SearchNetworkingChannel.com met with Kerry McDonough, operations director of small business channel sales at Cisco, to discuss these announcements -- first in a short video and then in a longer Q&A. McDonough explains why "small is the new big" and then addresses some concerns about Cisco's role in small business channel sales.
In the keynote presentation, Andrew Sage (vice president of worldwide small business sales) said that "small is the new big" at Cisco. Why is small the new big?
Kerry McDonough: One of the reasons why small is the new big for Cisco is that it's a huge opportunity for our partners. At Cisco, we look at opportunities in what we call market adjacencies. Now our partners have been selling Cisco products to small businesses for years.
But this is a new opportunity, in that we have a new broad set of portfolio products that we integrated with our Linksys business series products to form the new Cisco small business series. And we're also introducing a whole new set of solutions now for partners in the Open For Guidance space -- those customers that haven't necessarily been able to work with Cisco from the standpoint of maybe the cost, price-conscious maybe -- now they're able to buy solutions from Cisco partners that they haven't necessarily been able to buy before. So actually, we're opening up the markets for our partners.
With today's economy, large vendors are pushing into small businesses. How is Cisco sizing its applications and strategy to fit the small business channel?
McDonough: One of the things about the opportunity itself is [first] that it's a very large total market as far as small businesses. They make up 70% of all new jobs that are created in the U.S. today, 50% of the non-formed GDP. So the opportunity is very, very large. And I think what Cisco could do with its partners is now expand the offering -- expand the offering to a complete portfolio of solutions: from security to unified communications to (of course) networking -- and really give the partner a single source for the entire amount to address the customer's needs.
Studies have indicated that small businesses during down economic times actually enter recessions a bit earlier, but they come out much sooner. So the investments that Cisco is making now with our partners really have positioned us for that upturn. And as we expand that portfolio, we're giving our partners more opportunity to address more customer needs from one single partner.
For Cisco partners in the small business space, what would be the major takeaways from Cisco Partner Summit?
McDonough: Small is big, and Cisco's very serious about small business. So with that we have not only (as I've mentioned several times, and I'm going to do that) a complete portfolio. It's 100% of what we do. It's not a percentage of anything; it's not a division; it's actually 100%. So networking products, unified communications, security solutions -- really offering a complete portfolio. And with that, we've expanded to offer a new support model for our partners, a new way for them to use an online community for support, new ways of doing more Web 2.0 technologies, which is a big benefit. We've also increased our incentives for the partners via some volume rebate programs, via some enhancements to our existing partner development funds, and we've really -- with all our new products -- expanded the portfolio to give them more to sell, and we've increased the profitability program as well.
What are Cisco's most important partner changes for small business sales?
McDonough: We've made some enhancements, I'll call them, that are incentives on volume rebates for sales; we've done some things as far as new product offerings that are available to select certified partners. It's not an extremely hard program to get certified at Cisco, and it gives them a stepping stone to the rest of our certifications, be it Premier Partner or Silver or Gold. It gets them into the Cisco fold without requiring them to have huge investments in technical or personnel and so on.
I think a lot of VARs, resellers or solution providers still think it's too hard to do business with Cisco: that it requires too much certification path, that it's not easy. It's hard to get the message out that we've made some significant changes; we've made it easier for our partners to do business with Cisco; we've made it easier for them to specialize in small business sales; we've expanded the portfolio not only to include the easy-to-use-and-deploy kind of products but [to put] together solutions for the whole portfolio. It really then allows that partner to go to a single source for an entire small business customer's needs. I think the hardest thing for us to do is try to get that message out to our partners and, I would also say, our future partners. Our partners that maybe looked at us years ago -- they still may have that perception that it's just too hard. So resellers, solution providers that may be working with multiple vendors, they can work with Cisco and we've made it easier, and we're serious about the commitment of small business.
There's a big focus at Cisco on collaboration and video, but a lot of small firms are just concerned with staying in business. How can these technologies be beneficial -- or even realistic -- for small business?
McDonough: One of the things that we try to do in working with our partners -- and to, through and with them for their customers -- is to position our technologies to be things that small businesses care about. If you went up to a small business and said, "Let's talk about collaboration," they'd probably look at you pretty crooked eyed. But if you talk to them about serving their customers better, having employees be more productive, connecting their employees, remote teleworkers … those are the things they care about. Collaboration is a type of technology that you would use for that. So for unified communications, you could do lots of things with our system to help serve their customers better, to help connect their employees and so on.
We try to take the care-abouts that small businesses have and use collaboration as a way for them to better serve and be more productive.
Similarly, as one analyst pointed out to me, many small companies don't have any concept of what a managed service would be. How are you making managed services work?
McDonough: Our partners have been the lifeblood of Cisco's touch to those small business customers. That does not necessarily mean just a product sale, be it a networking system or securing their business and so on. It's more about becoming their IT provider. Many businesses don't have IT staff. They barely understand the technology, but they know that they need it. They know that they can compete and grow their business with it. So managed services, as they relate to the partner offerings, are the things that small business would be looking for. That could range anywhere from contract professional services that they might have to network monitoring; it could be ongoing alerts. Just everything to keep that business up and running and really giving the small business a kind of insurance policy to make sure that the technologies they're getting from the partners actually help them run their business and grow.
A partner expressed concern to me that no matter what incentives Cisco offers, the small VAR is going to end up competing with (and losing out to) large Internet-based sellers like CDW, much like independent bookstores vs. Amazon. In the end, it comes down to price. Can Cisco ultimately save VARs from this fate?
McDonough: So one of the things that our successful VARs have learned -- and this is really not new -- is that they have to have a differentiated value that they bring to the customer. That could be a managed services offering; that could be their technical skills; lots of different things that differentiate them from the competition. In the case that you just mentioned, those large e-tailers or online shops really are providing a simple service -- be it price, be it delivery. Our VARs are offering much more.
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