Troubled Cisco Looks to 'Bust Silos'

Cisco is reorganizing 25,000 engineers in an effort to improve customer responsiveness, streamline development, and make technology reusable across the company.

Mitch Wagner, Executive Editor, Light Reading

November 3, 2014

7 Min Read
Troubled Cisco Looks to 'Bust Silos'

Troubled Cisco has reorganized its 25,000-person engineering team in two tidy groups, hardware and software, in an attempt to "bust the silos" in the company, says a top engineering executive.

The goals for Cisco are threefold. First, "to build the products that customers want us to build," says Pankaj Patel, Cisco EVP and chief development officer. Second, "to bust the silos." Cisco had too many business units in engineering, and is looking to streamline development. The third goal is to be able to re-use technology across the company to solve a range of problems.

The changes come as the engineering behemoth stagnates. Cisco reported a year-on-year revenue decline in its latest earnings in August, and announced 6,000 layoffs, downsizing for a fourth consecutive year. Moreover, the industry shift to virtualization and commodity hardware threatens Cisco's core business selling expensive, proprietary equipment -- though Cisco sees the shift as an opportunity. (See Cisco to Ax Up to 6,000 Jobs, But It's Excited About SDN)

But Patel remains upbeat, saying the organizational change will invigorate Cisco. "A change like this happens once in a generation -- every 10 or 15 years. I am more excited today than I ever have been," he says. "Our customers are demanding that we change and they are working with us. They want us to succeed."

Figure 1: Pankaj Patel, Cisco EVP and chief development officer Pankaj Patel, Cisco EVP and chief development officer

Cisco has put all its hardware development, including ASICs, switching, wireless, routing and optical, under Ravi Cherukuri; core networking software is under Ravi Chandrasekaran. The latter Ravi's domain includes platform-dependent core networking, switching, wireless and routing.

Between the hardware and software groups, Cisco is consolidating its central cloud orchestration, virtualization, and software-defined networking (SDN) groups -- formerly eight separate operations -- under a single leader, Gee Rittenhouse. This new group provides a consistent set of application programming interfaces (APIs) which Cisco can use in all its products, Patel says.

Other groups include collaboration, headed by Rowan Trollope; service provider video, software, and services, headed by Yvette Kanouff, formerly of Cablevision Systems Corp. (NYSE: CVC); security, headed by David Goeckeler; and service provider video infrastructure, headed by Joe Cozzolino, formerly of Google (Nasdaq: GOOG) and Motorola Inc. (NYSE: MOT)

Service provider mobility is headed up by Cozzolino, and the Unified Computing System (UCS) server development is headed up by Paul Perez and Eugenia Corrales. (See Cisco Goes Hyper With New UCS Servers )

On the top of the pyramid are service provider segment lead Kelly Ahuja and enterprise lead Rob Soderberry. "They can take what they want from the portfolios and decide what to sell to customers," Patel says. The segment leader is in the best position to put together solutions "because of the type of position he has, both northbound with the customer and southbound with the product management team in the engineering group."

Ahuja and Soderberry will set priorities for development which the engineering team executes, ensuring that priorities are set by customer needs, Patel says.

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Rounding out the new organization, Cisco's Insieme SDN group will remain separate, to allow it to continue to deliver its products unchecked. (See Cisco's ACI Gets Physical With SDN.)

The reorganization has been in progress for more than 15 months. "These changes are now being mirrored in the field across sales and service," Patel says.

The changes are part of "Escape Velocity," a larger cultural shift in Cisco engineering to encourage innovation, agility, customer responsiveness, and manage Cisco's technology portfolio effectively.

"I want [engineering] to take a lot of risks. I want them to fail often but fail fast," Patel says. "The main piece of Escape Velocity is about building the products and technologies our customers want, bust the silos we had, and create the development environment and technology for the future."

Next Page: Senior VPs Exit Cisco

The changes are designed to improve customer satisfaction, time to market, and provide accountability across the entire engineering team, Patel says. They will allow Cisco to focus on the most important technologies of the future, which are not the same as the technologies Cisco has built its business on. These future technologies include cloud, data center, SDN, virtualization, security, mobility, and the Internet of Things (which Cisco calls the "Internet of Everything"). (See Cisco Pitches Vision for 'Internet of Everything', Cisco: Carrier IoT Role Still Taking Shape and Cisco Beefs Up Its Intercloud, Adds Telco Partners .)

For service providers, Cisco is focused on helping organizations increase revenues, manage capex and opex, improve efficiencies and launch new services more quickly.

The organizational changes will also promote consistent APIs utilizing open standards and open source, providing consistent interfaces for programming Cisco's entire product portfolio, says David Ward, chief technology officer for the engineering group. (See Cisco Drops the S-Bomb.)

Figure 2: David Ward, chief technology officer, Cisco engineering group David Ward, chief technology officer, Cisco engineering group

With respect to network functions virtualization (NFV), Cisco is virtualizing as much of its portfolio as it can, not limited to virtual routers, switches, video and cable equipment, but also collaboration tools, video, mobile, security and more.

SDN and NFV are potentially threats to Cisco, often involving white box hardware that provides alternatives to Cisco's expensive proprietary gear. But Cisco doesn't see it that way, believing that its hardware enables guaranteed service levels and agility that can't be matched by white box solutions. "When you look at TCO -- opex in particular -- what we build into our kit can't be found in whitebox solutions," Ward says. Cisco believes it can give customers the best of both worlds -- SDN programmability combined with proprietary performance.

As a result of the reorganization and layoffs, Cisco has seen several senior VPs quit. Patel declined to provide specifics, but the departures number at least five, according to reports, including Sujai Hajela, SVP of Enterprise Infrastructure and Solutions; Sri Hosakote, SVP and General Manager, Switching and Wireless; Surya Panditi, SVP and GM, Service Provider Networking Group; David Yen, SVP and GM, Data Center Group; and Chris Young, SVP of Cisco’s Security Group. Lower-level VPs are reportedly leaving too.(See Cisco Beefs Up Its Intercloud, Adds Telco Partners )

Does Cisco have a brain drain? "Absolutely not," says Patel, noting that companies of Cisco's size going through the degree of reorganization that Cisco has done often see significantly greater leadership changes than Cisco has seen.

"I have a very deep bench when it comes to leadership," Patel says.

Cisco is yet unable to quantify improvements driven by the new organization structure. "It's still in the early phase. Formally, we launched this as of August 1. Give me some time. I will come back to you and give you some definitive data points."

Cisco has seen growth in several sectors, including networking security, which grew 35%, and UCS rack-mounted data center servers, growing 30% to more than 36,500 customers. The engineering reorganization and Escape Velocity weren't responsible for those changes, but they contributed, Patel says.

To be sure, many of Patel's points are technology cliches. Silicon Valley has been touting the culture of "fail fast" for years, and promises to reduce capex and opex while increasing revenue and agility are standard slides in every SDN and NFV vendor's PowerPoint deck. Still, cliches usually get to be cliches because they're true, and the fact that Cisco recognizes their importance is an encouraging sign it may be facing in the right direction.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to [email protected].

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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