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The deal economics for many Cisco Partners may not actually be affected over the long term due the nature of lower
margins currently associated with a primary resell business model. BUT, there will be revenue and potentially cash flow
issues as you make the transition. Successful solution providers have made incremental changes in their business by
shifting portions of their traditional Professional Services to Managed Services and replacing a portion of the product resell
with XaaS based offerings. The sample P&L below illustrates how a different mix of revenue streams can have a material
impact on your bottom line.

Cisco Partner w ith Traditional CPE Resell Business Cisco Partner with blended Services Model

Product Project Recurring Total Product Project Recurring XaaS Total
Resell Services Services $100.0 Resell $100.0
$70.0 $60.0 Services Services $15.0
$25.0 $5.0 $18.5
Revenue 70% 60% $10.0 $15.0 15%
25% 5% 18%
% of total revenue 10% 15%
$8.0
Gross Margin $8.4 $7.5 $2.0 $17.9 $7.2 $3.0 $6.0 $2.3
8%
Gross Margin % 12% 30% 40% 18% 12% 30% 40% 15%
$6.0
Sales Cost $8.0
6%
8%
$4.5
General $6.0
& Administrative 4.5%
6%

Operating Income $3.9

3.9%

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