Chambers: Point products don’t fit the bill

SANTA CLARA, Calif. – Cisco’s chief executive officer says companies and governments need to change their business processes in order to benefit from leading-edge networking technologies.

At Cisco’s worldwide

analyst conference Tuesday, CEO John Chambers said customers don’t always make purchasing decisions based on single products, such as IP telephony. Instead, he said, they look for products and services that will help them tie everything together across the network.

Cisco and other vendors are trying to persuade organizations, and industries, to change their business practices and to adopt technologies that will support their new practices.

One example, he said, is the vision of a single electronic health record that would allow doctors, pharmacists and other practitioners to access all relevant information on a patient. This, he said, would increase efficiency across the health care system and reduce the probability of errors — such as prescribing a drug to patients who is already taking other medication that would cause an adverse reaction.

Chambers, who spoke to an audience of about 400 reporters, technology and financial analysts at the Santa Clara Convention Center, gave other examples of business practices that depend on next-generation networks, such as customer support centres that can route calls over IP networks between cities, without having separate private branch exchanges. “”You have to change your underlying business or government architecture … in order to benefit from this,”” he said.

But despite being a good hardware manufacturer, Cisco has little expertise in business process change, said Albert Daoust, director of special projects for Toronto-based Evans Research Corp. “”They’re highly dependent on other people thinking of new applications, new business processes, new business practices, and they in fact have nothing in the pipe.””

But if you ask people at Cisco how they feel about the company, they would say, “”the best years are still in front of us and we have a lot of room to grow,”” said Charles Giancarlo, Cisco’s vice-president and chief technology officer.

His “”fantasy”” is for the company to make revenues of more than US$50 billion per year in 2009, he said. At that time, he predicts the public switched telephone network will “”barely exist”” and more people will use video on demand.

Voice over IP can offer more features – such as click-to-dial, he said. Giancarlo added Cisco has shipped more than four million IP phones, and is replacing more than 8,000 time division multiplexing phones every day.

John Riddell, an analyst from Ajax, Ont.-based Angus TeleManagement Group, said Cisco has an advantage over traditional phone suppliers – who normally sell to telecommunications managers — because it has traditionally sold data products to IT networking staff.

“”Cisco is banking on the fact that IP telephony centres telephony in the IT and data sphere of corporate management, and Cisco has the edge there because they already have relationships (with IT managers). Cisco has enormous market power, particularly in Canada and has made major inroads over the last five years.””

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