Cisco Systems, Inc. (CSCO) Earnings Call Transcript & Summary

Hi, I'm Joe Rubino, Technical Solutions Architect for Cisco Systems. With me is Geo Gonzalez, Product Sales Specialist. Today, we're going to talk about Cisco SD-WAN Cloud OnRamp for Multi-Cloud.

So why Cisco? Geo, can you dig into this just a little bit?

Absolutely, Joe. No problem. So when we talk to customers, there are 3 things that are very important for them top of mind. Cloud adoption is very important. We see that from customers from different verticals using Infrastructure-as-a-Service, Software-as-a-Service, Platform-as-a-Service. So this is top of mind when we have conversations about customers that are transforming their infrastructure. Not only that, but also then, when they transform to a cloud-based world, the securities is fundamentally very important. So they need to think about that, too. The network is going to transform so that the cloud resources are going to be managed in a very easy way. So for us here at Cisco, it is important to think about how users are going to be connected to applications that could be hosted on-prem, in the cloud or for applications that are consumed directly from the cloud. And how is it that those users are going to access those applications in a secure way, okay? In a way that is going to be protected from threats, not only from the Internet, from anywhere, essentially. But then in the context of managing that -- those new resources from the cloud, we need a solution, an architecture that is going to automate and orchestrate the configuration, how customers are going, how users are going to access that information or that data as well from the cloud. So from an architectural perspective, we focus our attention on how to connect users in an easy way, securely and how to provide a tool, an architecture that allows network teams to manage it in a very automated and orchestrated way. So from that standpoint, Joe, 3 key things that we talked about with customers usually. Multi-cloud access, once again, it doesn't really matter what the customer is going to connect to. We'd like to provide a solution that is cloud agnostic that allows the customer to take advantage of all the cloud resources. It doesn't matter where they are, or it doesn't matter where the vendor is but also in a very secure way. So our architecture allows customers to connect to, for example, cloud-based security providers that are going to allow them to deploy SASE architectures, secure access service edge. But then in relation to that, we bring in to the table all the analytics to allow the customers to make informed decisions about where to and how to, for example, provide applications to users in a very easy way that are going to allow them to have the best user experience, once again, automated and orchestrated. That's the key there. From an operational efficiency perspective, that is going to translate into cost savings for our customers.

So Cisco is really uniquely positioned to bring it all together. Excellent. So there's a lot going on, on this slide. Geo, can you bring this all together for our viewing audience?

Absolutely, Joe. So bottom line here, guys, is that, our solution is an enterprise-class solution in the market. It's deployed worldwide by Fortune 500 companies, is used -- is market leading essentially. We are #1 in terms of market share. And I mean, the numbers speak by themselves here on this slide, Joe.

Excellent. So a little more on this slide then.

Yes, absolutely. Just to confirm what previous -- what we saw in the previous slide, Gartner, we are leaders in the Magic Quadrant from a Gartner's standpoint. This is just one -- another data point that you can use to make an informed decision about what vendor to go with from an SD-WAN perspective.

So I guess, based on what we're seeing here, we're in a lot of verticals, solving a lot of different use cases. What would you say about this slide?

Joe, absolutely. So financial services, health care, manufacturing, retail, technology, we are deployed. And customers are using our solution from across different industries, different market segments. Our use cases are robust. Therefore, we have an enterprise-class solution that will bring to the table what customers need in terms of multi-cloud, in terms of security, in terms of how to improve operational efficiency and manage the network in an easy way. Once again, companies are migrating from traditional WAN architectures over to software-defined WAN that is the backbone, the core for many other things that customers are working on today, cloud security and, once again, insights on analytics that allow them to manage better their application experience.

Okay. It makes a lot of sense. And if you look at all the different verticals here, each vertical has to have dozens of their own unique use cases on a per-vertical basis. So we really are solving a lot of problems. Tell us a little more about this slide.

Yes. So from a software perspective, Cisco routing business unit is focused on adding features and functionality to our solution that is just innovated. That is going to help customers solve their business problems and business challenges rapidly. So we focus our attention on multi-cloud. As we mentioned before, application experience is key, of course, so we look for ways to optimize how customers are accessing -- user -- accessing applications and improving user experience. Security key, we integrate also with other security vendors out there. We provide things like [ segmentation ] that is very valuable to customers. And then we work closely with managed service providers, too, that standardize or use our architecture to offer managed services to the market -- to customers out there. So just -- this is, Joe, some of the key things to talk about. I guess the key takeaway here, Joe, from a software perspective is that we're focused on developing and adding features to our code that are going to help customers with business challenges that they have. And we continue evolving and creating new things that are going to help our customers adopt and migrate and transform the network rapidly.

