Cisco Systems Inc. is turning its attention to small-medium companies, hoping that some online marketing will push partners and resellers to go after what is supposed to be one of the few sectors that have money to spend.
“We’ve seen budgets tightening for the last couple of years,
but spending is there as long as the productivity and return on investment stories are there,” Peter Alexander, vice-president of commercial marketing for Cisco (www.cisco.com), said in an interview.
It believes that unlike enterprises, these companies are now spending on network infrastructure. They are looking for entire solutions, Alexander said, the kinds of offerings assembled by partners and resellers that Cisco relies on for the overwhelming amount of its sales.
“We need to enable the channel to do that and make their integration job for the network side a minimum effort,” he said.
SMBs are looking for intelligent networks, IP telephony and wireless solutions from integrators and specialized offerings such as managed services from service providers, he said.
However, no new products or solutions are part of the company’s strategy, which was announced this week. Instead, it hopes to improve Cisco’s visibility to small and mid sized firms by using the Internet to draw attention to its brand.
Cisco defines small-medium businesses (SMBs) in Canada as having less than 500 employees.
First, Cisco is opening a Web site called the SMB Networking Connection (www.cisco.com/go/smb) where they can chat with each other and Cisco technicians about network problems as well as find research material.
Cisco has also honed its Cisco Internet Business Roadmap (www.cisco.com/go/cibr), a free online tool to guide companies in choosing a network solution, to make it more appealing to small-medium companies by classifying users by industry verticals.
To help resellers, Cisco has put together some technical solutions as well as material which they can use for co-branded promotional material.
Since the roadmap opened 18 months ago many resellers use it as selling aid in customer meetings, said Alexander.
Flexible leasing terms, available through resellers, are being made available as another enticement to SMBs.
However, Canadian direct resellers won’t be able to take advantage of another aid in the campaign, a link to the newly-designed Cisco.com Web site which would give them another channel for those seeking to buy from that site. So far only U.S. direct resellers are being hotlinked to the site. There will eventually be links to Canadian companies, Alexander said, but he wouldn’t say when.
“There certainly is opportunity in the marketplaces Cisco is looking at,” said Mark Quigley, research director of the Canadian division of the Yankee Group. “but I don’t know that it represents a tremendous departure from what the company’s done in the past. A little more focussed, perhaps, but this is a space they played in regardless.”
Yet Cisco is doing more than throwing the ball into the court of their channel partners, he added. It has also spent time and effort in examining the SMB market to help resellers sell into it.
But a national systems integrator and Cisco silver partner says the new strategy won’t immediately bring new business.
“I think they’re going to face some significant challenges,” said Greg Larnder, vice-president of business development at Compugen Inc (www.compugen.com). His firm has formed alliances with companies like 3Com Corp. and Nortel Networks Ltd. to attack the small-mid market, manufacturers who turned earlier to the SMB market. And those SMB customers will likely remain loyal to the equipment they’ve already installed.
“The challenge is Cisco hasn’t focussed on the SMB for a long time, so the channel has gone to other vendors,” he said. Compugen turned to other suppliers for SMB business in part because smaller companies can’t afford to pay its Cisco-certified consultants to design their networks.
He estimates two-thirds of Compugen’s network revenue comes from enterprise customers.
But he said rather than sell equipment to small and mid-sized companies, Cisco could make a real impact in that market by selling to carriers and providers who will in turn sell network service to SMBs on pay-by-use basis — the so-called utility model — he said.
“If Cisco’s intent is to work with the channel we look at this favourably,” said Larnder.
But, he added, “it is going to be an uphill road.”