Cisco, Microsoft team up in SMB channel

Microsoft multipurpose server and CRM software for companies with 500 or fewer employees will fly into U.S. small and midsized enterprises on the wings of Cisco networking gear if a new partnership takes off as the companies hope.

Microsoft multipurpose server and CRM software for companies with 500 or fewer employees will fly into U.S. small and midsized enterprises on the wings of Cisco networking gear if a new partnership takes off as the companies hope.

The partnership could help bring advanced call center capabilities, combining data with voice calls, to smaller companies. It also is intended to lift the companies’ channel partners, with system integrators and resellers taking advantage of architecture blueprints, system verification by the vendors and packaged offerings, the companies are set to announce Thursday at Cisco’s partner summit in Honolulu.

Small and midsize businesses (SMBs) will be able more easily to set up a server and get on the Internet safely, according to Rex Bloesser, director of business development for the U.S. midmarket at Microsoft. They also will be able to get CRM functions integrated with converged voice and data communications, improving productivity and customer experience just as many large enterprises already have done, said Peter Alexander, vice president of Cisco’s Worldwide Commercial Market Segment.

For example, when an existing customer calls, call center employees will be able to see a screen of information on a PC about that customer, including the caller’s buying history, he said.

Whereas most of CRM software has been focused on large enterprises, Microsoft has seen the need for sophisticated CRM in SMBs and delivered its Microsoft CRM software to met those customers’ needs, Bloesser said. In addition, many of Microsoft’s smaller business customers also are Cisco shops, and many channel partners offer both companies’ products, he said. The companies aim to provide incentives for channel partners they have in common to offer such systems; they also want each vendor’s partners to join up in order to offer complementary products.

Many SMBs can benefit from these kinds of integrated systems but lack the in-house expertise to implement them; that’s where channel partners are needed and where they have their opportunity to add value, Cisco’s Alexander said.

“It’s an area that is looking for guidance from the major vendors, and certainly Cisco and Microsoft are two of the most visible vendors in the SMB market,” Alexander said. “We reduce the risk and complexity of these implementations.”

The companies’ plan includes the following immediate steps:

• Develop reference architecture blueprints to provide channel partners with guidance for planning, building, operating and supporting sets of technologies for customers.

• Introduce a joint product offering that combines the Cisco 831 Broadband Router and Microsoft Small Business Server 2003 Standard Edition software, a unified server that includes file, application and other servers in one platform. Microsoft CRM 1.2, released in December, can run on Small Business Server.

• Work together to further integrate Microsoft CRM software with Cisco’s Call Manager Express IP telephony platform. This work, which is still going on, is intended to give SMBs advanced call center capabilities, Bloesser said.

The router and server joint product offering will ship in March and represent a 20% price break versus purchasing the products separately. The software reference architectures will be available to Cisco and Microsoft channel partners in the second quarter of this year, according to the companies.

Cisco and Microsoft’s products for converged communications already work well together, but coordinating their development efforts should make it easier for integrators to set up these systems and for SMBs to use the technology, said Gia McNutt, CEO of Special Order Systems, a channel partner of both companies in Rocklin, Calif.

For example, when Microsoft comes out with a new version of a software platform, it’s likely to work closely with Cisco’s gear in time but may not be as fully integrated as possible the day it hits the street, she said. That may have held some SMBs back from adopting converged communications, she said.

“It presents more challenges for the integrator and the customers who’ve embraced this technology early on,” McNutt said.

“The customers all talk. The technology world is very small. … If one person has a tough implementation (experience), it’s heard by others,” she added.

Special Order Systems, a long-time Microsoft channel partner, has been setting up communications systems for customers since 1996 and working with Cisco since 1999. CRM has been big business in enterprises and is just now hitting SMBs, McNutt said. Integration with telephony is a key to making the software useful, she said. CRM software that isn’t integrated with a phone system can’t offer features such as current customer information popping up on the operator’s PC when the customer calls in, she said.

“Those things are almost a hole in CRM, so we see communications integrated with CRM as being so exciting,” McNutt said.

The deal is likely to expand the SME opportunity for Cisco by giving it a firmer foothold in the small-business end of the segment, according to Andy Bose, CEO of AMI-Partners, which studies SME customers and channels for vendors including Cisco and Microsoft. Cisco’s current partnership with IBM is focused more on medium-size and larger companies, he said.

The potential market overall is huge, Bose said. SMBs in the U.S. spend about $135 billion per year on IT. They are just beginning to adopt CRM software, with only about 11% using it now, he added. That compares to between 25% and 30% in many Western European countries. Although the U.S. companies’ needs are different — for example, fewer small businesses in the U.S. do business across borders — they also have been waiting for the right packages from CRM vendors such as Microsoft, SAP and Siebel Systems, he said.

“One of the biggest issues has been … what was available for the SMB market really was not sized properly,” he said.

The partnership may help SMBs in the U.S. catch up with those figures, but its biggest impact will be on channel partners, Bose said. If they execute properly, the two vendors will help them go to market with an integrated offering of software and infrastructure, train them to set up and support those offerings and help them find likely customers, he said.

The convergence of existing technologies as well as the emergence of new ones may help bring about more deals like this one, according to Gartner analyst Michael Haines. For one thing, traditional communications vendors want to tap in to channels, which they traditionally have not used and which are key to reaching small and midsize customers.

“I’m surprised we haven’t had more of these types of announcements,” Haines said.