Ciscos Chambers: Networking Is Back

In his NetWorld+Interop keynote, Cisco CEO John Chambers said to achieve productivity gains from technology initiatives, companies must change their business processes.

LAS VEGAS—Coming on the heels of a strong fiscal third-quarter report, Cisco Systems Inc. President and CEO John Chambers gave an upbeat keynote presentation at NetWorld+Interop here Wednesday, claiming confidence is up.

"Its a pleasure for networking to be back. My main message here is confidence," said an energetic Chambers. "Consumer confidence was strong during the downturn, but business executives didnt hold up well, and they stopped thinking three to five years out. But the clear trend is up and to the right. As business leaders get [more] confident, they tend to spend."

Cisco has seen a dramatic improvement in customer sentiment in the last four months. "Instead of wishing our business was as good as the GDP numbers, we are optimistic about our own business," Chambers said. Business executives, although still slightly hesitant, "will take their foot off the brake and find the gas pedal," he said.

The United States saw sequential growth in capital spending in the "midteens," while Ciscos own business grew 4.1 percent sequentially from the second to third fiscal quarter. Cisco revenue was up 21.7 percent year over year at $5.6 billion. Chambers attributed the growth to increasing productivity both for Cisco and businesses as a whole, and he said that businesses that understand their investments in IT get some credit for those improvements.

But to achieve solid productivity improvements from technology initiatives, whats key is taking a strategic, architectural approach to new technology investments and changing business processes in the implementation.

"Were talking about an industry with productivity implications that work on a macro level all the way down to the individual desktop. Networks enable that, but you have to see what the enabling applications are that allow this direction," he said.

In a survey Cisco sponsored of business leaders in the United States and in other parts of the globe, Cisco found that "those that changed business process at the same time they put in new systems, who also set aggressive goals and measured those and built the systems on an intelligent network architecture, had four to five times the productivity than those that just put in the technology," Chambers said.

"The surprise to us, customer support, as an example, is that we had a 25 to 30 percent increase in productivity, but if we didnt change the process, we had negative productivity," he added. "If you throw a lot of money at IT but dont change the process, you will spend a lot without any gain."

Next page: Key to creating networks.