Cisco Systems will offer its financing programme for small and medium enterprises (SMEs) with a partner South African bank by September this year.
This was unveiled at a Cisco press forum, in Istanbul, Turkey, last week, which focused on its small business partner programme.
Milo Schacher, Cisco`s director of commercial business for global emerging markets, said the Cisco SMB Lease programme, offered by Cisco Systems Capital, is aimed at helping Cisco channel partners penetrate the SME market.
Traditionally strong in the large business sector, the networking giant is targeting small business in the emerging markets, where it expects the biggest demand for its products to come from in future.
Schacher said the greatest economic shift seen in the past 10 years is the gross domestic product (GDP) of the developed economies has declined, while the GDP of emerging markets has increased.
"In 2004 and 2005, emerging markets outperformed developed markets in terms of GDP growth," said Schacher. "And the 23 biggest countries in emerging markets are growing steadily."
Cisco responded to this trend by defining four emerging market regions, or so-called "theatres": Latin America and the Caribbean; Central and Eastern Europe; Middle East and Africa; and Russia.
These regions comprise 130 countries with a population of 2.2 billion, said Schacher. As a result of this re-organisation, Cisco has increased both focus and investment in these markets, particularly in the top 23 countries.
"The new channel partner strategy is working well across all theatres," said Schacher. In Q1 of the past financial year, Cisco`s emerging markets business grew by 29%; in Q2 by 32%; and in Q3 by 42%.
"We have put a lot of investment into this and expect the momentum to continue. Last year, we had 800 people in Commercial Business, now we have 1 500 and we`ll be hiring more."
Broadband is key
Schacher said Cisco prioritised the investment by introducing country classification, from A to C. As an "A" country, SA enjoys top priority, together with Turkey, Poland, Czech Republic, Russia, Saudi Arabia, Mexico, Brazil and some other Latin American countries.
Cisco recognises five common development phases in a country`s transformation. Of the top 20 emerging countries, 18 are in phase two or three, said Schacher.
"One of the key elements to get a country up to speed is to roll-out broadband and have business and country connected."
Cisco estimates it needs many more channel partners to cover the small business sector, which it defines as companies with 20 to 249 employees. It estimates there are over 1.2 million such businesses in the emerging markets.
Schacher said Cisco has a three-year strategy in action, consisting of eight themes, starting with market intelligence, capacity and partner network building. In A countries, the vendor plans "to have the full build-out across all eight themes in three years", including finance and managed services.
Cisco has introduced the SMB Lease programme in Brazil in an effort to make it easier for the price-sensitive small business sector to buy into its value proposition - that it makes business sense to pay more for better quality and investing in Cisco infrastructure is an investment into the future of the business.
The SMB Lease financing programme will launch in SA in August or September and the partner bank, one of the big four, will be announced soon, he said.
"The objective is to give the SMEs the option to go with opex rather than capex and help them improve their operating cash," said Schacher.
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