Excellent. When I look at this slide, and I think I look at multi-cloud, app experience, security. When I look into security, security is big on everyone's radar today. And when I think about use cases, segmentation, I think about risk mitigation, companies that want things like data sovereignty. And then when it comes to features, which we'll talk about later on, like embedded security capabilities, I don't really know of another solution that can do everything we do and bring it all into one place. This is excellent.

So Joe, one of the key things is here at Cisco, we are not only evolving our architecture to make sure that we help customers with their business challenges, but we also are integrating things like ThousandEyes, Umbrella into our architecture. Multi-cloud is very important. Can you do a deep dive into the multi-cloud architecture, please?

Absolutely. So Cloud OnRamp for Multi-cloud or what we used to commonly call Infrastructure-as-a-Service, 93% of enterprises are embracing multi-cloud, 60% of enterprises will implement SD-WAN by 2024, 30% of enterprise will adopt software-defined cloud interconnects, or SDCI, by 2024, and 17% growth on private connectivity to the cloud. So private connectivity to the cloud seems to be taking a back seat to these newer methods of connectivity. We're going to talk a little bit about that. We're solving some problems here when it comes to the cloud. Obviously, there could be some complexity. Experience -- what type of experience does an operator or architect need solving security problems, and how do we consume the solution? These are all questions that we're going to try and answer in the next few slides. So in essence, what we're bringing to the table now is an approach to cloud-agnostic backbone. How do I use the Internet as my own private backbone and yet still get the same performance? We call that Cloud OnRamp for -- or software-defined cloud interconnect, SDCI, and we're doing that currently with Megaport and Equinix. Cloud Hub, using one of the CSP providers, AWS, Google, Azure, using their backbone as a service, may get part of your SD-WAN. So that if you have an office on one side of the country and an office on the other or an office on the other side of the world, you could use the high-speed, low-latency backbone as part of your network. Multi-cloud integration, if we talk about software-defined cloud interconnect again, the ability to integrate multiple cloud service providers and have access to all of them from one point on the network. And so kind of summing them the idea up, we're talking about greater automation, a normalized multi-cloud experience, consistent UI and workflow and our vManage, and that's the user interface that you interact with unified policies and experience. The cloud is just another data center on your WAN, why should it be any different just because you're interacting with the cloud? And then ease of management, orchestrate Cisco and cloud provider networking resources via our vManage solution. So what's under the hood? Essentially, the Catalyst 8000V virtual router is the engine that powers this thing under the hood. And AWS currently were optimized for 30 gigabits per second of throughput. That's pretty impressive. Google Cloud. You're going to see a consistent theme with AWS, Azure and Google Cloud. It's this idea of site to cloud, where I have workloads in the VPC or VNet and the need to access those workloads from my office. Like I said before, it's just another data center on your network or this idea of site to site. Now you might think site to site. I have site A. I have site B. Site A needs to talk to site B. We're just going to go over the Internet or some private connectivity, but in cloud parlance, site to site really means going through the cloud service provider's backbone, using it high-speed, low-latency backbone to get to your other site, improving connectivity, improving performance, improving the end-user experience. So if we talk about use cases and solving challenges for the customer, taking, let's say, private connectivity, expensive connectivity out of the picture and being able to use commodity Internet and then a cloud service provider's high-speed backbone, that solves a lot of problems when it comes to cost reduction, OpEx and improved performance. With Google Cloud, we have integration with Google's Service Directory. So if you publish your own applications within Google Cloud, we'll be able to use those and publish those in vManage to match on policy and be able to take some sort of action based on matching of custom applications that we automatically import from Google Cloud Service Directory. Here's just another view of that same concept. Okay. AWS, Amazon Web Services. So there's really 3 options to get connected. Option #1 would be, you have an SD-WAN router at your bridge, you have an SD-WAN router in AWS. Remember I said before, it's just like another data center on your network. And then we use IPsec connectivity between your SD-WAN router and the AWS Transit Gateway. Another version of that, that gets you better throughput, would be to use GRE instead of IPsec encapsulation when we connect to the AWS Transit Gateway. Another variation is a native IPsec tunnel to the AWS Transit Gateway. Now there are cases where we have customers who like to do it this way, but you lose a lot of the feature, form and function of the SD-WAN solution when you do that. Azure, once again, this idea of site to cloud and site to site, the key takeaway from this is that we do support Azure's virtual WAN architecture. And that is our go-forward motion with Cloud OnRamp for Multi-cloud. And Cloud OnRamp for Multi-cloud is Cisco's ability to network in the cloud. Cloud Hub with Microsoft Azure Virtual WAN, here's another view of the same thing. Again, some consistent themes throughout, flexibility, reliability, security, on-demand, software-defined cloud interconnect. So you've probably heard a lot about this, and maybe you're curious as to exactly what this is. So Joe, do I deploy directly into the cloud service provider, directly into Azure, directly into Google, directly into AWS, or can I have an agnostic approach? This, in fact, is an agnostic approach. I will explain just a little bit. We have this idea of the first mile. And the first mile is between you and that colo, that hub where maybe you jump off net for your local provider and then you go long haul. That's the middle mile. So while we don't have control necessarily over local access, with software defined cloud interconnect, you can gain control over the middle mile and improve performance and improve the end-user experience. And then, of course, we don't necessarily have control over the last mile. Cisco SD-WAN cloud interconnect with Megaport and Equinix, a software-defined cloud interconnect or SDCI. It's this idea of having an SD-WAN platform, an SD-WAN router, virtual SD-WAN router, and a Megaport or Equinix PoP, providing connectivity across Megaport's backbone to get to another site or to reach workloads in multiple cloud providers. So if you look at this graphic, we see we have an enterprise site on the top, and it's connecting to an SD-WAN router, this little guy right here. And from there, we're connecting to another SD-WAN router. This provides encryption, end-to-end encryption into the cloud service provider's network. If you don't need encryption, you can connect natively, and then this idea of connecting from site to site and then also connecting to -- using the Internet directly as a backup path and connecting to SaaS applications using software-defined cloud interconnect. Here's another way to show that. If you look at the yellow dotted lines, we kind of get the idea then with this visualization that with a single Cisco SD-WAN router deployed either to Megaport or Equinix, I have connectivity into all cloud service providers. And so now if you have a workload in Google Cloud, if you have a workload in Azure or workload in AWS, we're solving this multi-cloud problem by allowing all of those workloads to talk to each other through the SDCI fabric or the SDCI backbone over which you're having SD-WAN fabric. This idea solves a major challenge in terms of being able to have this idea of it's just another data center on your network. Well, Google, Azure and AWS are just data centers on your network. Wouldn't it be really cool if we had a solution and you're looking at it to let them all talk to each of them natively? and then, of course, the black dotted line allows for agnostic use of Megaport or Equinix' backbone for high-speed, low latency access between sites. In this slide, we basically show that Equinix is doing the exact same thing.

