Chambers Promises a Simpler Cisco

LAS VEGAS -- Cisco Live 2011 -- After his Tuesday keynote, Cisco CEO John Chambers said he's making a mental note to not miss the next big transition in his business.

His talk had included a slide showing Cisco's major transition points so far. In 2001, at age 15, Cisco survived the dot-com bust by expanding beyond switching and routing. Now, 10 years later, Cisco is at another major transition point -- one Chambers said the company will fix by making decisions faster and becoming less bureaucratic.

"Speed of decisions is the number-one thing I want to see improved at Cisco," he'd said during the keynote.

His slide showed the next phase lasting only five years. While a small group of audience members hung out with Chambers after the keynote, Zeus Kerravala, an analyst with Yankee Group Research Inc. , asked about that time frame, and Chambers responded that he expects the next major transition to come that quickly.

He added that he intends to do a checkup on the business at around year four, to make sure he isn't caught by surprise again.

The simpler Cisco
Cisco isn't expected to detail its restructuring until after its fiscal year ends on July 31. So, Chambers didn't talk at all about the staff cuts that have been all the rage in the press. (See Report: Cisco Cuts Could Hit 10,000, Cisco May Cut 5,000 Jobs and Cisco's Early Retirements Begin.)

But he did give Cisco's customers an overview of how the company's management is changing, the goal being to create a faster organization that's easier to do business with.

Because Cisco Live is a customer event, Chambers emphasized that more sales decisions will be made closer to the customer level, rather than by faraway executives.

In the post-keynote hanging-out session, Chambers added the boards-and-councils structure hadn't necessarily outlived its usefulness but had become too bureaucratic. The number of boards and councils has already been reduced to three -- enterprise, service provider and emerging markets. (See Cisco Cuts Down on Councils.)

"The guys that run those boards will be held to greater accountability than in the old model," Kerravala told Light Reading.

Cisco is also merging some product groups, because the siloed approach that served it well in the 2000s has become too clunky, Chambers said. Too many groups emerged -- software had three major ones plus assorted skunkworks around the company. Software is being melded into one group, and something similar is happening to Cisco's other major businesses.

Table 1: Integrating Cisco
These pieces... ... Are getting combined into:
Various software groups OS group
Switching / Routing / Optical Core technology group
Voice / Social media / WebEx Communications and Collaboration team
Cable and set-top stuff Service provider group

Chambers also mentioned in his keynote that the company will integrate new technologies more quickly. Kerravala translates that to mean Cisco has to make "fewer acquisitions or bigger ones" -- probably the latter.

One topic Chambers didn't discuss was market adjacencies -- the technologies peripherally related to Cisco's business. "That to me is their biggest challenge," Kerravala says. "Last year they were talking about 30 adjacencies. I think they might streamline that down to 10."

Adjancencies are maligned nowadays, partly because no one could figure out why Cisco wanted to own the Flip camera. But they helped Cisco dig out of the dot-com crash. Five of the six advanced technologies, as Cisco called them back then, became $1 billion businesses for Cisco, Chambers said. Those include security and wireless LAN. (The sixth technology is probably optical networking.)

Kerravala thinks Cisco has to keep looking outside its normal boundaries for growth. "Enterprise drives the ship, and there aren't that many large areas of spend lift in enterprise that have the margins Cisco wants and that they don't dominate," Kerravala said.

— Craig Matsumoto, West Coast Editor, Light Reading

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Pete Baldwin 12/5/2012 | 4:59:34 PM
re: Chambers Promises a Simpler Cisco

So, the optical group (which seemed to be resurgent) is now merged with switching & routing.  I'd missed that detail in my own table - Andrew Schmitt of Infonetics pointed it out.

In my defense: I'd been thinking about how optical had been taken off the AT list, so that its *revenues* would be reported as part of routing & switching. That was years ago, and it's not the same thing as actually merging the groups. Interesting.

One that I *DID* notice is the merging of cable into a more general service provider group. I always perceived Scientific-Atlanta as its own little universe inside Cisco, but ... not any more.

