Cisco looks to channel for SMB sales surge

Milo Schacher, senior director commercial business, global emerging markets, at networking giant Cisco talks through his plans to capitalise on strong channel momentum in the Middle East market.

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By  Stuart Wilson Published  August 29, 2006

|~|MiloScha200.jpg|~|Milo Schacher, senior director commercial business, global emerging markets at Cisco|~|Milo Schacher, senior director commercial business, global emerging markets, at networking giant Cisco talks through his plans to capitalise on strong channel momentum in the Middle East market.

CME: Cisco has a range of financial programmes that the channel can take advantage of. When will we see initiatives such as the SMB lease programme actually rolled out in the Middle East?

Milo Schacher: This is a scheme that Cisco has already launched in some Latin American countries. When we launch this type of scheme the Cisco Capital team will choose a partner bank that works in the SMB space. At the moment we are investigating the possibility of launching this programme in some key markets such as Saudi Arabia. We have already made a couple of contacts in Saudi Arabia and we are currently talking to them and that is where we are up to at present. There is no specific launch data but Saudi Arabia remains a high priority market that we are totally committed to.

CME: Saudi Arabia seems to be a market of real focus for Cisco. How are you making sure that enough skills exist in-country to allow the market to grow to its full potential?

MS: This is where programmes such as the Cisco Networking Academy come into their own. This is an initiative that we roll out in all countries working closely with the government and education establishments. One of the key priorities for Cisco in many of the emerging markets that we operate in is to build up the channel capacity that exists in the market. To do that we require skilled networking professionals.

CME: How has the distribution model evolved in emerging markets? Distributors in the Middle East are now saying that the CDP-CAD distinctions are meaningless.

MS: In the past we did have the CDP-CAD model, which was basically a two-tier approach to distribution. We migrated out of that model at the beginning of the financial year for the Middle East and all distributors can now purchase directly from Cisco under the conditions that we have agreed with them. However, if they see some value in buying from another distributor they can also do that but without price support from our side. We think that this model fits best with our strategy and it has also reduced the complexity associated with managing the previous two-tier model.

CME: How do you expect the Middle East distribution set-up to develop moving forwards?

MS: A key priority for Cisco during this fiscal year is to build up the capacity for serving the SMB segment and a key element of this is making sure that we have the proper number of resellers targeting these customers. We also need to make sure that we have the right number of distributors for these resellers to buy from. What you will see moving forwards is the existing distribution partners growing in terms of their size. You will also potentially see new distributors appointed in the Middle East market as well. Cisco plans to extend more credit capacity to the channel meaning better conditions and better commercial capabilities for the resellers and more technical support capabilities from the distributors as well.

CME: In terms of expanding your partner base to target more SMBs, how are you balancing this channel effort alongside what Linksys is doing in terms of building up its routes-to-market?

MS: This is something that is defined very clearly internally. There is a certain market area that Cisco is unable to address and this is where it makes real sense for Linksys to operate. Therefore, on the channel side, what is happening now in the field is that our partners are going in to make the sale and instead of walking away from a potential deal with a small price sensitive customer, the partner will instead sell the customer a Linksys solution.

CME: Are you actually seeing this happening with partners already?

MS: We have partners out there in the market that go out to sell the Cisco value proposition and when they run into a situation where they can’t sell Cisco — be it a low-end small office home office customer or a price sensitive customer — they will sell Linksys. I actually met up with a premier reseller a few weeks ago and spoke to them about this very point. The reseller informed me that he was doing about US$2m in Cisco business and a further US$400,000 with Linksys. This is exactly what we want to see. We have a very powerful offering for the channel and we are aligning the Cisco and Linksys brands carefully.||**||

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