Cisco announces new streamlined operating model

Thursday, May 5, 2011

Cisco (Nasdaq: CSCO) will employ a new streamlined operating model aimed at reorganizing key functions and simplifying operations, according to a statement from the company.

The model will change Cisco's business structure and operations, while also improving its sales, services and engineering organizations.

According to Cisco, the model is part of plans to focus on five areas the company has highlighted as network and internet growth drivers, which include the core of routing, switching and services, collaboration, data center virtualization and cloud, video and, lastly, architecture for business transformation.

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Cisco said the changes are in line with its mission to improve customer, partner and employee experience; simplify its operating model; and create greater focus on the five priority areas. According to Cisco CEO and chairman John Chambers, the market is moving toward simplification, and the company needs to simplify the execution of its strategy.

Changes announced today will include reorganizing Cisco's Worldwide Field Operations into three geographic regions to push faster decision making, as well as greater accountability and alignment.

Executive VP Robert Lloyd will continue to lead the operations. The three regions are the Americas; Europe, Middle East and Africa; and Asia Pacific/Japan/Greater China.

In another change, Cisco Services will organize around key customer segments and delivery models in alignment with field operations, while continuing to be led by executive VP and COO Gary Moore.

Cisco Engineering will drive technology innovation, accountability and alignment across the company's priority areas. Senior VPs Pankaj Patel and Padmasree Warrior will co-lead this segment.

Within Cisco Engineering, the company will designate an Emerging Business Group to focus on early phase businesses, led by senior VP Marthin De Beer.

Finally, Cisco will refine its cross-functional council structure to three councils that reinforce consistent, globally aligned customer focus and speed to market across major business areas. These councils will aim to strengthen connections between strategy and execution across functional groups.

A majority of changes are expected to take place over the next 120 days, while the new sales organization will be in place at the start of Cisco's 2012 fiscal year, beginning July 31, 2011.

Last month, chief executive Chambers sent a message to all staff members addressing the state of the company and promising upcoming changes in its operations, saying Cisco had "disappointed" investors and "confused" its employees.

"We have been slow to make decisions, we have had surprises where we should not, and we have lost the accountability that has been a hallmark of our ability to execute consistently for our customers and our shareholders," Chambers said in the letter. "That is unacceptable. And it is exactly what we will attack."

At time of print, Cisco shares were up 0.86% to US$17.62.