All eyes were on Cisco last Friday, December 7th as the company held its annual Financial Analyst conference in New York. Cisco, the undisputed 800-pound gorilla in networking, has been rapidly transforming itself into a broader IT company. At the event, CEO John Chambers made the bold claim that the company’s goal is to not just be an IT company, but indeed the No. 1 IT Company. Chambers did clarify that this would be accomplished by improving overall value as an IT partner versus total revenue. Chambers also re-affirmed to investors that the long-term growth target remains 5%-7% and that gross margins would remain constant during that timeframe. So summarizing the “Cisco plan" – No. 1 IT company, long-term growth of 5%-7% off the already massive $46B or so in revenue, and steady margins – makes it a pretty bold statement to throw out there.
I do, however, think Cisco has a good shot at reaching these goals, for the following reasons:
I certainly think the company has set itself up well to become a better IT vendor. The company will almost certainly break away from Dell and HP, both of which have significant challenges to their businesses today.
Usurping the likes of Oracle and VMware for IT mindshare is a different matter. While I believe the transition to cloud and mobile will put Cisco in a position to achieve its goal of being a more significant IT solution provider, it does need to continue to bring in new leaders, hire salespeople who can "talk the talk" with line-of-business managers and market higher-level network-based solutions with more quantifiable benefits. Everything is set up for them to succeed, and now the company must execute, something Cisco has a track record of doing well over the past decade.
Zeus Kerravala is the founder and principal analyst with ZK Research. Kerravala provides a mix of tactical advice to help his clients in the current business climate and long term strategic advice. Kerravala provides research and advice to the following constituents: End user IT and network managers, vendors of IT hardware, software and services and the financial community looking to invest in the companies that he covers.
Kerravala does research through a mix of end user and channel interviews, surveys of IT buyers, investor interviews as well as briefings from the IT vendor community. This gives Kerravala a 360 degree view of the technologies he covers from buyers of technology, investors, resellers and manufacturers.
Kerravala uses the traditional on line and email distribution channel for the research but heavily augments opinion and insight through social media including LinkedIn, Facebook, Twitter and Blogs. Kerravala is also heavily quoted in business press and the technology press and is a regular speaker at events such as Interop and Enterprise Connect.
Kerravala remains associated with Yankee Group through the company's affiliate program.
Prior to ZK Research, Zeus Kerravala spent 10 years as an analyst at Yankee Group. He joined Yankee Group in March of 2001 as a Director and left Yankee Group as a Senior Vice President and Distinguished Research Fellow, the firms most senior research analyst. Before Yankee Group, Kerravala had a number of technical roles including a senior technical position at Greenwich Technology Partners (GTP) where he worked with Johna Til Johnson, the founder of Nemertes Research. Prior to GTP, Kerravala had numerous internal IT positions including VP of IT and Deputy CIO of Ferris, Baker Watts and Senior Project Manager at Alex. Brown and Sons, Incorporated.
Kerravala holds a Bachelor of Science in Physics and Mathematics from the University of Victoria in British Columbia, Canada.