Cisco Systems (Nasdaq: CSCO) is getting leaner and slightly more Canadian in its latest round of changes.
Ever since Gary Moore became Cisco’s Chief Operating Officer the networking giant from San Jose, Calif., has been re-inventing itself in the market place.
The biggest impact on Cisco will come in a few days. Starting in August the company will cut about 6,500 jobs in an effort to reduce operating expenses by $1 billion per year. That’s about nine per cent of Cisco’s regular, full-time workforce. The executive ranks will not be spared as it too will be reducted by 15 per cent for VPs.
Some will be offered retirement packages. A sources inside Cisco’s Worldwide Partner Organization told CDN that Karl Meulema, senior VP of global strategy and operations is retiring.
The same source added that Cisco is simplifying its go-to-market sales approach in an attempt to speed up decision making.
The most dramatic change coming in the next 30 days is in its eight geographic theatres. Cisco will drop from eight regional geographies to just three: Americas, EMEA and AsiaPac.
For the Canadian market this means the U.S./Canada region is no longer. Cisco’s Latin American region will merger into U.S./Canada and be headed by Chuck Robbins, who held the position in the old U.S./Canada region a few years ago before he was replaced by Wendy Bahr. Jim Sherriff, who is currently the channel chief for U.S./Canada will hold a similar position in the newly formed Americas region.
The source also said that Cisco’s multi-segmented go-to market areas will be dramatically decreased to just two in an attempt to be broader. Going forward Cisco will have only two sales models: Partner Led and Customer Led.
Amidst huge layoffs Cisco’s Worldwide Partner Organization will only see one change; the loss of Meulema. Keith Goodwin will still be in charge of the entire organization, Edison Peres remains Channel Chief, Bahr is still the Global Transformation Officer, Scott Brown will continue to handle distribution and Donna Wittmann stays as Canadian channel chief. Bob Singleton, a long time Cisco employee from Toronto will replace Meulema as senior VP of global strategy and operations.
And, there is more Canadian content as Cisco’s SMB lead Andrew Sage, who is also a native of Toronto, is being promoted to the Worldwide Partner Organization to run the Partner Led go-to market segment. He will now report to Goodwin.
The plan going forward will be for Cisco to go deep with a set of channel partners that can accelerate business in commercial, public sector and service provider, where the company does not have a high touch in currently, according to the source.
The source added that the channel should look for more incentives from Cisco to get these markets in motion. The source continued by saying that these changes will have an immediate impact and to expect results in about 30 days.
Kent MacDonald, vice president of business development for Cisco partner LongView Systems of Calgary, says the changes are positive. “All good news for the channel by my read. Chuck, Jim, Keith, Edison and Wendy are very strong supporters and friends of the channel, and they have proven over and over that they listen and respond to the channel,” he said.
MacDonald added that it was great to see Singleton and Sage get promotions and that he enjoys Cisco’s Canadian content in its leadership ranks led by Rob Lloyd.
Cisco watcher Steve Hilton of Analysis Mason of Boston echoed MacDonald’s comments on Sage saying he has strong operation focus and that Cisco needs that skill set.
Hilton added that Cisco isn’t going to just circle its wagons and allow itself to be overrun. “I think the re-structuring, while painful, is absolutely necessary. You can’t ask a team to focus on 30 key initiatives and expect universal success. Pick a small number of key strategies and excel,” Hilton said.
In fact, that’s exactly what Cisco has done. The Cisco source said all of these changes is part of Cisco reinventing itself. A stated goal of the company is to become an $80 billion powerhouse in computing. It currently sits at $48 billion.
The source added that Cisco is taking a step back and looking to focus on a few key areas. It wasn’t that long ago when Cisco CEO John Chambers talked about addressing 30 market adjacencies.
Now it will be just five:
1. Core routing, switching and services;
2. Collaboration;
3. Data center with virtualization and the cloud;
4. Video; and
5. Architectures for business transformation.
Channel partners have told Cisco that they are in way too many things and that it was making it hard to do business with them.
Hilton also said the focus on Partner-led and Cisco-led channels is a good one. “Doesn’t seem too different to me than in the past, but maybe it’ll give a lot more clarity to the channel on who is going to lead in the sales process. And we all know that setting clear expectations with the channel is key,” he said.
The source also addressed Microsoft’s intention to take away as many Cisco channel partners as possible. The source said that worldwide partner organization is well aware of Microsoft’s plans and that they are prepared for it. This will not stop Cisco from collaborating with Microsoft now and in the future, but it has been made clear to the channel team at Cisco its value proposition has to increase and they will in the end let the customer choose.
Hilton said that Microsoft is gunning for Cisco partners, but that Cisco should worry more about the Chinese vendors. He said that in the long-run Cisco faces more competition from Huawei and ZTE, who are formidable competitors, than Microsoft. “Neither is a technology innovator or leader today, but they certainly can learn quickly and emulate best-in-class product design,” Hilton said of Huawei and ZTE.
Finally the Cisco source said that the Worldwide Partner Organization will be filling Luanne Tierney’s job in channel marketing. Amanda Jobbins, a field marketing executive based in London, U.K. will now be in charge of channel marketing. Changes are also occurring in this area as Cisco has merged channel marketing with corporate marketing under Blair Christie. The source said that this move will ensure that the channel will get more channel marketing resources.