Cisco Continues Investment in Small Business Sector
Focus is on solutions that bring business value to customers and programs that support its reseller network.
By Cecilia Galvinalvin
Last summer, Cisco began its focus on the SMB market when it integrated the Linksys small business portfolio and business team into the larger Cisco organization and created a single small business go-to-market strategy. Since then the networking giant has spent roughly $1 billion on the small business sector, which it defines as companies with 100 or fewer employees. To find out more about Cisco’s plans for its small business customers and partners, Executive Editor Cecilia Galvinalvin spoke with Andrew Sage, the company’s vice president of worldwide channels.
ChannelPro-SMB: You have made quite an investment in the small business market. How did you decide that the timing was right, considering the struggling economy?
Sage: A lot of people are asking that same question because it’s a time when most people are battening down the hatches. We think it’s the perfect time to double down on the segment, because small businesses will recover the quickest from the downturn. This segment is also far less volatile than other segments–purchasing behavior is less discretionary. So when our small business customers need to connect their warehouse with wireless networking, for example, or when their phone system fails and they need to replace that technology, they can’t wait a couple of quarters or a year; they’ve got to move quickly.
We also think that the world’s governments are going to get behind the small business sector because it’s a huge portion of the GDP of any country, including the U.S. and Canada. We’re driven by small businesses, and [each country’s] stimulus strategy has a significant element for the small business customer. In the U.S. it’s working with the SBA [Small Business Administration] to make sure that credit is still flowing, targeting the healthcare industry–doctor’s offices-and other initiatives that we think are going to benefit our partners.
ChannelPro-SMB: Who are these small business customers?
Sage: To simplify things, we talk about three types of customers in small business: the basic customer, the open-to-guidance customer, and the elite customer. Basic customers are reactive technology buyers. They potentially buy online or from retail, and may try to implement solutions on their own or may turn to the neighborhood IT person for that. They are also pretty reactive and price conscious. The open-to-guidance customer, who we think provides the best opportunity for both Cisco and its partners, is one who sees the potential for technology to improve their business and will rely on a partner to help them realize that vision. Elite SMB customers are already working with Cisco partners and are likely buying enterprise products from partners who serve that segment.
All of these customers have different needs from a networking-communications-collaboration standpoint, and there are opportunities for partners in all three of those segments. We intend to build products, solutions, and programs to help partners succeed across all three.
ChannelPro-SMB: What solutions and partner programs do you envision?
Sage: In terms of solutions, when we talk to open-to-guidance customers through our partners, we want to bring business value. Clearly they don’t want to talk about 802.11 and dual band at wireless access points. They want to talk about how our partners are going to help their businesses. That is, how are you going to help me work from anywhere and secure my data and my customers’ data? How can you help connect my employees and my offices, either as I grow or conserve office space? These are some of the kinds of problems partners can solve for [their] small business customers using our products and solutions.
For our small business partners, we are getting some great feedback on our recently launched small business support center, which provides pre- and post-sales support for both partners and customers. We also launched a small business support community–a Web site partners can go to and ask questions that can be answered by other partners, Cisco field engineers, or tech engineers. It’s a very flexible way to get answers quickly.
Partners say they really like this community approach to support. They always want to be able to click on a “click-to-talk” button or dial a phone when they have to, but the community is really starting to catch on fire.
We also have 1,650 select certified partners in the U.S. and Canada that are trained and certified to meet the needs of small business customers, and they qualify for our Partner Development Fund, or PDF. We rebate these partners between 2 and 10 percent based on the solutions they are selling. And in the last month or two we announced 90-day channel financing for select partners. If they qualify for the financing, they can take delivery of the product, ship it, install it, bill it, invoice it, and collect it before they have to pay the distributor for it. So it’s a cash flow driver that is very popular with our partners right now.
On the customer side, we have zero percent solution financing or the first three months without payment, which is attractive to customers and partners. It’s another cash flow contributor to a small partner. And now that people are particularly price conscious, we have lowered the price of our flagship small business unified communications platform, the UC500, between 10 and 15 percent depending on the configuration, so it is a bit easier to sell. And we will continue to look for opportunities to optimize our pricing.
