Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Cisco Systems Seeks to Streamline Its Operations With a Reorganization

With less than a week to go before it next reports its quarterly earnings, networking giant Cisco Systems announced a corporate-wide reorganization that it says will “streamline” its sales service and engineering organizations.

It said it has defined five priority areas: Core, which is its traditional routing, switching and services business; Collaboration; Data center virtualization and cloud; Video; and architectures for business transformation. The point of the changes, Cisco says, is to improve the customer experience, simplify the operating model and to focus more on its key priorities. See? This is why the Flip Camera had to die.

The shake-ups include a realignment of the sales operations around three geographic regions, all of which will continue to report in to Executive Vice President Robert Lloyd. Cisco Services, the company says, will be revamped to align with the field operations, and will continue to report in to COO Gary Moore.

Cisco’s Engineering division will be run by two executives: Senior Vice President Pankaj Patel and CTO Padmasree Warrior. Within engineering, a new Emerging Business group run by Senior VP Marthin De Beer will focus on early stage business, especially video and the Medianet architecture. The whole engineering group will report up to Moore.

The re-org comes as Cisco is bleeding managerial talent. Last month Zynga nabbed Debra Chrapaty, former SVP of Cisco’s Collaboration group, to be its CIO. Then there was Dan Scheinman, general manager of the EOS video group Flip Video, who resigned the day Cisco announced the last bit of its restructuring. Also last month, Nawaf Bitar, Cisco’s former head of security, jumped to rival Juniper Networks. Bloomberg News today quotes Robert Ackerman, the founder of Allegis Capital who has sold three companies to Cisco, as saying Cisco has a “culture that frustrates talented people.”

It’s not clear that all of the changes CEO John Chambers promised last month in a memo to employees will get the job done. In his memo, he conceded that the company had been “slow to make decisions,” and had been surprised in places where it should not. This followed some quarterly earnings reports, the most recent one in February, that have surprised shareholders for their weakness.

The company says the changes announced today will take place over the next 120 days, and the new sales organization will formally be in place by the end of July. Cisco shares rose 15 cents–or less than 1 percent–in early trading. But it will probably take longer to see any meaningful change. As analyst Brian Marshal of Gleacher & Co. put it in a research note issued to clients shortly after the announcement: “While we applaud Cisco’s recent moves, we believe it will take a non-trivial amount of time to move this tanker ship.”


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