Cisco enhances its SMB offerings, widens market opportunity

Looking to help its partners cut a wider swath out of the burgeoning SMB market, Cisco Systems has launched a number of new products and services as part of its Cisco Smart Business Communications System (SBCS) portfolio.

The San Jose, Calif.-based networking vendor says it sees SMB as one of its fastest growing segments. It’s also a fragmented sector; Cisco claims 20 per cent market share but no one vendor has a dominant piece of the pie. Andrew Sage, director of operations for worldwide channel marketing with Cisco, says with solutions dedicated to the SMB customer Cisco sees great growth potential.

Cisco launched its first offerings in the space six months ago under the SBCS moniker, designed to be an integrated network platform with all the tools and functionalities, from routing and security to switching and unified communications; that an SMB would need.

“We really think this starts to bring this concept of the network as the platform into the SMB market, and open-up that market to Cisco,” said Sage.

Part of the portfolio is the Unified Communications 500 (UC500) series, which initially supported small businesses with 8 and 16 user versions. This week Cisco announced two new versions to bring support up to 32 and 48 users, which Sage says will really open-up the SMB market for Cisco partners.

“The potential market for the solution is much broader now,” said Sage. “Our partners love the fact the market is expanded for them and frankly, their comfort-zone is typically around the 32 to 48 user end of that spectrum anyway.”

There will be a little overlap with Cisco’s enterprise offering, Communications Manager Express (CME), which begins at the 40-user level and scales up to 250 users, but Sage says he views that as a positive. The UC500 is more the ‘S’ of SMB, he says, while CME is for the ‘M’ of SMB.

As part of the recent announcement, Cisco also launched four new Catalyst Express Ethernet Switches designed to meet different networking requirements, with flexibility around core density and Power over Ethernet. Also new is Cisco Mobility Express, designed to facilitate easier wireless deployments.

“We think our partners are really going to enjoy getting out there and selling (these new products and services),” said Sage.

Additionally, Cisco launched SMARTnet Services for SBCS, a Cisco-provided technical support service program that partners can sell as an additional incremental revenue opportunity as part of their SBCS deployments.

Sage says many of Cisco’s SMB partners provide their value in the customization, implementation and design of the solution, and would rather leave the maintenance and day-to-day trouble shooting/break-fix to someone else. That’s where the services package comes in.

“For many of our partners it is ideal. They get the professional services revenue, the customization revenue and the implementation revenue, plus the product margins,” said Sage. “And then they also get a margin on reselling the Cisco SMARTnet services.”

Recognizing that the cost of making SMB sales tends to be higher for partners, as they need to make more sales to be profitable, Sage says Cisco has designed a number of programs around SBCs to ensure partner are profitable and are rewarded.

“If we look at the businesses of our successful partners, and you take (all the margins) into consideration, we feel strongly a partner should be able to deliver a 15 per cent after-tax profit on a Cisco practice,” says Sage. “That’s the perspective we take on it.”

In the first quarter of its fiscal year Cisco signed-up 1000 partners worldwide to its Select Certification designation for SMB-focused partners, with a fiscal year-end goal of 5000. Rebecca Leach, manager of partner programs for Cisco Canada, says 15 partners have come onboard in Canada so far, and they’re on track to meet their goal of 100 Canadian partners by fiscal year end.

Noting that 99.7 per cent of Canadian customers would fall into the SMB category, Leach says Cisco sees a particularly large opportunity for the Select Certification program and the SBCS products in the Canadian market.

“Select Certification from a Canadian perspective is a wonderful opportunity for us and our partner community to engage in the SMB market,” said Leach.

While Cisco is actively recruiting partners in Canada, Leach says she wants to emphasize their first focus is partner growth and profitability, and they’re being careful not to saturate urban markets.

“We’re targeting those geographic areas where there’s less coverage for SMB customers,” said Leach. “That’s where we’re looking to grow our customer base.”

She adds Cisco Canada has a number of Canadian specific resources and incentives to recruit partners, including free UC500 demo kits for the first 40 Select Certification partners. Additional promos will be rolled-out quarterly.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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