Canadian Small- and Medium-Sized Companies Taking ’Big Business’ Approach to Technology

Cisco Net Impact Study Reveals Organizations Aligning Technology Investments with Business Goals and Customer Strategies

TORONTO, November 30, 2006 - Canadian small and medium enterprises (SMEs) are taking a “big business” approach to their technology investments and becoming more sophisticated, according to findings released today from the Net Impact SME Canada 2006 study. The complete report, part of the Cisco® Net Impact Research Series, which measures the effects of information and communication technologies (ICT) on business processes, can be found at http://newsroom.cisco.com/dlls/global/canada/NetImpactCAN2006.pdf

Net Impact SME Canada 2006 reports that the ICT infrastructures of small- and medium-sized businesses are becoming increasingly similar to those of larger enterprises - a shift fueled by the need for SMEs to strengthen their relationships with their customers and remain competitive. Meeting the demands of customers is cited as the primary driver of investment for almost a third of the study’s respondents; 25 per cent of the companies cited increased competition.

“We’ve seen a marked change over the last decade, with Canadian businesses becoming far more strategic in their approach to technology investment,” said Jay Shutter, managing director of Illuminas, the global market intelligence firm that conducted the survey on behalf of Cisco Canada. “Previously, with most SMEs, technology was about simply getting the job done. Now, SME business and technology strategies are increasingly aligned, and IT is being harnessed to drive customer engagement with more sophisticated customer relationship management and enterprise software applications.”

“We’ve witnessed an important transition in how SMEs value technology,” said David De Abreu, vice president of commercial operations at Cisco Canada. “Whereas in the past, organizations tended to make IT investments to cut their costs, now they are looking beyond that and considering the role technology can play in enhancing their customer programs and sales activities.”

Of those SMEs with a more sophisticated infrastructure, the majority have implemented networking hardware and software and network security solutions. Other solutions being widely adopted are business productivity applications such as those used for data storage or business automation processes.

Key findings of the study include the following:

* 75 per cent of SMEs are using networking hardware and software and network security solutions to automate, enhance or improve business processes

* Half of SMEs report their ICT strategy is aligned with their business strategy

* SMEs rank customer relationships as most critical to their success

* Half of the SMEs report that technology is enabling them to find new customer prospects

* More than one-third of SMEs are early adopters, exploring technologies or implementing them as soon as possible to gain a competitive advantage

* The typical SME has not established performance metrics for monitoring and evaluating its ICT investments on a consistent basis

Net Impact Canada also reveals the optimism of small- and medium-sized businesses regarding their revenue growth. Fifty-nine per cent report an increase in current year-over-year revenue, and 67 per cent expect earnings to increase again over the next year.

“It’s no coincidence that, as smaller companies begin to invest more heavily in ICT, they realize an increase in profits,” said De Abreu. “We’re seeing that SMEs are more prepared than ever to meet their business goals and are reaping the benefits. Cisco expects to see a continued rise in ICT adoption across Canada, and we are excited to be a part of SMEs’ continued growth and success.”

For the Net Impact SME Canada study, Illuminas conducted interviews in June and July 2006 with senior decision makers from 200 organizations employing fewer than 500 workers. Only those organizations actively using information and communications technologies to automate, enhance or improve business processes qualified for the study. This is the fifth year Cisco has commissioned a study to explore the challenges and opportunities facing the Canadian SME market.
About Illuminas

Illuminas is a market leading research consultancy headquartered in the UK, with offices in London, Hong Kong, New York, NY, San Francisco, CA and Austin, TX. Over the last seven years, Illuminas’ technology practice (formerly Momentum Research Group) has examined the macro- and micro-economic impact Information and Communications Technologies are having in the United States, United Kingdom, Germany, France, Italy and Canada. In the course of these studies, Illuminas has partnered with researchers from notable organizations including the University of Texas, University of California, Berkeley, Schulich School of Business, York University and The Brookings Institution. For more information about Illuminas, visit www.illuminas-global.com
About Cisco Systems

Cisco (NASDAQ: CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Cisco Systems Canada Co., a wholly owned subsidiary of Cisco Systems, Inc., has offices across Canada dedicated to customer support, sales and service. Cisco products are supplied in Canada by Cisco Systems Canada, Ltd. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com/canada/

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