The mid-market is not new to Cisco Systems. The San Jose, Calif.-based company has been actively selling into the mid-market space for more than a decade. What’s different now is that Cisco has re-developed, re-packaged and re-priced its solutions for companies between 100 to 1,000 employees all through channel partners.
At the heart of this re-do is the Cisco Business Edition 6000, a single-server, scalable collaboration solution that has five applications already built-in. Those apps are Unified Communications Manager, Unity Connection, Instant Messaging and Presence with Jabber, Prime Unified Provisioning Manager, and VCS. One of those apps came from the Tandberg acquisition and used to cost $20,000. Now it’s part of the Business Edition 6000.
Marc Inderhees, a senior manager in Cisco’s collaboration sales team, told CDN that the Business Edition 6000 ships in a box to the channel partner with turnkey licensing. The solution provider just has to configure the applications and as soon as the switch is turned on, the licenses are delivered electronically. Cisco is also giving solution providers the ability to upsell customers with additional collaboration apps such as TelePresence, Unified Contact Center Express, Unified Attendant Consoles, WebEx, and Emergency Responder.
According to Inderhees, Cisco’s approach to the mid-market is similar to the company’s plan for the enterprise. Currently, Cisco has about 40 per cent marketshare globally with customers of 1,000 employees and up. The company has the same goal for the mid-market space.
“We got to 40 per cent in the enterprise in a short period of time. It took a concerted effort with products and programs. Yes, we sold those same products into the mid-market in the last 12 years or so. But we did not do anything to mid-marketized them. We sold the same complicated, sophisticated product to the mid-market. And, we were making them order it the same way with long lead times,” Inderhees said.
He added that the product were not priced accordingly for the mid-market. Cisco has changed that with Business Edition 6000. Cisco also acknowledged that what the mid-market might look like in the U.S. is not the same as in Canada.
Rod Scotland, manager of mid-market architectures for Cisco Canada, said In Canada a mid-market customer could get as low as 75 employees. He said that a 600 person company is a hot market for Cisco channel partners right now. Scotland said the addressable market in Canada is worth $588 million.
“About one in four employees work for a mid-market company in Canada. We are taking the approaching that mid-market needs its own products and price,” Scotland said.
Inderhees gave an example of a typical deal for Business Edition 6000. He said in a 250 user deal, the revenue total encompassing the full suite of applications and TelePresence along with an upgrade to the core network will come in at $350,000. On top of that would be about $75,000 in partner value-added services. At the lower end, a customer could get a full turnkey solution for about $78,000. Partner margins would go through Cisco’s VIP program and could hit 15 per cent.
Ordering the Business Edition 6000 has been re-done as well. The old three-step ordering process has been changed to a single SKU stocking process. In the past, Cisco would ask channel partners to submit to its Advanced Collaboration Architecture Specialization to become authorized to sell this solution. The company realized that channel partners who targeted the mid-market were not able to invest more than 150 hours of training at a cost of about $10,000. For the Business Edition 6000, Cisco has re-designed its authorization standards where the average time invested is about 45 hours at a cost that is roughly $1,000.
Cisco has also reduced the threshold to attain partner benefits and back-end rebates by about 50 per cent. There is also a new promotion to help channel partners close deals faster. Inderhees said channel partners can earn an additional five per cent discount if they can sell any three Cisco end-points. This promotion ends at the end of July. Cisco is also stepping up its channel marketing efforts for Business Edition 6000 with video case studies, partner marketing guides, a seminar-in-a-box tool for both English and French.
The Cisco Business Edition 6000 supports a maximum of five virtual machines (four core applications with Cisco Unified Provisioning Manager as the fifth) running co-resident on the Cisco UCS C220 M3 Rack Server.