CH-CH-CH-CHANGES…

“Turn and face the strain”

David Bowie’s song seems very apropos for Cisco (NASDAQ: CSCO) these days.  After four (4) consecutive quarters of unsatisfactory earnings, Cisco CEO John Chambers wrote his employees a memo
notifying them of some pretty substantial CH-CH-CH-CHANGES on the horizon.

 

Some of the more noteworthy changes are:

• Making it easier for customers to work with the vendor
• Earning back some of the lost creditability
• Refocusing on five key areas: routing, switching and services; video; collaboration; data center virtualization; and architectures
• Restructuring their consumer business

 

While this list of changes seems great on paper, executing said list may prove to be much harder than they realize.

For example: Refocusing their strategy on five (5) key areas when they have moved aggressively into 30 new lines of business over the years would be a huge undertaking for a company with
~70,000 employees spanning the globe. I’m confident it can be done, but there will be pains and it will take some time.

Another example: Earning back some of their lost creditability can be a very tough proposition when there are other players in the market (re: Juniper, HP) that have had creditability,
if not cachet, for a number of years. In addition, customers are pretty fickle, and it takes some serious schmoozing to woo them back after experiencing frustrations with any vendor.

While I applaud Mr. Chambers for his corporate-wide memo and edict for change, I can’t help but wonder why it took 1 year of substandard earnings woes to be the impetus.

Granted, the economy is still slowly coming out of the recession, but there had to be some red flags raised on the non-performing lines of business and customer relations feedback.

It will be interesting to see if a much larger change a la Google’s re-organization will be needed to bring this company back to the forefront.