Cisco creates new channel tier to focus on small business segment


For the first time in its history Cisco Systems wants to focus on the ‘S’ in SMB.

The networking giant has redefined an old channel initiative, the SMB Select Marketing program, to bring the channel on board with this new strategy.

Now called SMB Select, it already has 5,000 global resellers in the plan, which is aimed at selling to customers with up to 99 employees.

At the Cisco Partner Summit, Andrew Sage, the company’s vice-president of channel marketing said the company plans to build a new tier in its channel hierarchy.

Currently, Cisco’s channel is segmented in three tiers: Gold and Silver, Premier and Registered Partners. Sage said that Cisco will take the 5,000 global partners and place them in a new tier called Select.

Sage added that the goal to double the number in this tier to 10,000 by 2010 and to triple that in three to five years. The addressable market in the SMB is at $10 billion in the commercial segment. Cisco has about $1.5 billion of that today.

According to Sage, the opportunity is huge.

In Canada, there are only 54 Select partners but Rick Graham, area vice-president, distribution and channel operations at Cisco Canada, said he wants to more than double that by 2010.

Sage added that inside these channel accounts Cisco hopes to triple the bookings within the Select tier.

SMB is not new for Cisco. The company did identify the opportunities back in 2004 with the SMB Select Marketing program. But Sage admitted that plan was small and just an incremental investment.

“We need to double down on the SMB,” Sage said.

Cisco surveyed 2,500 partners worldwide for this initiative and the consensus was that partners want to increase the relationship with the country as well as have more incentives for demo equipment, marketing support, and training.

Near the top of the list was partners are considering investing in higher level of certification. More than 50 per cent wanted to do this and it was driven by the distribution partners, Sage found.

Analyst Stefan Dubowski of Decima Reports said this is an indication Cisco is embracing SMBs. However, he believes the jury is still out on whether the small businesses will embrace Cisco.

“You would not think Nortel would be able to address the SMB space particularly well, but look at its VCM 50. It is a solid product for the SMB space. This suggests to me that small companies are willing to consider enterprise-focused manufacturers for small business equipment,” Dubowski said.

Cisco’s go-to-market route for SMBs will be strictly through the channel.

Those surveyed revealed SMB customers rely on partners as their trusted advisor.

“In the SMB space, we are 100 per cent channel led. Nothing will be sold direct or online or even through a garage sale. It will be all through channel partners so it is important to support them,” Sage said.

Service partners and gold partners account for 55 per cent of Cisco’s SMB business today. The other part comes from focused SMB partners.

To become an SMB Select Cisco partner a VAR has to have dedicated technical and sales staff.

The partner also has to take a two day e-learning session, one for technical and the other for sales.

The benefits of the program are free e-learning, certified partner brand, more partner development funds, a dedicated channel account manager, and the availability of the EasyLease financing for 25 countries.

The partner development funds will be available online in the form of an E-Wallet.

Sage said that it was important to add the EasyLease financing because the typical deal gets 25 per cent bigger with financing than without it.

The SMB Select program will also open up opportunities for some of Cisco

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