Is Nuova Needling Cisco's Brass?

Most observers agree the recent departure of Jayshree Ullal is a byproduct of Cisco Systems Inc. (Nasdaq: CSCO) shifting into more of a services model. But what if Ullal's case, specifically, had some extra motivation behind it?

Some sources think Cisco's upcoming acquisition of Nuova Systems helped Ullal -- a senior vice president and part of the nine-person Cisco Development Organization that's second-in-command to CEO John Chambers -- decide to walk out last week. (See Ullal Calls It Quits at Cisco.)

Nuova's four founding executives -- Mario Mazzola, Luca Cafiero, Prem Jain, and Soni Jiandani -- hailed from Andiamo, the storage networking spin-in that Cisco funded and acquired a few years ago. And long before that, they'd been acquired into Cisco normally, via its purchase of Crescendo. (See Cisco/Andiamo Vets Try Something 'Nuova', Andiamo Crew Reunites With Cisco, and Cisco Wraps Up Nuova.)

Ullal hailed from Crescendo, too. But she and other top execs didn't get startup-like payouts for staying inside Cisco, and they certainly didn't get to do it twice.

"I'd heard she was pissed off about the whole Nuova thing," as one source, requesting anonymity, put it.

Another theory is that a Nuova founder's new job at Cisco was going to clash with Ullal's, possibly helping to trigger her idea to leave.

Cisco named John McCool as Ullal's replacement, but it's not yet said what the Nuova team will be doing, since the acquisition isn't completed.

"When integrated into Cisco, they [Nuova] will be an independent business unit, and the founders are expected to be in leadership roles," a spokeswoman tells Light Reading via email.

Other sources don't think Nuova factored into Ullal's decision at all. Some believe her departure, and those of other executives like former chief development officer Charles Giancarlo, had more to do with Cisco's long-term future. (See Giancarlo Quits Cisco, Paddles to Silver Lake.)

Big-picture pressure
Two of Chambers's main themes lately have been the use of Web 2.0-like tools to complete corporate projects and the shift of Cisco more into the realm of IT services.

The latter is happening partly because Cisco worries about low-cost router competition, as Chambers has discussed openly for years. (See Cisco Rolls Out Roadmaps.) But it's also one of the few ways Cisco can keep fueling the 12 to 17 percent growth per year that Chambers keeps talking about.

"Cisco has a commanding market share in all the significant segments which generate revenue for it, and none of those segments show organic growth," says Tom Nolle, principal analyst of CIMI Corp. "What that adds up to is what I'm going to call the WebEx direction."

Cisco acquired WebEx Communications last year and is selling it not as a plain enterprise tool, but as a service, Nolle points out. (See Will WebEx Change Cisco?) Moves like that don't bode well for a team that's accustomed to selling boxes.

"The skill set that's needed is quite different," says Zeus Kerravala, an analyst with Yankee Group Research Inc.

"Cisco is going to be a different kind of company because Wall Street mandates it become a different kind of company," Nolle says. Some executives might have seen this coming or, Nolle theorizes, Chambers might have dropped them hints that Cisco's new direction is going to lean on executives from a different industry sector.

This isn't necessarily bad. If Cisco gets the transition right, the moves will seem ingenious. "If they get it wrong, they're looking at more management changes, starting with John Chambers," Nolle says.

— Craig Matsumoto, West Coast Editor, Light Reading

ScottEmery 12/5/2012 | 3:40:26 PM
re: Is Nuova Needling Cisco's Brass? Re: Paragraph 4.
Charlie came to Cisco from Kalpana, not Crescendo. See his Bio: http://www.silverlake.com/cont...
Pete Baldwin 12/5/2012 | 3:40:25 PM
re: Is Nuova Needling Cisco's Brass? I think you're right... I'm getting my really old acquisitions mixed up.

Thanks - we'll correct the story.
Stevery 12/5/2012 | 3:40:17 PM
re: Is Nuova Needling Cisco's Brass? Subject: cisco brass
Who cares? They're all just milking the cisco teet.

And this must be when "cisco has big brass teets" enters the lexicon.
sjd6 12/5/2012 | 3:40:17 PM
re: Is Nuova Needling Cisco's Brass? Who cares? They're all just milking the cisco teet.
Sisyphus 12/5/2012 | 3:40:03 PM
re: Is Nuova Needling Cisco's Brass?
The article discusses several different issues and mingles them together, presenting a linearity that in my humble opinion isn't.

First of all, there is the very valid discussion about Cisco's need to grow out of tin-pushing box manufacturer mode. The quarterly numbers show that is indeed happening, without the need to revamp top management. That trend will continue to accelerate. But that may affect key technology visionaries more than it does top management - I think the "cultural change" needs to be led by management employees and investors trust. But the ASIC stalwarts may not be the most effective technology visionaries going forward. But even that is changing.

Then there's Jayshree's departure. I very much doubt it was in any way prompted by compensation envy - I think insider trading shall reveal Ullal can retire many times over. But she has been in exhausting roles for a very long time, and unlike other executives that have taken one or the other breather assignment she's always been involved in one of the most aggressive and competitive areas. I must assume she could have gone for spin-outs if she'd chosen to, she most certainly signed off on some of them, which probably would not have happened without her approval.

As to Tom Nolle - he is right. Web 2.0 stuff is networking companies' last preliminary chance to gain relevance at the application level, which would be a huge inroad into where the IBMs and Oracles of the world feast on Enterprises IT budgets. Cisco seems to get it and seems to be making the right things to get there, one step at a time, and elarning lessons along the way. SONA has matured, partnerships with SAP show Cisco leverages its strengths in software without threatening the big software vendors realm, and it is a very interesting vision to enrich applications with more and more network capabilities.

It'll be a great thing for networking if Cisco can elevate the network further and make it more relevant at the application level.
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