Cisco's Chambers Keynote Foreshadows Restructuring
While Cisco Systems continues to innovate, it has become too complex and needs to become more streamlined and easier to work with, CEO John Chambers said in his opening keynote at the Cisco Live show in Las Vegas.
As a result, Chambers acknowledged the company will undergo a restructuring although he didn t disclose any specific plans for layoffs.
Cisco needs to focus on innovation so that it can remain a networking leader, execute faster and more simply, and have a leaner organization, Chambers, said in a ninety-minute keynote presentation on July 12. The reorganization will consolidate multiple groups working on new products and streamline decision making, Chambers said.
Industry analysts have predicted that Cisco will reduce its headcount by at least 5,000 with about 1,000 employees departing under an early retirement program started early in 2011. The rest will come from layoffs coming after the start of Cisco s 2012 fiscal year on Aug. 1.
As part of the simplification process, Cisco will narrow its focus on five major priorities going forward, including its core networking business such as routing, switching and services, collaboration, data center virtualization and cloud, video, and business architecture that tie the various technologies together to work seamlessly, Chambers said.
"Intelligent networks will be the most strategic asset in IT," Chambers said. By focusing on the five main priorities, Cisco will drive the future of networking and change every industry around the world, he said.
Security will be a "key focus across the top five areas" with built-in capabilities. "Security will not be bolted on," Chambers said.
Data center virtualization and going to the cloud will be the "new IT architecture" because customers are looking for scalability, cost-effectiveness and on-demand availability, according to Chambers. About 76 percent of new servers in data centers are virtualized, but the goal is to bump that figure to 80 percent, said Chambers.
Cloud is a combination of software-as-a-service, platform-as-a-service and infrastructure-as-a-service, Chambers said, noting that "everything is going to be a service."
Cisco will also make sure all its products and services fit under the four mega- trends that will change how people work, including mobile, social, visual and virtual.
"Four years ago we said video was going to be the next voice. Video, four years from now, will not only be the leading way we communicate, it'll be the primary form of IT," said Chambers. He said just over half, or 51 percent of network traffic in 2010 was video, but that figure will rise to 91 percent by 2014.
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