Cisco reorganizes around growth sectors

Cisco Systems Inc.’s recently-announced business restructuring should have little short-term impact on its Canadian operations and customers, the company says.

The San Jose, Calif.-based networking company recently announced it would merge its service provider and enterprise product lines under one engineering division.

“The networking requirements of the service providers and the enterprises are becoming more consistent in the sense that people’s intranets and extranets and the public Internet are starting to look incredibly similar from a technological standpoint. It made sense for us to merge our development efforts as this trends moves forward,” says Cisco Systems Canada director of marketing Andrew Sage.

The new group will be organized in 11 technology areas including storage, core routing, network management services and optical. Sage says these areas were chosen because they have the growth, profitability and adoption potential to carry the company.

While layoffs usually go hand-in-hand with reorganizations, Sage says there are no plans to cut jobs, though some may be asked to move to another part of the company. For its Canadian sales operations it’s business as usual.

“We’re going to continue to have a separate focus on service provider and enterprise in the field. We’ve got a sales and engineering organization that supports and sells the service providers and a separate one that supports and sells to enterprise,” says Sage.

Bob Hafner, vice-president and research area director at Gartner Inc.’s Toronto office, says the move makes it a better-focused company on the enterprise side.

“I think what they’ve done is gotten rid of a little bit of the duplication between efforts that may have coincidentally resided in both the service provider and enterprise groups,” says Hafner.

Initial reaction on the Nasdaq seems to be favourable. Cisco stock is up more than US$1 since the announcement. Whether it’s the silver bullet to turn the company around remains to be seen.

Will this be looked on as a wonderful amazing new re-org in the future? I’m certain from a positioning perspective it’ll be looked on positively, because the word of it has already caused the stock price to go up. Even if it has no impact on R&D or their ability to deliver products, if it results in positive stock price it was successful,” says Hafner.

But to be successful on a grand scale, Hafner says research and development will have to become a priority. He says new technologies and equipment will be needed and others haven’t been able to carry the load, adding the service provider has had significant difficulty penetrating the market.

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