Galileo 12/5/2012 | 4:59:33 PM
re: Chambers Promises a Simpler Cisco Good article Craig. I wonder if it means that cisco will be focusing it's switching more innthe core level and less in the access
Jeff Baumgartner 12/5/2012 | 4:59:32 PM
re: Chambers Promises a Simpler Cisco

Interesting move. With cable finally going with IP video , or at least QAM/IP hybrids, it might make sense to fold all that together if Cisco doesn't have to place as much product development behind a cable QAM partition.  Looks like those products will be able to address the telco and cable markets , or at least address them with some tweaks that are specific to the SP. JB

inauniversefarfaraway 12/5/2012 | 4:59:32 PM
re: Chambers Promises a Simpler Cisco

Hope JC doesn't reprise the "I believe" video from the Nortel days, what a sad video that was. Remember the girl that hesitantly said "I believe... Nortel will be here... in a year..."

Can someone give us those famous last words "Cisco will survive!"

Gabriel Brown 12/5/2012 | 4:59:30 PM
re: Chambers Promises a Simpler Cisco

Hi Craig -- does the Mobile Internet Technology Group (part of Service Provider) ever come up at these big Cisco events?

This group was formed around the Starent acquisition and, from what I can see, looks to be doing well. It has had some big strategic wins outside the core W. Europe and N. America in the last 12-18 months.

Rush21120 12/5/2012 | 4:59:28 PM
re: Chambers Promises a Simpler Cisco

How is does cutting 14% of your work force make you simpler?  The question is what/whom will be cut.  Cisco has grown too big, is losing profitability and has way too many managers.  The issue, as it always has been for Cisco, is that the people making the decisions are still the same.  Without significant top/middle management changes history/Cisco will repeat regardless of what JC says.  I say this as a previous 9yr Cisco employee 2000-9, where I and several others created products for Cisco making ~$7B in direct sales.

Pete Baldwin 12/5/2012 | 4:59:27 PM
re: Chambers Promises a Simpler Cisco

> How is does cutting 14% of your work force make you simpler?

That's a key question. Some staff cuts are probably necessary, but any larger action would seem like it's being done just to appease Wall Street.

My hunch is that you're right - the primary changes Cisco needs are in the management ranks.

Pete Baldwin 12/5/2012 | 4:59:27 PM
re: Chambers Promises a Simpler Cisco

Gabe -- You know, I don't know. Last year would have been a big splash year for Starent, but I didn't attend last year.

Overall, the event does focus more on the IT side (lots about Cloud and UCS, e.g.)

^Eagle^ 12/5/2012 | 4:59:18 PM
re: Chambers Promises a Simpler Cisco

You could probably fire everyone with rank of VP or above (with a very few exceptions) and no one would miss them.  Most folks at that level only create endless meetings that don't get real work done.  The real work is done by rank and file engineers, engineering managers, and the folks who manage the direct relationship with customers.  

it would be interesting to know how much it would save in $$ if Cisco were to simply lop off the top 1/4 of the company's executive ranks.  I would cut all management that is more than 2 layers between working engineers and department heads.  Or more than 3 layers away from JC himself.  Haha, I would also completely clean out JC's suite of managers below him and admin staff.  Give him a desk in a cubicle near engineering.  Make him do his own powerpoint slides like everyone else.  Go back to real start up mentality.  Become aggressive in technology not simply "management techniques".

Sadly, the same is true for many many companies struggling financially.  From start ups to giant companies like Cisco.  

Surprise surprise, cut out the highly paid, low work output producing execs in most companies and you will see strong balance sheets and growing profits.  [Note: the assumption that the "C" level of a company is smarter and can make better decisions than the rank and file middle manager is just that; An assumption.  They, the executive teams, simply have access to a different mix of information.  Not smarter at all, and certainly clearly not able to make better decisions!]



bkechiche 12/5/2012 | 4:59:17 PM
re: Chambers Promises a Simpler Cisco

Gabe, the Starent team that came witht the transition is still at Cisco driving the effort, they had two exces heavily exposed to the analyst side event. will be more thna happy to biref you, fill some gaps.

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