SMB key focus area for IT cos

Small and medium businesses have suddenly become a key focus area for IT companies. Everyone is trying to tap this segment which is expected to make huge investments in their IT infrastructure. Senior vice-president (commercial), Cisco India & SAARC Pramodh Menon explains why this segment has assumed greater importance for the company and how it plans to tap it.

There is a lot of interest in tapping the SMB segment. While Dell recently launched a new brand ‘Vostro’ catering specifically to SMBs, Cisco India has come out with a new strategy for the segment. What is the reason?

If you just look at some of the statistics and projections on the SMB segment, that would explain this sharper focus on SMBs. According to an Access Markets International Partners 2006 study, there are an estimated 7.6 million SMBs in India. These small and medium businesses are expected to increase their IT spend by 24% in 2007 to about $8 billion to beef up their servers and networking technology. This is a huge market that needs to be tapped.

More importantly, the SMB companies in India are driven by entrepreneurial spirit and global ambitions. Their revenues and profits are growing faster than others. They have easier access to capital than ever before. Globally, Cisco decided to focus on small and medium businesses in 2004. Until then, we used to fit in our existing products for the segment. In the last 12 months, we have focused on purpose-built products for these small companies with less than 100 employees and medium-sized companies with up to 250 employees. Following the strategy of our parent, Cisco India is also focusing heavily on the SMB segment.

What are the challenges in catering to SMBs?

The challenge is to connect IT with business for those who are not so far IT adopters. So, we have designed SMB Class Solutions considering the specific requirements of the SMBs and have been educating these customers with its benefits. For example, Cisco’s Integrated Services Router (ISR) is a typical SMB class product that combines the benefits of voice, data and video. It does away with diverse sets of hardware and literally is a ‘small office’ out of a box.

Finance is a big issue for these small and medium businesses. How do you address that?

As part of Cisco’s continuing commitment to help small and medium-sized businesses (SMBs) and midsize companies invest in smart data and communications solutions, Cisco Capital offers the Easy Lease programme in India. This innovative financing programme is designed to enable SMBs to adopt state-of-the-art network technology quickly and easily, with minimal initial investment and maximum convenience.

By making payments on a monthly or quarterly basis, SMBs can maintain consistent and balanced operating and capital expenditures. Easy Lease offers streamlined lease documentation, flexible payment options and fast turnaround.

What about channel expansion? How does Cisco plan to increase its reach?

We are already present in nine cities and we see small and medium businesses capable of large-scale IT adoption in 16 more cities. These include Coimbatore, Lucknow, Bhubaneshwar, Baroda — the tier II cities. We have launched Select Certification programme to differentiate, recognise and reward Cisco channel partners that have a focused business practice selling into the SMB market.

That brings an additional 600 SMB-focused channel partners to our existing 1,500 reseller base. We’ll also augment our Network-on-Wheels campaign that we launched 12 months ago and is a mobile demonstration of our products and solutions. It is amongst the largest marketing programmes by Cisco in India.

Cisco also has a specific segment, Cisco Capital, that provides finance to SMBs. How does that fit into your SMB strategy, besides the Easy lease programme?

Yes Cisco Capital is an integral part of our SMB strategy in India. It is the technology financing arm of Cisco Systems. Cisco Capital enables Cisco’s customers to easily acquire, deploy, maximise and upgrade their networking technology investments through innovative financing solutions, which include leasing — one of the most flexible and cost-effective financing tools. Easylease is one of the programs that come under it.