with technology advancements and enhance productivity by enabling the latest product features and capabilities through major software upgrades. They are able to cost-effectively predict and plan IP communications budgets over multiple years.

What benefits are you seeing with a software subscription vs. traditional a la carte model? Are you willing to commit to a multi-year software subscription term (3+ years)? Why? Or why not?

Bonnie

Solutions Marketing Manager

[6rdaley]

I'm somewhat confused by the new Subscription Model and have to have my account team try and explain it to me often. In the past, we paid for maintenance and this automatically included all upgrade versions, we simply paid for the labor to implement it. Now, I must pay for the 3 years of maintenance plus the 3 years of software subscription. I get the idea behind the subscription, just don't get how this is saving me money.

[depadua_chris]

I am also confused by this new Software Subscription.  If it's at all possible I'd like to see some documentation on the new model.  As it happens, we are getting ready to renew a number of our SmartNet contracts and if there are some potential cost savings available I'd like to get more information.

[arnieg]

The explanation that was the easiest for me to understand was that the ESW takes the place of the old SAS (minor upgrades only) and the UCSS takes the place of the old SASU contract (major upgrades). The biggest difference is that you cannot buy the UCSS (major upgrades) without purchasing the ESW (minor upgrades) also. In the past you could purchase either SAS or SASU. If you add the two together (ESW and UCSS) you will see that the cost is close to what you used to pay for the old SASU contract (unless you have quite a few users). The change is that they are now charging for major upgrades based on total users as opposed to the one size fits all model. Unity has always been charged according to the number of users, but not CCM/CUCM. In my opinion this was Cisco's way of generating more revenue from the larger companies for upgrades. Prior to this modeling a company with 50 phone users would pay the same price as a company with 2500 users. The total number of users is honesty based as there is no verification trigger for Cisco. I did not see any cost savings with this new model, but I did not see a substantial increase either. Cisco did a very very poor job of passing this information to their partners. The first year that I went through it, my vendor couldn't clearly explain the changes. My latest contract renewal was the first time they were able to explain it to me clearly and help me understand what I was paying for.

[toddwils]

For those interested in learning more about the UCSS framework, see here: http://www.cisco.com/go/ucss.  There is a good presentation (.pdf) under the Additional Resources section that explains everything.  I will try and help those posting comments here to better understand the ESW/UCSS replacement of SAS/SASU...

First and foremost, SAS = ESW and SASU = ESW + UCSS.  SAS/SASU terminology is in the past and isn't used moving forward.  Now, if you are acquiring Unified Communications for the first time, a-la-carte, then you can purchase a 1-year ESW contract.  This will cover TAC support and minor upgrades.  Furthermore, if you would like access to major releases (i.e. from 6.x to 7.x), then you will be required to either buy 1-year UCSS contract alongside ESW, or purchase the software directly in the event you don't have an active UCSS agreement in place.  So, to be clear, you are not required to purchase ESW/UCSS contracts, but if you would like to access to TAC, Minor Releases and Major Releases, it is highly recommended.

Your second option is to opt for Cisco's Unified Workspace Licensing model.  This allows a customer (at a discounted rate) to own the rights of various software applications (i.e. Call Control, Messaging, Single Number Reach, Desktop Client, etc.) depending on what level of Workspace Licensing you choose.  When making the acquisition of Cisco's Unified Communications solutions, and with Workspace Licensing, you are required to purchase a 1-year ESW and 3-year UCSS contract.  As mentioned previously, this provides the customer TAC support and Minor Releases up to 1-year and Major Releases for up to 3-years.  I have many customers, for consistency reasons, to add 2 more years of ESW to the acquisition of product alongside UCSS.  One key advantage here is that you are able to lock in on today's ESW/UCSS pricing even though it may change (increase) year to year.

I hope this helps in some way.  Thanks.

[blittrell]

This whole thing has been confusing for a very long time, that is why we are looking at going to CUWL, I think that is the correct acronym.  Even if it doesn't save us a dime it sure beats having to figure out what you have and what you don't and what you need.

[toddwils]

It will do both actually...  it will absolutely eliminate the complexities of ESW/UCSS and managing each of those individually for multiple applications.  Secondly, CUWL will absolutely save money for a customer over the course of your Unified Communications solution.  For example, if you were to roll out dialtone and voicemail, then add applications over time (i.e. Unified Personal Communicator, Single Number Reach, Collaboration Software like MeetingplaceExpress, etc.), the price of a seat is much less expensive than doing this a-la-carte, much less.  Even if you decide to roll out one application (i.e. Single Number Reach for example), it is even more cost effective than the traditional a-la-carte model.

Hope this helps.

[arnieg]

What if we have current ESW and UCSS smartnet contracts in place, can those be converted or will we have to wait for them to expire? Is the cost pro-rated or will we have a new anniversary date if we choose to go with CUWL?

