Cisco Systems CEO John Chambers said that despite the downturn in the U.S. economy, Cisco plans to grow its IT expenses by 10 percent in the next year as the company looks to expand into markets from home entertainment to the data center and virtualization. While speaking at Gartner's Symposium conference, Chambers said Cisco plans to expand its software offerings and also what it does to enhance virtualization in the data center.
many enterprises might try to cut down IT expenses
in the next year as Wall Street's financial crisis continues, Cisco
CEO John Chambers is looking to
invest in his own company's information technology.
During his Oct. 14 keynote address at the Gartner
Symposium/IT Expo, Chambers said Cisco
will increase its IT budget by 10 percent in the next year
as the networking
giant looks to increase its presence in the data center as well as in the home.
Chambers said the company plans to put more money and resources into software
development, while increasing the types of collaboration tools it uses to cut down
on its internal expenses such as travel.
While many enterprises and government organizations view IT
as an expense, Chambers
said investing in IT at a time when budgets are tightening
save money by making it easy for employees to communicate or work
collaboratively. The trick, said Chambers, is making sure the IT priorities
align with the company's overall business strategy.
"In other environments, IT is viewed as an enabler of the
business strategy and in the case of an economic slowdown, you can use IT to
gain a huge competitive advantage," said Chambers. "What Cisco is going to do
is grow our expenses regardless of what the economy does and in IT that means
growing by 10 percent."
When it comes to using IT to help save money, Chambers
said IT managers need to look to collaborative tools and Web 2.0
technologies, such as blogging and especially video collaboration technology,
to gain a competitive edge. These are also keys to reducing expenses in the long run. For large
financial institutions that are merging, Chambers said video collaboration is a
way to help make those transactions smoother and more cost effective.
Within Cisco, Chamber said he is putting that philosophy to
use. In the past year, Cisco has added to its software engineering teams,
including 50 vice presidents, and added more emphasis on collaborative tools and Web
2.0. Chambers said that to better communicate with his employees, he blogs
frequently. All these different types of internal collaboration tools have
helped Cisco slash $150 million from its travel budget.
As for the company's future, Chambers said Cisco wants
to position itself and its networking products as the crossroads between
hardware and software. Chambers sees this as another form of collaborations.
However, Chambers also said he believes Cisco needs partners, such as Microsoft
to complete its vision.
There are plans to provide more services around the network,
which will help bring Cisco technology deeper into the home and into new
enterprise vertical markets such as sports and entertainment.
Cisco also has big plans for virtualization and Chambers
sees an enormous role for the
company's networking products to enhance virtualization
. While Chambers did
not offer much in the way of specifics, Cisco
has already announced that it will team with VMware to develop a software
that should ease the management and networking of
"Virtualization will first occur in the data
center and then come all the way to hub, so you will see us make a series of
announcements in the next 12 months," said Chambers. "When it comes to
virtualization in the data center, we are going to be extremely aggressive. You
will also see us being aggressive all the way to hub, so you won't know if your
movie is stalled on your set top box, on your PC or on the television itself ...
and our goal is how do you play these all together virtually."