Cisco Systems is an effective business, but not an efficient one.
That observation comes not from one of Cisco’s competitors, or a management consultant, but from inside Cisco itself, from Randy Pond, the company’s senior vice-president of operations, processes and systems.
Speaking to CIOs in Auckland this week, Pond outlined a grand strategy to make Cisco more efficient and position it for its next phase.
Part of the project includes eliminating “shadow IT”, the practice of getting a third party to effectively carry out an IT project if the project is turned down by Cisco management.
“It’s a sneaky way to spend IT dollars,” Pond says, with the resulting work coming out of a non-IT department’s budget.
Co-ordinating software out-tasking is another plank of the efficiency project.
Cisco is a huge believer in out-tasking and nearly all its hardware manufacturing is done on that basis, but Pond says when that model was extended to software development, it struck problems.
“It got too complicated and we’ll save $100 million in 2005 by co-ordinating it.”
The efficiency project spans IT, sales, human resources and other departments at Cisco and will run over the next three to five years.
Through most of its history, Cisco has been managed in silos, with departments interacting little and sometimes duplicating work, he says.
The project has no official name yet, but is informally known within the company as “process for process”.
“When it gets some legs, we’ll brand it.”
The efficiency drive is necessary to take Cisco into the future and dovetails with changes in Cisco’s product offerings.
“Cisco has to step up to the next level and offer better alignment between networks and business requirements.”
A systems, rather than mechanical, view of the network is necessary and will be realised in more intelligent networking products, he says and that includes moving from ASICs (application-specific integrated circuits) to programmable silicon and stepping up from working at the transport layer of the OSI networking model to the session, presentation and application layers.
It means supporting multiple operating systems in products and thinking in terms of application-oriented networks, not packet-oriented ones.
The continuing convergence of voice, data, video and storage will continue with the benefit of the new approach, he says.
“It’s a five-year vision and we’re still in phase one.”