So Joe, before we move to the next section, so just to summarize, from -- if we're talking to a CTO, so one of the things you and I see when we talk to customers is that SD-WAN, from a business perspective and cost savings standpoint, has always been closely connected to service provider circuit costs. And that's table stakes. Everybody is doing that out there that is selling SD-WAN. I think what you just show us is that the innovation of our architecture is going to allow customers to manage a multi-cloud environment in a much more easy way. Therefore, that is going to be closely connected to operational efficiency, and operational efficiency is related to cost savings as well. Because now my team, my network team that has been focused on spending a lot of time on managing this multi-cloud environment is going to have an architecture that allows them to manage policies, security, configurations in general in a much more easier way. Therefore, they will be -- they can focus their attention on what is mission critical for the business.

So you touch on a key point, Geovany, it's still SD-WAN. And we get asked all the time when we deploy to the cloud, and we get all the goodness that you and I have been talking about now, do we lose any SD-WAN functionality? That's the big question that comes up. What about all that other cool stuff that you guys do? And so to that point, we still improved the application experience, things like application-aware routing, TCP optimization, data reduction, packet duplication. All those cool features that we get with SD-WAN, you still get that when you integrate with the cloud. Again, just another data center on your network. Also, end-to-end segmentation, we're still doing that. That industry-leading capability that we have to segment traffic over the wire using our multi-VRF capability, that's still there. On-box security, full-stack security, on-box enterprise firewall, intrusion prevention, URL filtering, advanced malware protection and SSL decryption. We still have that. Umbrella, SASE, that's still there. Analytics, incredible deep visibility and analytics into application performance and the end-user experience, that's still there. Integration with ThousandEyes, that's still there. So Joe, are you saying I could use ThousandEyes with the cloud? Absolutely, that's what we're saying. So summing it up. Cisco SD-WAN cloud networking, Cisco WAN, multi-cloud security analytics, Cisco SD-WAN cloud OnRamp, we're bringing that all together to market-leading solution, innovation that spans most customer use cases is just another data center, all of the goodness of SD-WAN, a unified, simple, secure and consistent experience for deploying and operating SD-WAN in the cloud, all the things that you have come to expect from SD-WAN. You want more? Use a little call to action, go to webinars.cisco.com, and if you pause the video, look at that big long URL at the bottom, that will take you to the Cisco SD-WAN page. Thank you for your time.