Cisco continues to change

Restructures operations, management councils as per Chambers memo

So Cisco moved again this week to attempt to right the ship after it veered off course in its fiscal 2011 first and second quarters. This time, it whacked away at its business structure, including the management councils that have been criticized for slowing decision making and execution.

A week after CEO John Chambers issued his infamous Change Manifesto memo, the company lopped off its Flip consumer videocam business, realigned other consumer operations and cut 550 employees. A week after that, Cisco instituted an early retirement program to encourage US and Canadian employees 50 years old or older to scram.

Now, it's restructured overall company operations and management. Those management councils, staffed by development and marketing higher-ups in each of Cisco major product groups, have been whittle down to three from nine.

The councils, instituted in 2007, have come under fire, most recently for lacking focus, being slow to make decisions and an inability to execute following quarters in which Cisco's growth slowed due to slumping revenues and profits in core markets, as well as new ones. Chambers indicated as much in that memo to employees last month.

Analysts have been calling for Cisco to streamline or even abandon the council structure.  This week's move is a response to that.

Cisco has also narrowed it major areas of business down to three, from four: Enterprise, Service Provider and Emerging Countries, vs. the previous Enterprise, Service Provider, Commercial and Consumer. Cisco is not exiting the consumer or commercial markets but simplifying how it operates by placing more accountability on fewer leaders, a company spokesperson said. 

Cisco said it will streamline its sales, services and engineering organizations as it focuses on the five areas it's targeting for growth: routing, switching, and services; collaboration; data center virtualization and cloud; video; and business process architectures. Cisco says the changes reflect a plan to improve customer, partner and employee interactions, simplify its operating model and improve focus on the five priority areas.

The majority of changes will take place over the next 120 days, with a new sales organization in place by July 31, the start of Cisco's fiscal 2012.

But is this enough? Some analysts want Cisco to cut even more from its product portfolio, such as the Scientific-Atlanta set-top boxes and the Linksys home networking gear. That would just about be the nail in the coffin for Cisco's entire consumer product line and business.

What do you think?

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