Cisco's Chambers: If You Don't Change, You Get Left Behind


Cisco Chairman and CEO John Chambers on Tuesday told thousands of Cisco Live attendees that while Cisco hasn't faltered in its pace of innovation, the company has become too complex to work with and is hard at work on making those processes simpler.

In a keynote presentation at Cisco Live in Las Vegas, Chambers argued that Cisco needs to focus on innovation so that within two or three years, it remains the networking leader, can execute faster and more simply, has a leaner organization, and is a better trusted networking and IT business partner.

It's a now-familiar refrain for the embattled Cisco CEO, who faces consistent criticism from Wall Street, Cisco customers and Cisco channel partners that Cisco had lost its operational focus and has seen disappointing earnings, lost confidence and threats to its core switching and routing businesses as a result.

Chambers himself said as much in a now-infamous April memo, and in recent weeks, Cisco executives have promised that Cisco will emerge from its ongoing corporate restructuring a simpler, better engaged company that has fewer layers of bureaucracy.

"We will do whatever it takes to make you successful," Chambers said.

Chambers reiterated that Cisco will focus on five major priorities going forward: its core networking businesses, collaboration, data center (including virtualization and cloud), video, and business architectures that tie those technologies together.

It's those technologies, Chambers said, that will define the role of the network in business going forward. Video, especially, will be a game-changer, but Cisco's focus will be on solutions that cover four major trends of mobile, social, visual and virtual.

"Four years ago we said video was going to be the next voice," Chambers said. "Video, four years from now, will not only be the leading way we communicate, it'll be the primary form of IT."

The distribution, management and usability of video will depend on the strength of the network architecture beneath it, he insisted.

"Without this architecture, video does not take off," he said. Among major IT vendors, only Cisco, Chambers said, has the whole stack and critical mass needed to do that.

Cloud, he said, will undoubtedly be the next IT architecture, and Cisco's impressive growth behind its Unified Computing System (UCS) is an example of how it has moved to capture the cloud trend quickly, Chambers said.

"A cloud to me is a combination of software-as-a-service, platform-as-a-service and infrastructure-as-a-service," Chambers said, citing scalability, cost effectiveness and on-demand availability as what drives customers to invest in cloud strategies.

Chambers also cited mobility and security, the latter of which is what Chambers said is his "top focus in terms of a capability across all of those five key company focus areas."

Chambers was quick to address Cisco's restructuring, saying that Cisco simplified management. For example, before, he said, Cisco had four or five individual groups focused just on switching, and the situation was the same in other major technology segments.

Cisco has for some time been "top heavy," he said, referring to the myriad managers, councils and boards that have slowed Cisco's decision making in recent years.

"We're a $40 billion company," he said. "[But] if you don't change, you get left behind, regardless of size."

Cisco solution providers that attended the keynote told CRN that Chambers and his executives were saying all the right things, but with the specter of Cisco layoffs lingering and a lot left to be determined about how Cisco will operate as a leaner company, it was too early to tell how much Cisco had accomplished from a turnaround perspective.

"They know they have to make doing business with them easier," said a top sales executive at a national Cisco partner, who requested he not be identified. "We've all told them that and now that they see it showing up in their quarterly numbers and in the criticism they get, we're seeing actual changes."

The partner said that the changes Cisco made to its channel sales organization and its global field sales structure should make things easier for VARs.

"We've yet to see any reason why those changes are a negative," the partner said.