Cisco departure latest sign of transformation

Cisco is transforming itself from a pure networking vendor into more of an overall provider of IT systems
  • Jim Duffy (Network World)
  • 16 May, 2008 11:38

The departure of a longtime Cisco executive last week is the latest sign that the company is transforming itself from a pure networking vendor into more of an overall provider of IT systems.

Jayshree Ullal, senior vice president of Data Center, Switching and Services and a 15-year veteran of the company, is the most recent high-level executive to leave Cisco. Her exit follows those of Chief Development Officer Charlie Giancarlo and Senior Vice President Mike Volpi, both of whom were considered potential successors to CEO John Chambers.

The turnover ends an era of leadership founded in strategic LAN switching acquisitions in the early 1990s. Ullal came to Cisco with 1993's acquisition of LAN switch vendor Crescendo Communications, along with engineering executives Mario Mazzola, Prem Jain and Luca Cafiero.

Mazzola, Jain and Cafiero had left Cisco to form data center switch start-up Nuova Systems, only to rejoin Cisco earlier this year with the company's acquisition of the start-up.

Giancarlo came on board with 1994's acquisition of Ethernet switch pioneer Kalpana.

"She was the last of a generation," Frank Dzubeck, president of consultancy Communications Networks Architects, said of Ullal. "This is the passing of the baton."

Ullal was not available for comment last week. But on her Cisco blog she wrote that her decision to leave Cisco is "with mixed feelings and much introspection.

"As for the inevitable question of what I plan to do next, I hope to rekindle passions for my 'next new gig' this summer and make an informed decision later this year," Ullal wrote.

Ullal's departure is a sign that Cisco is morphing into more of an overall IT company, one that provides orchestration of the entire IT operations -- servers, storage and applications in addition to providing network infrastructure, says Zeus Kerravala, an analyst at The Yankee Group.

"You see a change of guard happening at Cisco, and it's needed," Kerravala says. "This is less about a market transition and more about a company transition. In order to get to be an IT company, Cisco needs some new leadership."

The leadership change for now won't extend as far as the CEO's office; Chambers already has the overall IT background, having come from IBM and Wang.

But his inner circle is ripe for turnover and it may accelerate now that HP is acquiring EDS. Cisco may be watching that US$14 billion marriage intently, ready to scoop up some IT talent that shakes out of the massive combination of the IT systems and services giants.

Indeed, Cisco stated in its latest quarterly results that it is looking for its services business to contribute US$8 billion in annual revenue - one-fifth of the company's overall sales. It currently stands at about US$6 billion.

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"When HP/EDS finishes, the total number of employees will be less than the two separate companies - it will be a place to get talent from," Kerravala says. "The more tightly integrated computing and networking become, the more it is required for Cisco to have that talent."

But Cisco is not looking to become an "old world" IT and outsourcing company like IBM or HP/EDS; Cisco is instead more aligned with Google's model of IT, Dzubeck says.

"It's IT based on Web 2.0 and collaboration, TelePresence and software-as-a-service," he says.

But rather than transformational, Dzubeck believes Ullal's departure was more out of frustration with recent operational changes, such as the establishment of the Cisco Development Organization (CDO). Formed late last year, CDO is a council of development managers chartered to oversee Cisco's technology initiatives and its ability to deliver more integrated products to customers.

"The problem is simple," Dzubeck says. "The operations structure does not fit people's way of managing."

Dzubeck says the CDO council is a loosely coupled structure as opposed to a closely knit matrix structure favored by Ullal and perhaps other Cisco managers. He says the committee-driven council is lengthening the time to market for Cisco products.

"The development time frames are not in synch with the rest of the industry," Dzubeck says.