Five months into the job, Cisco CEO Chuck Robbins laid out his vision of where the IT economy is headed and what Cisco needs to do to lead the changes. It’s a vision that will fundamentally change Cisco from a hardware-focused maker of networking gear.
SAN JOSE – At Cisco’s Global Editors Conference, Cisco’s (relatively) new CEO Chuck Robbins laid out to press and analysts his vision of where Cisco has to move to remain relevant. It’s a view that fundamentally will move Cisco beyond its traditional core business of switches and routers, which now accounts for less than half (46 per cent) of the company’s revenues.
Robbins said that the opportunity today is like the heady initial days of the Internet in the 1990s – with one key difference.
“In the first wave of the internet in the 1990s, we had to be evangelists to convince people that this was going to be big,” he said. “Now everyone knows it. They are looking for ways to differentiate their strategy.”
That’s hard today given the incredibly rapid pace of change, Robbins stressed.
“The pace of change has never been greater, and the geopolitical dynamics that we face change almost daily,” he said. “Economic shifts are happening at a pace that’s unbelievable. It has created an incredible level of pressure – and opportunity – for our customers, who are worried about the six people in a garage somewhere who are going to disrupt their business.”
Robbins said the result is that many customers now have a fundamentally different way of thinking about technology and how it fundamentally defines their strategy.
“CIOs now say they spend 75 per cent of their time doing operational kinds of work and believe it’s becoming less and less important to the company,” he said. “They want to spend 75 per cent of their time driving the strategic value of the organization. This is why they are moving to converged architecture. Customers now are more concerned about operational costs rather than capex. That has NOT been the case before, where they were concerned about costs up front. They are trying to free their people up to spend more time on strategy.”
Robbins said that while 25 per cent of customers today say they have a strategy to take advantage of the digital revolution that is beginning to occur, 75 per cent say they know they need to, but don’t have anything yet.
“It’s an invitation to help them think about it,” he said. “We don’t have to evangelize it. All these connections will provide our customers with an incredible opportunity.”
So what does Cisco have to do to capitalize? A lot, Robbins said, much of which is fortunately in progress.
Getting access to the insights from IP mobile traffic is critical.
“40 per cent of that is going to be M2M,” he said. “Getting it out will tear apart the whole paradigm of IT computing where we take things back to the datacentre.”
Robbins said all this data has to be secured, something that Cisco has been working on aggressively, particularly through its 2013 acquisition of Sourcefire, which made it a major player in the security space.
“We have to drive security everywhere,” he said. “Having 45-50 individual security vendors in the enterprise is no longer an option because they can’t correlate all the data fast enough to stop the threats,
“We also have to build an architecture to let the network take advantage of machine learning, and do deep traffic flow analysis, which can only happen in a timely fashion if it takes place in the network,” Robbins stressed. “There’s no periphery any more. We have to do things differently.”
Robbins stated that as industrial systems that have run proprietary protocols are being converged in order to get insights from the data they can provide, 500 billion devices will be added to the network.
“We have to connect it, converge it, get the data, and apply analytics to provide insights customers can act on,” he said. “That’s what’s behind so many of the announcements we have seen.”
It requires bringing together business strategy and technology strategy
“We start with an intelligent, high performance infrastructure, and we open it and create an abstraction layer so everything we build is programmable,” he said “We need to converge the application with the infrastructure to take better advantage of the assets customers are going to deploy, and to be able to provide security and analytics out of the network.
“We also have to make it viable across the public, private and hybrid clouds, to give applications the ability to dynamically provision the assets they need at any moment in time.”
So how will Cisco do all this? Robbins said they will continue to build their own technology, but that they will also continue to aggressively acquire key companies, and to partner with others, as they did in their recent collaboration with Apple, and as they are doing with non-traditional IP companies like Schneider Electric who are heavily engaged in the Internet of Things.
“91 per cent of the people from companies we acquired are still with us after five years, so they must like us!” he said. “We will also continue to drive deep strategic partnerships with organizations driving digital transformations.”
Investment and co-development efforts complete the strategic axis. This will include deepening Cisco’s commitment to the developer communities, who build the applications, of whom the company estimates about 700,000 are on board through several different channels. It also requires continuing the commitment to Cisco Investments’ direct investments in over 1,000 start-ups in what the company has identified as bleeding-edge areas.
Robbins pledged that Cisco will be ruthless in leading market transitions across this build-buy-partner-invest-co-develop spectrum to drive the digital revolution.
“We are going to lead them and accelerate them, with speed across all five of these elements. We have to move faster, faster, faster, faster, faster. They say something will take 30 days, I say three weeks. I don’t even know the details, but it feels good. We have to figure out how to go faster.”
The stakes are too high not to, Robbins concluded.
“I believe this is bigger than the first wave of the Internet,” he said. “It has to be. You can’t create 400-500 million devices and not create this value.”