Cisco Seeks 10,000 New Certified Partners in Small Business Push

Cisco Systems is continuing its march downstream with changes to its channel program that could add 10,000 SMB-focused solution providers to its Certified Partner ranks and is also rolling out a new VoIP system for 16 or fewer users.

The push comes as part of Cisco's stepped-up focus and investment in the SMB space as the company drives to gain more market share there, said Keith Goodwin, senior vice president of worldwide channels for Cisco, during a press conference Tuesday at the Cisco Partner Summit in Las Vegas.

"We do over $1.5 billion currently within the SMB space. However, our market share within the SMB is significantly less than all of the other customer segments we participate in," Goodwin said.

It also comes amidst growing competition in the unified communications space from Microsoft, which last month unveiled plans for an small business-focused IP-PBX platform code-named "Response Point."

At the conference, Cisco unveiled plans to add a new fourth tier to Cisco's Certified Partner program, its first new certification in 10 years. The new Select partner tier will become the entry-level certification for the program, which currently includes Premier, Silver and Gold badges. It fills the gap that currently exists between Premier and lower-end Registered partners, which have to do little more than sign up to begin working with the networking vendor.

As a result, Cisco expects to admit close to 10,000 Registered partners to its Certified Partner ranks over the next three to five years, giving them access its full breadth of training, sales resources, rebates and incentives for the first time, said Andrew Sage, senior director of worldwide channels marketing at Cisco, San Jose, Calif.

The 5,000 current members of Cisco's SMB Select program -- a marketing initiative launched in 2004 to help recruit and support small-business focused partners -- will have six months to meet the requirements of the new specialization. Some 4,200 SMB Select partners come from Cisco's Registered Partner ranks, with the rest coming from the Premier level of the Certified Partner program, Sage said. Cisco's 30,000 worldwide

"What we need to do is double the number of partners that have verified [SMB] capabilities, and we want to triple the amount of business the average partner in the community does with us," Sage said.

Solution providers said the new certification level will bring them tighter ties with the vendor.

"It's a no-brainer for us," said Martin Gendell, principal at Apogee Technology Services, a Cisco Registered and SMB Select partner in Alexandria, Va., of the new Select certification. "I wouldn't say we felt like an orphaned step-child, but it's nice to have a more formal recognition that we do cater to the SMB market, and also from Cisco that they are taking it seriously."

It makes sense for Cisco to pursue the SMB opportunity through a fresh set of partners, said Dana Zahka, president and CEO of Select, a Cisco Gold partner in Canton, Mass. "The investment for us in our Gold status is so large that it's difficult for us to go after the SMB space," Zahka said.

NEXT: Requirements and benefits

To earn Select status, solution providers will need to pass Cisco's newly launched SMB specialization, including two days of online training each for a technical and sales role, covering routing, switching, security and wireless. Unified communications will be added later this year. A single person can fill both roles, a departure from Cisco's current strategy of banning role-sharing in its other certification levels. The role-sharing ban is still in place for Premier, Silver and Gold partners, Sage said.

In exchange for earning the SMB specialization and Select certification, partners gain access to free SMB-focused e-learning content, the ability to brand themselves as certified partners to verify their skills to customers, participation in Cisco's financial incentive programs, including the Value Incentive Program back-end rebate initiative and its Opportunity Incentive Program for deal registration. Cisco is lowering the threshold for OIP to $10,000 to open it up to smaller deals, Sage said. The previous floor was $30,000.

In addition, qualified Select partners are eligible to receive Cisco's new partner development funds based on a percentage of the partner's Cisco sales. The program enables partners to purchase demo equipment, use the funds for training or marketing, or apply the funds to their bottom line, Sage said. Select partners also have an assigned channel account manager.

None of these benefits are available to Registered partners, meaning that the financial benefits to partners that take the plunge to join the Certified Partner program stand to be large, Sage said.

"To a large extent, you get out of it what you put into it, but certainly we will take advantage of the marketing opportunities and programs as well as the training opportunities," Apogee's Gendell said. "At this point it's difficult to put a bottom-line figure on it, but the investment to attain the certification is minimal compared to the benefits."

NEXT: Cisco VoIP gets smart for small business

Cisco also at the conference launched the Smart Business Communications System, a VoIP platform for the small business space. The system includes the new Unified Communications (UC) 500 Series, which is built on the latest version of Cisco Unified Communications Manager Express, Cisco's commercial IP communications platform geared toward customers with up to 100 users.

The UC 500 provides support for up to 8 VoIP users and includes analog trunking, firewall, VPN and optional WLAN capabilities. Cisco also launched the Catalyst Express 520, a desktop companion switch for the UC 500 that supports Power-over-Ethernet and expands the system to up to 16 VoIP users.

The Smart Business Communications System supports Cisco's current line of IP phones. The UC 500 is scheduled for general availability in June and is expected to carry a street price of $600 to $750 per user, including the phone and the expansion switch.

It was designed to be easy to use and implement, and can be installed in 15 minutes, Cisco executives said.

"They are providing opportunities to make it easier for smaller organizations to take advantage of VoIP," Apogee's Gendell said.

The new system will square off against Microsoft's forthcoming Response Point line, which is scheduled to ship through OEM partners later this year. At the same time, the two vendors are working together to ensure that Cisco's IP communications lineup interoperates with Microsoft applications.

"We have to both be mature about it and say we will complement each other where possible and compete when necessary," said Peter Alexander, vice president of worldwide commercial marketing at Cisco.

It also left some solution providers wondering where Linksys, Cisco's consumer/SOHO focused division fits in, given that Linksys has been working to bolster its small business portfolio, which includes several VoIP products.

"I think Cisco's pretty confused about Linksys," said one Cisco partner who asked not to be identified. While Linksys is trying to promote its own business-class portfolio, Cisco executives and field sales reps are steering Cisco partners away from the product line, the partner said. "If you're aligned with the field, you had better not sell Linksys because they're not compensated on it," the partner said.

The partner also questioned whether the anticipated street price for the UC 500 line is low enough. "A $600-per-seat system competes with other IP solutions but not with the key systems, and the reality of the [small business market] is that they buy the cheap stuff."

NEXT: Cisco's small business onslaught

Cisco has upped its focus on the small business space in recent years, disclosing plans in 2004 for a two-year $2 billion investment to boost the vendor's product portfolio, enhance its channel programs and build market awareness around its SMB offerings. Since then, Cisco has added more than 50 purpose-built products for the commercial market, which includes the small business and mid-market segments spanning 5 to 1,000 users.

It's an investment that's paying off. Commercial sales accounted for 24 percent of Cisco's roughly $7 billion in product sales last fiscal year and has been Cisco's fastest growing segment for seven of the past eight quarters, Cisco's Alexander said, adding that commercial sales for the first half of fiscal 2007 have grown 20 percent year over year.

"This is the beginning of a big push in the SMB and further down to make sure we have the right solution for the 'S' in SMB," Alexander said.