John Chambers opens up

TORONTO — Like a packet of data travelling through one of his company’s Internet routers, John Chambers can’t stop moving.

The Cisco Systems chief executive spent Thursday morning restlessly navigating the round tables of

a Speaker’s Forum event, branding himself an IT industry optimist whose firm will double its product releases in the coming year. More importantly, he told the audience of senior Canadian business executives, his customers are no longer standing still, either.

“”They’re taking their foot off the brake (but) they haven’t found the gas pedal yet,”” he said, citing year-over-year revenue growth at Cisco in the high teens during its most recent quarter. “”That’s the first time we’ve seen this kind of movement in three of four years.””

Though he wouldn’t break out specific figures, Chambers said Cisco’s Canadian sales have been more consistent than that of the U.S., with 40 per cent year-over-year growth. Maintaining that growth means collaborating with other vendors, he added. While support costs at one point drove customers to adopt a “”preferred supplier”” approach, Chambers said Cisco is being asked to partner with more suppliers than ever before. Among those potential partners is Canada’s Nortel Networks, although some observers expected Cisco to buy Nortel when the telecom equipment firm was rocked by accounting scandals earlier this year. Chambers dismissed that notion.

“”I don’t know how to do a large acquisition,”” Chambers said, adding that it is extremely difficult to retain good people and keep products rolling out in those kind of mergers. “”I would love to have Nortel as a partner and work in a way that we would go to market together. I’ve been at the altar for years.””

Cisco did make another acquisition Thursday, however. The company said it would pay US$89 million for Procket Networks, which makes routers for controlling Internet traffic that competed with some of Cisco’s products.

Brian Sharwood, an analyst with the Seaboard Group in Toronto, said the deal may simply be a way for Cisco to eliminate a rival.

“”Cisco’s been incredible in the enterprise space and right now the carriers need huge, hard-core routers,”” he said. “”If Procket is making carrier-core routers, they might just want access into their customer base.””

As sales improve, Chambers said he is also starting to see signs that businesses are improving their productivity at a rate of two or three per cent, thanks to more strategic deployment of their IT resources.

“”It isn’t just having a great CIO and spending lots of money on it,”” he said. “”I think a few years ago we all understood the need for process change conceptually, but we needed to develop a way of measuring that on a routine basis.””

Cisco has struggled with some of its own productivity initiatives, Chambers admitted. A company-wide effort to use e-learning, for example, ended up actually decreasing the level of work completed. The problem was the sessions simply automated distance learning and didn’t address each employee’s specific needs.

“”I thought instead of bringing people to San Jose or Montreal they could all access 40 hours of e-learning,”” he said. “”You know how long the average e-learning session is now? About 15 minutes. After that, people start to drop off.””

Chambers claims that Cisco has increased its productivity by about 23 per cent in the last nine months and at a rate of about 10 per cent over all each year. Those numbers are important, he said, as the company sharpens its focus on three specific areas of activity: IT security, IP telephony and wireless connectivity. Security protection, for example, is becoming something Chambers said will increasingly have to become part of the network, given that the rate of some attacks scale too quickly to be solved through manual intervention.

“”It’s much like the human body. A lot of the time you don’t even know how many viruses are in there,”” he said. “”Every once in a while you’ll take an aspirin. And even more rarely, you’ll go to the doctor.””

Commment: [email protected]

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