Chuck Robbins On Cisco Cloud: From 'Death' To Growth Driver

Cisco Systems went through some early growing pains when it came to figuring out a successful cloud strategy. Now, the IT powerhouse found its niche as a network and security manager of the multi-cloud world.

"I've joked that the irony of all ironies that that the cloud was supposed to be the death of Cisco five or six years ago. Now, it's actually driving the company's growth," Chuck Robbins, CEO of Cisco, told CRN.

That's because customers have discovered that cloud doesn't mean adopting one platform; a multi-cloud approach is required. Cisco not only partners with some of the industry's leading providers, but harkening back to its networking roots, Cisco is a specialist in managing on-premise IT environments and knows how to help customers manage a brand-new kind of IT infrastructure.

"Customers are consuming collaboration services from us and other service providers, and then they are consuming [Software as a Service] SaaS solutions from up to 200 different providers, so they find themselves trying to manage this entirely new network where traffic is flowing in nontraditional patterns," Robbins said. "That requires a re-architecture of the infrastructure."

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But the path to growth didn't come easy. Cisco has diligently spent the last several years evolving its cloud strategy. The San Jose-based IT giant realized that a focus on multi-cloud would be the right approach for it to take in the crowded cloud space because the vast majority of customers are using multiple clouds platforms and applications, including Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP), as well as Salesforce, Office 365, and Workday.

"People talked about cloud in the beginning like they were just going to move to a different neighborhood," said Kip Compton, senior vice president of cloud platforms and solutions for Cisco. "Like they could just move everything to one cloud, and it would be very simple."

The reality is, cloud environments are often made of many cloud platforms and one of the biggest challenges for businesses is connecting and securing this infrastructure and applications. That's where Cisco comes in.

"Networking and security are typically identified as two of the biggest challenges for companies taking advantage of cloud technology," he said. "Those happen to be two of our biggest areas and deepest areas of expertise."

Cisco is providing the connection between workloads and applications moving between third-party cloud platforms and private cloud environments, said Kent MacDonald, senior vice president of Strategic Alliances for Long View Systems.

"To move a large amount of data or workloads, you need very agile, secure network infrastructure," MacDonald said. "Cisco has always been the connector – they really are the bridge to the cloud."

Long View Systems, a Canadian solution provider and Cisco Gold partner, is selling managed IT and cloud services, including Infrastructure as a Service (IaaS), private cloud, and multi-tenant cloud solutions to its base of customers in the energy, transportation, and financial verticals.

"There's not another company that has a suite of network and security offerings to support data mobility as customers move to and from the various cloud offerings on the market," MacDonald said. "If you don't have a reliable network, you can't get to Amazon or Azure."

Ultimately, Cisco decided against spending its money and resources trying to build a public cloud to compete with the likes of AWS, Azure and GCP. Instead, it has chosen to partner with these players. Today, Cisco partners with AWS on a hybrid Kubernetes offering; with GCP on a joint solution for hybrid container applications; and with Azure on its hybrid Azure stack offering. While Cisco offers a wide range of cloud-based services, the IT giant doesn't have its own Infrastructure-as-a-Service (IaaS) offering and therefore not competing in the same space. Cisco has kept its focus on staying agnostic in the IaaS arena, while building a bridge between clouds.

The leading public cloud providers all have their unique strengths. AWS, for example, is a popular platform for consumer-facing businesses, GCP's strength lies in its innovative machine-learning chops, and Azure is very well-suited to run workloads with Microsoft technology. At the same time, many businesses still have workloads that need to run on-premises for regulatory reasons.

"Customers need to be in different environments to get access to innovation, but they want to reduce the complexity," Compton said. Cisco's strengths lie in removing complexity and friction associated with operating in a wide swath of IT environments, he added.

Specifically, Cisco can bring in networking and security elements that are common across a businesses' cloud environment, as well as application visibility, thanks to its critical AppDynamics acquisition. AppDynamics can help customers measure, diagnose, and manage application experience across their entire IT environment, he said.

Unlike other players in the crowded cloud space, Cisco has shifted its mentality around cloud to focus on what customers really want and why they are buying, as opposed to the latest and greatest features, said Ryan Marsyla, strategic director of architecture for Trace3, an Irvine, Calif.-based managed service provider and Cisco partner. "Customers are starting to understand that cloud is not an easy button," Marsyla said.

Cisco is "doing the right thing" by partnering with industry-leading cloud providers, he added. "If you look at tools like ACI Anywhere and the capabilities of Cloud Center, they are brokering those workloads, and it's a very smart choice" he said. "I personally would like to see Cisco do more in that area."

Today, cloud runs across all of Cisco's business segments in some capacity, which include Infrastructure Platforms, Applications, and Security. For the second quarter that ended Jan. 26, 2019, Cisco reported revenue of $12.45 billion, up 7 percent year-over-year from $11.7 billion. In the company's Applications business segment, which includes AppDynamics and WebEx, revenues grew by 24 percent year-over-year to $1.47 billion. Security also rose 18 percent to $658 million during the quarter, while Infrastructure increased 6 percent to $7.13 billion.

Aside from its successful cloud strategy that focuses on connectivity and security, Cisco has also had some luck in the markets it plays in today, Compton said.

"It turns out, when you move to the cloud, you need a fantastic network."

As businesses implement cloud solutions such as Office 365, employees could be spending all day working in a SaaS service, so speed and latency to the Microsoft cloud, for example, is going to impact performance and productivity. Moves like this are triggering companies to invest in their networks.

Cisco's SD-WAN adoption, Compton said, is being driven largely by cloud adoption.

"I believe we have really come from a place where people saw cloud as a headwind to something that is driving our growth," he added.

For partners, the opportunity around cloud is very exciting, Kompton said. "Our partners are increasingly using APIs to build software and intellectual property that they can deliver to customers in a brand-new way." For example, some solution providers are using location analytics APIs on Cisco's cloud-managed networking offering Meraki to create new offerings for retail customers.

As Cisco's own cloud strategy continues to mature, so does customers' approach to the cloud. Robbins said that businesses are learning about what the cloud can and can't do, as well as the potential cost and security trade-offs.

"I think [customers] are making different decisions, where four or five years ago, there was this race to the cloud because it was assumed to be cheaper, easier, and faster. There are some elements of those characteristics that are true, but I think customers right now are rationalizing where is it really true and where it is perhaps not working for [them]," he said.

At the same time, private data center tools also continue to improve. Cisco in January expanded the reach of its data center technology, Application Centric Infrastructure (ACI), to hybrid, multi-cloud, and hyperconverged edge environments.

"I've always had a view that over time, a lot of the capabilities in the public cloud will become more available in the private cloud, which will give customers more flexibility," Robbins said. "Some of those capabilities are being providing by the cloud providers back into private cloud, so I think customers are going to have more optionality on what leads them to run an application in the private data center or cloud over next few years."