Cisco SMB Investment To Total ‘Tens Of Millions’ In FY 2024
“We’re investing tens of millions of dollars in marketing, and also tens of millions of dollars incrementally in partner programs [and] profitability to go after the space this year,” Andrew Sage, vice president of global distribution and SMB sales, tells CRN.
Cisco Systems’ small to mid-sized business has been consistently one the company’s fastest-growing segments. Now, Cisco is significantly scaling its investment in SMB to the tune of “tens of millions,” according to executives.
“We’re investing tens of millions of dollars in marketing, and also tens of millions of dollars incrementally in partner programs [and] profitability to go after the space this year,” Andrew Sage, vice president of global distribution and SMB sales, told CRN.
Sage said that Cisco this fiscal 2024 year, which began August 1, is “upping its game” for SMB investment and the company’s executive leadership team (ELT), including CEO Chuck Robbins, approved the spend to go after these customers.
“I think our partners are going to be super thrilled,” he said. “[SMB] over-delivers in terms of contributing growth for the company, and so it was a pretty clear candidate for investment.”
Cisco in 2022 rolled its small business customer segment under its largest route to market, the Global Partner Organization, a fitting move considering that Cisco’s SMB segment, a multibillion-dollar global business, is a 100 percent partner business, executives told CRN at the time.
A year and a half later, the combination is paying off in dividends, to the point in which the San Jose, Calif.-based company has launched a new go-to-market strategy for SMB business called Scale, Sage said.
Scale was introduced in July to Cisco’s global sales and marketing organization. Scale’s strategy, said Sage, “is really about addressing the needs of SMB customer stampeding to the cloud right now … using marketing and partners to scale to serve the needs of our SMB customers.”
SMB customers, or those spending $50,000 or less in annual bookings, are moving to the cloud at a faster pace than Cisco’s larger customer or enterprise base is, Sage said.
“[SMBs] need a platform and they need partnerships in order to make that successful. Our whole goal [with Scale] is to be that platform, to give them the security, the connectivity, the reliability, the performance they need, through partners who can take technology and turn it into an outcome for them,” he said.
Cisco has developed Scale with partners in mind first and foremost, Sage said.
“This is going to be very hot market for partners to drive growth and profitability through managed services and other services. That’s a good reason to pay attention,” he said. “We want to be their best partner. We want to be a partner that will enable them, support them and make them profitable. And we want to go help them find new customers that they can help us to grow their businesses and profitability.”
Luxy Thuraisingam, Cisco’s vice president of Global SMB and head of global partner marketing, added that the company wants to help partners get to market with SMB customers faster.
“To whatever means they want to invest in, we want to invest with them,” she said. “We’re already seeing success. We have the sponsorship of the ELT. We have the investments and the momentum. I hope in another year, we’re celebrating with our partners.”
Portland Internetworks, an MSP and Cisco partner that targets SMB customers, knows firsthand that SMBs aren’t just “pizza shops.” These are businesses that have sophisticated IT needs, but they probably don’t have IT resources in-house, said Doug Westervelt, Portland Internetworks’ CEO.
Westervelt said while Portland Internetworks has been partnering with Cisco for 20 years, the relationship at times been like “dancing with an elephant.”
Now, the firm has seen changes in how Cisco is working with partners to target SMB customers.
“We’re seeing a ton of change in Cisco’s attitudes towards SMB, and much for the better,” Westervelt said. “Cisco is making such a huge investment and has such great brand recognition. I think the opportunity is fantastic,” he said.
Leading With Managed Services
About one out of every two customers in the SMB space is going to want to procure IT through a managed service model, Sage said. “Clearly, we have to have a very, very focused and successful MSP route in order to get these customers.”
About 44 percent of Cisco’s SMB business goes through a Provider Partner, a figure that the company expects to climb to 50 percent or higher.
Alongside MSPs, distributors will be key to Cisco’s Scale SMB strategy since Cisco supports more than 70 percent of its SMB business through distribution.
Cisco will continue to lead with its Meraki portfolio, the fastest-growing platform for the company’s SMB business, Sage said. The single dashboard allows businesses and partners to manage network infrastructure, endpoint security, and SD-WAN.
“Over time, we’re going to work harder and harder to make sure that everything we delivered to this customer falls under that same umbrella,” he said.
Cisco’s former channel chief, Oliver Tuszik, last November at Cisco Partner Summit 2022 said that the SMB market is “by far the biggest opportunity to grow or even double its market share,” but while the company is very strong in the enterprise and public sector, Cisco only has a small market share in the SMB market.
While Cisco has since gained some additional share in certain important routes to market, its ambitions are to gain “a lot more share” in fiscal 2024, Sage said.
“We’re really confident that we know why partners work with us … It’s because of our technology, first and foremost. And then it comes down to profitability and engagement and everything else. So, we need to lead with a strong portfolio,” he said. “Our SMB portfolio has never been stronger, cornered on Meraki, cloud security and cloud collaboration.”