Cisco Targets Small Businesses

Peter Rando, manager of product marketing, demos the UC500 at the Cisco Partner Summit Technology and Solutions Forum. The UC500 is the box on the bottom. It is topped by the CE520, the WAN controller and the IPcelerate IPsmartSuite module.

In an effort to increase its market share among SMBs, Cisco Systems Inc. announced the upcoming summer launch of its Smart Business Communications System (SBCS) for small business and a new Select Certification level for SMB-focused partners. Cisco channel execs told PHONE+ the move will enable the gearmaker to more actively target interconnects and telephony agents that have not yet embraced the companys convergence products.

I think this can be a product that can bring many more of them over. It gives them the ease of transitioning into a convergence world, says Richard McLeod, director of unified communications channels for Cisco and a former executive at Avaya and Lucent with years of experience with traditional telephony channels.

McLeod spoke to PHONE+ in early April at the Cisco Partner Summit in Las Vegas, which drew some 2,400 partners from 98 countries. The event served as a backdrop for the unveiling of the SBCS, which integrates voice, data, wireless and security. Weve built the best of Cisco in one box that is small not from the capability standpoint, but in size, says Rick Moran, Ciscos vice president of solutions marketing.

That box is the UC500, which is based on Ciscos Unified Communications Manager Express and Cisco Unity Express. It is an eight-port system that supports Cisco Unified IP phones and Communicator softphone. It also has a built-in Wi-Fi access point.

The system can be expanded to 16 ports with the addition of the Cisco Catalyst Express 520. (By summer launch, expansion up to 48 ports is planned.) Notably, it includes a VPN for teleworkers but is not a networked solution for branch offices.

IPcelerates IPsmartSuite offers plug-and-play apps for vertical markets, such as health care, as shown in this screen shot of a Cisco IP phone display. The package offers patient interface features like automated sign-in, patient status alerts, automated messaging on waiting room phones, dial-out for appointment reminders, matter code validation and video notes to patients. It also includes productivity apps like visual video collaboration between doctors, call recording and message alerting. Finally, it includes 911 notifications for emergency situations.

With all these functions, the UC500 is not cheap. To get into it, a small business would pay about $700-plus per user, including the IP phone but not counting applications or maintenance and professional fees tacked on by the partner. This compares to a KSU at less than $1,000 plus $150 per phone. And, compared to other challengers to KSUs in the segment open-source IP PBXs are coming in at $1,000 to $2,000 or hosted PBX services at $300 plus $50 per month this entry fee seems steep even for the low end of the market.

The difference here, says Moran, is that UC500 combines capabilities routing, switching, wireless access point, voice mail, VPN and firewall functionality that normally are sourced separately, so the aggregate cost and associated professional fees is potentially less. And Cisco has extended its Easy Lease program down-market, perhaps removing any potential sticker shock.

Similarly for partners, the piece of the pie is so much bigger, McLeod adds, noting UC500 addresses not only unified communications but switching and routing and security as well as SIP trunking and integration with ASP offers like The network services and applications can be commissionable on top of any professional services fees charged. Cisco already has partnerships with network service providers such as Cbeyond and Broadwing (now Level 3 Communications Inc.) such that they are menu selections in the configuration program. When selected, the network configuration data is prepopulated into setup screens. McLeod says additional carrier relationships are planned as are more software as a service (SaaS) integrations.

Cisco also is creating alliances with thirdparty ISVs for software that partners can sell on top of SBCS. At the channel meeting, for example, IPcelerate Inc. announced prepackaged vertical market applications specifically for the UC500. Called IPsmartSuite, IPcelerates offer is a small appliance with embedded software enabling functionality designed for vertical markets through icons on the dashboard of a Cisco IP phone. The initial release includes four vertical market packages tailored to small businesses operating in health care, legal, retail and manufacturing industries. IPcelerate CEO Kevin Brown expects a dozen or more verticals as well as horizontal applications to follow in the coming months. Banking, insurance, local governments and utilities are likely successors.

The partner revenue opportunity includes moving down-market and serving new verticals, Brown says. With IPsmartSuites remote monitoring capability, VARs will be able to push information to customers IP phone screens offering them the ability to enable new functionality like video blogging that applies to the needs of a user.

Ciscos Richard McLeod (above) and Rick Moran (below) at the Cisco Partner Summit in Las Vegas.

Similarly, McLeod says SBCS is designed for channel partners to build a service practice around it such that they will see significant new revenue. SBCSs remote monitoring and management capabilities, for example, represent an opportunity for partners to provide a managed offering, which can realize margins upwards of 50 percent, he says. Cisco Monitor Direct enables partners to offer customers a 24-hour network management service. And the Cisco Monitor Manager, a CPE device, allows partners to not only monitor but troubleshoot and fix problems remotely.

Finally, McLeod says that layering on incentives and rebate programs offers additional revenue to partners. These programs and sales of the UC500 are available to Cisco partners certified to sell unified communications gear.

To facilitate sales of the new SBCS, Cisco also is launching the Select Certification, an entry-level certification for channel partners with a primary focus on the SMB market. It is the first new certification for the company in more than 10 years. Ciscos existing certifications are Premier, Silver and Gold.

The Select Certification is a follow-up to a program launched in 2004 called SMB Select Marketing, which now has 5,000 partners. The company is expanding its certification programs to include these partners. Certification is not automatic; SMB Select Marketing partners must pass certification tests to qualify.

Select Certification has technical and sales training requirements, which when met, give partners access to a range of perks including certified branding and placement in the partner locater. Additionally, a new partner development fund has been created to set aside a percentage of a partners sales to invest in further training, demo units and marketing.

In three-to-five years, Cisco intends to double the number of SMB-focused partners to 10,000 and triple the average business they bring to Cisco, according to Andrew Sage, senior director of worldwide channel marketing for Cisco. About 50 percent or 5,000 are likely to be based in the United States, McLeod says.


Cisco Systems Inc.
IPcelerate Inc. 

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