John Chambers believes technology will play a pivotal role in recovering from the recession and that broadband is the starting block, writes IAN CAMPBELL
DOORS HAVE a way of opening for multinational chief executives such as John Chambers of Cisco Systems. Presiding over inward investment decisions means they get to walk the corridors of power and have the ear of world leaders. They enjoy unique insights that they occasionally share with the rest of us.
A couple of days before he gave his keynote speech at last week’s Cisco Live event in London, Chambers was at the World Economic Forum in Davos. There he detected a very different attitude towards technology, an acceptance of its importance in a way that he had not seen before.
“Every government is talking about innovation and productivity and how you enable it. Governments, business and citizens are working together in ways they have not done before.”
That’s just as well, according to Chambers, because the rise of Asian economies is posing a serious challenge. He says innovation and competition have never moved faster and Europe has to act quickly to avoid being left behind. Unsurprisingly, he believes Cisco and its network technology is a key enabler for innovation and productivity. “We are moving from the innovation economy to the networked economy. The whole future is around collaboration and social networking with good processes wrapped around them.”
Chambers, a self-proclaimed optimist, believes companies and countries are waking up to the importance of increasing productivity through technology. “Innovation, capital investment and business process change enable productivity which allows you to compete on a global basis against competitive structures we have never seen before.”
He had met economists at Davos predicting annual productivity growth of 2-3 per cent, possibly rising to 5 per cent, in the next few years. He believes that technology will play a pivotal role in bouncing back from the recession and the starting block is broadband.
“The importance of broadband in enabling is the base for the foundation on which everything else rests. If you don’t have real broadband at an affordable price, then the things we’re talking about will not occur.”
If there is a new-found belief among economic movers and shakers that technology is transformational, Cisco is ready and willing to sell them stuff. The company has a long track record of acquisitions that has given it a lead in voice-over IP (VoIP) and video conferencing, building on core network competencies that made it the number one player in routers and switching boxes.
More recently it moved into the server market, directly competing against HP and IBM as it attempts to secure a footprint in the data centres that will become the fulcrum for cloud computing, touted as the next big evolution in IT delivery.
While Microsoft’s Steve Ballmer and Oracle’s Larry Ellison try to bulldoze their way into their customers’ consciousness, Chambers is a more ethereal presence.
He may be just as evangelical when it comes to pushing products, but his style is softly spoken southern pastor rather than fire and brimstone preacher.
Chambers has been steering Cisco’s course since he was appointed CEO in 1995, a long and successful reign that he puts down to the company’s ability to continually reinvent itself.
“I have a healthy paranoia from watching companies that don’t change and disappear. I was at IBM when mini-computers came and we didn’t make the transition. I was at Wang when the PC and the internet came and we didn’t make the transition. They went out of business and it took IBM 20 years to recover.”
The lesson is something that countries as well as companies need to learn, according to Chambers. He says the most successful are the ones that struggle with change because they don’t see the transition coming.
“Market transition waits for no one; no company, no country, no population or region. If you don’t balance what you do well with watching for market transitions, you get left behind. At Cisco we reinvent ourselves remarkably well.”
With $40 billion in the bank, Chambers makes it clear that the acquisition strategy will continue with a focus on security because it is the “biggest problem” for his customers.
“To do security piecemeal isn’t going to work. Six months ago Cisco decided to make a big run at it from an architectural perspective,” he adds, conceding that the company didn’t yet have all the pieces of the jigsaw.
The theme of architectural design and hosted data centre services is central to Cisco’s vision as it signals its intent to join the procession of vendors to the cloud. The days of selling Cisco boxes will gradually draw to a close in another one of the market transitions that Chambers talked about.
“We are moving from a product standalone play to an architectural play. If we are going to lead, we have to lead in that architecture and I think the world will purchase architecturally.”
Asked about improving network capacity and whether Irish company InTune Networks and its pioneering tunable laser technology was on Cisco’s radar, Chambers will not comment directly. “We probably look at 100 companies for each one we buy or invest in,” he says. “If there are start-ups that are really good in a critical mass area, that’s where we look at doing our acquisitions.” He says it usually takes a decade for a product to get to a point where Cisco will get involved.
He was more direct about Cisco’s research and development commitment to Ireland. The company has an RD unit in Galway which is exploring future collaboration and social networking tools. Chambers took the opportunity to stress that the relationship would be unaffected by the economic crisis.
“When there were some challenges there [Ireland], we didn’t hesitate to say we are completely committed to the country, past, present and future.”
