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Cisco Goes Small to Go Big

This week at its Partner Summit in Las Vegas, Cisco announced its “Designed for Business” brand for small businesses. The portfolio comprises existing plus new products.
An example of new products, customers with modest networking needs can take advantage of Cisco’s business wireless solutions and extenders. Customers that have more advanced networking needs can choose more feature-rich Cisco Meraki wireless products or the new Catalyst 1K switch that brings Catalyst features to small businesses at a modest price.
Cisco’s product portfolio can be confusing, with such a wide range of switches, routers, access points, collaboration tools, security solutions, and more. For example, most small businesses have simple network architectures making troubleshooting straightforward. A more advanced small business may have WAN connections, VPN links, or Internet of Things endpoints connected, and telemetry information in the Catalyst 1K can be beneficial in ongoing management.
Guide Me, Please
To help small businesses determine which products they should be considering, Cisco has created an interactive product guide. After working through a series of nontechnical questions, such as number of employees and level of IT support, the potential customer receives Cisco’s suggestion for the set of products that would best meet the company’s specific needs at reasonable spend.
I ran it for ZK Research and was advised on the following:
  • Cisco Meraki MS 120 switch
  • Cisco Meraki MR 42 access points
  • Cisco Meraki MX65 with Advanced Service License
  • Cisco Umbrella cloud security
  • Cisco Webex Meetings
  • Cisco Webex Teams
  • Cisco Webex Calling
This suggestion is actually very close to what I’m currently using, except for Umbrella (and now I’m wondering if I should add it).
Market Defined
Cisco’s definition of small business has less to do with employee headcount and more to do with level of IT spend. The company uses a combination of current spend, wallet share, and potential spend to determine whether a company falls into its definition of small business. The modest level of spend from these organizations would indicate the networking requirements are basic in nature. Once businesses get bigger or connect more nodes, they would require the feature set found in some of the higher-end Meraki equipment and Catalyst products.
If you wanted to affix a headcount to the segmentation, it would be around 250 or fewer, Andrew Sage, Cisco’s VP of global distribution, said during an analyst Q&A. But that can vary widely by type of organization, he added.
Cisco wouldn’t say what it feels the total addressable market (TAM) for this segment, perhaps so as not to create financial expectations that it can’t meet. From my discussions with other analysts and channel partners, I’d estimate the TAM to be anywhere from $30 billion to $50 billion. Given how fragmented this market is, even a small bit of success could move the needle for Cisco.
While the plan makes sense, it’s not like Cisco hasn’t tried to sell into small businesses previously. This begs the question: Why will Cisco be successful today when it hasn’t been successful in the past? I asked this question to Marc Monday, who left his self-described “comfy job” at SAP to become Cisco’s sales VP for global small business because he believes in the strategy so much.
Changing the Status Quo
Thar’s gold in them thar hills, for sure, but to claim it, Monday will need to fix many of the issues that have held Cisco back in the past. He described Cisco as a kid who has finally grown up and is ready to take on this challenge. He told me that if you try and teach a five year old calculus and they fail, you can’t get upset as the child doesn’t have the mathematical background to excel at it. Once the child turns 16, and has taken several years of algebra, they’re ready to take on the challenge.
One of the big shifts in Cisco’s business today since the last time it took a shot at the small business space is the number of SaaS apps available today. Small businesses want simplicity. In fact, during his keynote, CEO Cisco Chuck Robbins said, “Never has technology been so important to our customers and never have they cared less about the details of the technology.” This is as true for small businesses as it is for large enterprises.
Cisco’s broad portfolio of SaaS apps includes Webex, Umbrella, Amp, Duo, and others. Products like Meraki, which require on-premises infrastructure, are cloud-managed. That’s becoming the norm for Cisco. This makes provisioning, deployment, and management much easier than when dealing with on-premises deployments.
In addition, Cisco is investing more in its partner program to make it more small business channel-friendly, rather than simply applying the same processes used for enterprise-class sales. Now there’s far more automation and simplicity to streamline the processes. Also, Cisco will look to leverage both service providers and distributors to attack this market, since those types of businesses are optimized around selling to this market. Toward that end, Cisco introduced a number of new offerings for its partners that serve small businesses.
And, it’s banking on its massive size to be a differentiator, particularly when it comes to support. When a problem does occur, customers can call Cisco’s global, 24/7 technical assistance center and get a live person immediately. This isn’t the case with small vendors. Also, Cisco has excellent security technology and the methodologies to ensure its products are secure. This should give customers a higher level of trust with Cisco that they might not have with a smaller, point product vendor.
Cisco seems to be set up right to win here, so it’ll be interesting to see how small businesses respond. Will the Designed for Business initiative help convince them that Cisco products aren’t too complicated and expensive for them?
ZK Point of View: A small bit of success can yield big dividends and take the stock to a new level. However, the Cisco brand isn’t as revered with small businesses as it is with enterprises. Cisco must be willing to invest heavily in branding and marketing specifically to this audience to have success here. Given this initiative has the support of every executive team member, it’s more likely than not that Cisco will have at least modest success this time around.
One final note, the first day of Partner Summit, Nov. 5, was Cisco CEO Chuck Robbins’ birthday. He’s driven the company stock to heights not seen since 2000, made caring about the world something every employee thinks about, and this year Cisco achieved the honor of being voted the #1 best place to work. For that, and the fact that he’s a genuinely nice person, I’d like to wish him a very happy birthday.