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Cisco trims bloat

Engineering turnaround

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Cisco Systems has taken some hit points in recent quarters from its bloated business lines and unfocused product and marketing efforts. In response today, it announced its expected corporate reorganization. Most changes are in its engineering efforts, which is a tacit admission that the data networking giant has as much a hardware and software problem as a sales problem.

"Cisco has driven transformational change before, and we are again transitioning to the next stage of the company's evolution," said John Chambers, Cisco's chairman and CEO, announcing the reorganization.

"Today, the market is driving toward simplification and it's why the network matters. Our role as the leading network platform provider is strong, we have great customers, talent and expertise – and we know how to bring innovation to every aspect of the network. It's time to simplify the way we execute our strategy, and today's announcement is a key step forward."

Streamline

Cisco is streamlining sales, services, and engineering units while it focuses the company on five key businesses. These include core networking – the primary one – which includes routing, switching, and related services; collaboration; data center virtualization and cloud; video; and architectures for business transformation.

These areas are not all that different from how Cisco is currently organized, but there are changes that Gary Moore, chief operating officer at Cisco and heir apparent to Chamber, is in the functional units of the company that support these businesses.

Worldwide field operations are to be glommed together into three geographic regions with increased focus on customer segments. The regions are the obvious ones: Americas, EMEA, and Asia/Pacific-Japan-China. Robert Lloyd, executive vice president in charge of Cisco's sales and field operations, will continue in that role.

Within each region, Cisco will have dedicated sales teams to cover large enterprises, public sector, commercial, small business, service provider, and partners. Moore will continue to run Cisco Services, and will organize around those key customer segments, mirroring the field sales operations outlined above.

Re-engineering

One big change is in Cisco Engineering. Padmasree Warrior, who has been Cisco's chief technology officer as well as general manager of Cisco's enterprise, commercial and small business operations, is now co-manager of Cisco Engineering alongside Pankaj Patel, who was previously general manager of Cisco's Service Provider Group.

The engineering group will report to Moore, as it has been doing. The engineering organization will now have an emerging business engineering sub-group that will focus on early phase products, headed up by senior vice president Marthin De Beer, the executive who has been in charge of Cisco's telepresence, emerging technologies, and consumer business operations.

Another big change is that Cisco is cutting the number of councils it has to help run the overall business. The cross-functional council structure is the brainchild of Chambers, who was trying to push more power and accountability in into the functional units he set up.

Under the old model, Cisco had five major segment councils – enterprise, commercial, service provider, small, and consumer – and four cross-segment councils. That pow-wow organization has been cut back to three councils, focused on enterprise, service provider, and emerging countries. And here's one big change: instead of these councils getting resource allocation and profit targets, resources and accountability are now pushed over to the sales and engineering teams.

In short, Cisco has gone from a company that runs itself based on marketing teams back to one that is focused on engineering and sales. And that could spell plenty of trouble for the many rivals in the networking space that have benefited from an embiggened and unfocused Cisco. ®

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