Cisco’s John Chambers: Charting a Strategic Shift

By:
03/12/2010
From the Road

Cisco took a risk when it decided to expand its reach, repositioning itself as a provider of integrated computing, storage and networking for virtualized data centers. Computerworld Editor-in-Chief Scot Finnie, InfoWorld.com Editor-in-Chief Eric Knorr and I talked with CEO John Chambers about he company’s changing relationship with IBM, HP and others as it forged ahead into new enterprise IT markets.

Put Confidence in Experience

Cisco had entered new markets before, from its first foray into networking, against established vendors like 3Com and Cabletron, to its incursions into services against the likes of Lucent and Alcatel. Each time, executives had to commit to a strategy, without certainty of success. “We have a lot of healthy paranoia about what can go wrong,” Chambers said.

But past successes build confidence. The company’s new direction might seem like a stretch, “but we’ve done this multiple times before,” Chambers said. Each time, Cisco took its cues from customers, not competitors. “I don’t fall in love with technology,” Chambers said. “Most every move we make, including this virtualization focus, was driven by customers. Then, it’s usually internal innovation or an acquisition that kick starts you into it.”

Be Flexible

Cisco’s decision to become a virtualization player put its relationship with IBM and HP in doubt. Cisco didn’t renew its systems integrator contract with HP, Chambers said, because “you can’t be giving your partner your product plans, your directions, your evolution and then compete.” Today, Cisco still counts IBM among its strategic partners, but it also formed new relationships with implementation partners including Accenture, Wipro and TCS.

Partnerships with other vendors have to advance your strategic goals, Chambers said. “You partner with the players that you have to [have] to win the long-term architecture.”

Prove Yourself

Cisco backed up its shift in strategy with its Unified Computing System platform in 2009. CIOs would take a hard look at Cisco’s virtualization plans, and the company needed a set of satisfied early adopters to convince the majority of customers it was on the right track. “You’ve got to make your initial pilots, first 50 systems work well,” said Chambers, “If they do, then I think we’re in good shape to get pretty excited about it.

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