Cisco (CSCO) has signed a memorandum of understanding with Alibaba Group to explore ways to jointly offer collaboration and business management solutions to small and medium businesses.

Cisco and Alibaba Group announced the agreement at a signing ceremony attended by Jack Ma, chairman and CEO of Alibaba Group, and John Chambers, chairman and CEO of Cisco.

"Our collaboration with Alibaba Group will play an important role in helping extend our industry-leading SMB solutions effectively into the Chinese market," said John Chambers, chairman and CEO of Cisco. "By combining Cisco's technology leadership with Alibaba Group's community of eCommerce in China, we will help drive market transformation through innovation and bring benefits to SMBs as well as consumers in the Web 2.0 Era."

Under the terms of the MOU, the two companies agreed to explore collaboration in several areas, including provision of SMB focused web collaboration services; joint marketing of SMB focused web-based business applications developed by WebEx and its technology partners; cooperation in expanding Alibaba Group's overseas market; strategic business development initiatives to enable software-as-a-service capabilities.

Cisco and Alibaba Group will also appoint dedicated teams to develop execution plans across all areas of the MOU.

Under a previous agreement, Cisco will invest approximately US$17.5 million in Alibaba.com Limited, a subsidiary of Alibaba Group, as part of Alibaba.com Limited's planned initial public offering on the Hong Kong Stock Exchange, becoming one of only eight cornerstone investors in the listing.

"We look forward to cooperating with Cisco to find ways to bring software services to China's SME's," said Jack Ma, chairman and CEO of Alibaba Group. "China is entering a golden era for enterprise software services and collaborating with Cisco will help us meet our goal of bringing world class technology to China's businesses."