[rpadden]

The ESW and UCSS on the traditional stand alone solutions cannot be converted. However, you can work with your partner that initially sold you the ESW contract and the UCS subsciption to ask for a credit for the unused balance.  The cost of the new CUWL UCSS and ESW coverage is not pro-rated, you would have a new anniversary date for them.

[blittrell]

Hi All,

    You know how stupid you feel when you say something that you assumed was fact(because you were told by Cisco it was) but then you find out that it is in fact not fact?  Well that is how I feel about CUWL.  I just got the price tag for CUWL and the conversion from our current contracts to CUWL is about 3 to 4 times the cost, very not cool.  I am all for Cisco dumbing down these contracts so you don't have to be some financial analyst from AIG's think tank to understand them but 3-4 times more expensive?

    I was a bit suspicious when our sales rep was saying we would pay close to the same if not less then our current contracts, I firgured at least we would pay a little more but paying 4 times as much?  If we go with the 5 year buy-in we are looking at 2-3 times the cost of current contracts, WOW, for a school district that is huge.

    We bought into the Cisco VOIP system with the understanding that we would save around 50K a year, if we switch to the new CUWL contract it would wipe out that entire savings and then some, that is a negative ROI.

    As an FYI, CUWL does not cover hardware or CER as well, so you will still have to pay for the hardware smartnets and CER, which is negligable but you would think they could add that in for charging 3-4 times the current maintenance which includes the hardware and CER servers.

    Anyway, I have an email out to my sales rep to see if there is anything that could be done or if there is any mistakes with this, I will keep you all posted if there is.

Thanks

[mikhalil]

Thank you for sharing your experience. 

The 3-4 times as expensive does not sound right.  In some cases I have seen people reach these sorts of conclusions because they are only comparing to pure call management rather than including voicemail or the others apps.  However, without a full inventory of what you have and what you need/are considering it is hard to reach a firm conclusion or the root of the issue.  Feel free to confidentially send any and all information to cuwl-support@external.cisco.com and I will do my best to resolve your issue.  If you can also include the name of your rep that would be great as I cannot identify you from your community profile.  We can all work together to resolve.

[blittrell]

Hi Michael,

    I think there is a lot of marketing numbers being thrown around with CUWL. Maybe if you count all the items CUWL gives you, that many users may never use, then it may be as cheap as regular contracts, but the promise(or implied promise) to us was that we get a simplified contract, that costs the same or less and we get added abilities.  This is not the case, the cost of CUWL is twice as much as all our smartnets put together(including security, routing and switching, hardware and CER contracts), if you take the subset of contracts that the CUWL contract will replace the cost is well over twice the cost, it is closer to 4 times the cost, this does include Callmanager, and Voicemail contracts.

    I found the largest portion is the upgrade cost, for a standard user it is $47 per user(that is educational pricing) for a power user it $78, then you add on the first year of support and the cost is huge.  Maybe if Cisco foregoes the upgrade cost they would be more in line with their marketing claims but what are the chances of that?

    For the cost we will be sticking with the insanely complicated Callmanager/Unity contracts, unfortunatley.

    As an FYI, I did just get off the phone with our Cisco Sales person the the quote is in fact vaild:(

Very disappointed

[bonho]

I’m sorry to hear of your disappointment. Unfortunately, it's difficult for us to further comment on pricing without having the full picture. If interested, I encourage you to reach out to us at cuwl-support@external.cisco.com.  We can then work with you and your representative to validate you have the most appropriate solution based on your needs.  

[AARON ARCHAMBAULT]

UCSS basically cost the same as upgrading down the road, the advantage of this is the support and bug fixes, which you would not get without a contract.  For simplicity sake CUWL can save a lot of head aches and time of managing license, however it alos means you may purchase licenses that you will not use.  Also at issue with CUWL is the professional vs standard user, with professional you are supposed to get CCX and conferencing options, however it is not a one to one purchase, you only get 1 CCX standard user for every 25 purchased CUWL Professional licenses and similar numbers for conferencing options, and these numbers do not seem to be enough.  So why use CUWL Professional?  I have tried pricing this in many scenarios and have not yet found one where CUWL Pro made any sense.  Mind you my customers are not typicall the 10000 user variety, however from 100 to 1000 users I cannot find a reason for Pro.  Also in many areas, especially education CUWL does not seem to make any sense as most of the phones will not have the add on apps, and CER is not part of CUWL.  So Why is the option for add on phones that are not application phones limited to 15% of the total devices, including analog and common area phones?  If I have a school where many of the phones will not use the apps I cannot use CUWL and lose the advantage of simple licensing.

[mikhalil]

Actually the 15% limit is only for public space IP phones.  For analog phones the only restriction is they cannot exceed the number of IP phones (ie they cannot be more than 50% of the number of phones on the order).  Because when spoken, 15 sounds a lot like 50 there has been a great deal of confusion on this as one person hears incorrectly and it gets repeated.