Cisco CEO Robbins: Wait til you see what’s in our innovation pipeline

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MC: Shifting gears just a little bit, can you talk about the latest adoption figures for your application-centric infrastructure and how do you respond to critics who say ACI is a tougher sell compared to other network virtualization platforms because it requires a hardware upgrade to Nexus 9K gear in addition to the software?

If you look at our overarching ACI portfolio as we have defined it over the last couple years, last quarter I believe it was around $2.3 billion run rate and it grew in the mid-30s. The continued adoption of that technology is clear. There is no denial that our customers want greater ability to impact the policy relative to how infrastructure is deployed and configured. Look at the success we’ve had with CloudCenter which was a CliQr acquisition that we had around workload movement. We’re early in this convergence of the infrastructure and the application from a visibility perspective but I think every customer ultimately would like to see that.

Look at what we’ve done with Tetration, with ACI and with our security portfolio. Tetration gives you greater visibility into what’s happening with the application, you have security threat information that’s coming into the data center and then you have ACI that can drive the policy based on what does the application normally need and what am I learning from the network about what’s going on that might impact how I deploy policy. I think customers want to get there, it’s a significant transition, it requires a different way of thinking, it requires different skills and I think we’re just early in it.

MC: Do you think that products like Tetration actually help sell ACI or is that taking it too far?

No. I absolutely think Tetration helps sell and position ACI because what Tetration gives you is a real clear view of what’s happening with your applications versus what you think is happening with your applications. As you deploy Tetration and you get greater visibility to how your applications actually operate, you can then build your policy definitions based on that performance and then white-list, so to speak, an application performance profile or an application policy. Then you know in the future, is the application deviating from how I know it operates. There’s a very tight link between those.

JG: During the announcement about the recent restructuring, you talked about the company investing in key priority areas such as security, collaboration, next-generation data center and cloud. That’s pretty broad. Can you drill into that a little bit more and help people understand what the restructuring means for them and what it means for those areas at Cisco?

When you look at security or you look at IoT, even certain elements of our collaboration portfolio, you begin to understand how IoT is absolutely an industry-specific solution. [There’s] a need to integrate our new API-capable technologies with some industry-specific applications and the need to drive automation and cloud-based management of our core networking portfolio. Those are areas that we had to fundamentally align expenses against because those market opportunities are moving. That was the basic premise behind the decision. It’s a very difficult decision but we had to make it in order to really get our expenses aligned around those opportunities which are incredibly important to our customers.

JG: When that announcement came out, that was viewed certainly in the financial community, probably less so by customers, as some indication that Cisco is struggling through some transitions like some other big tech companies are struggling through transitions. What do you want people to really understand about that?

Our customers are going to operate in a hybrid environment. They’re going to have on-premise technology, they’re going to have cloud solutions, they’re going to have SaaS solutions and our responsibility is to deliver our technology in any of those flavors that our customers need from us. There are certain elements of our portfolio that actually align very naturally to SaaS offers or to cloud offers. Think about our collaboration portfolio, our security portfolio. You’ll see more automation and security management capabilities in the core that will be delivered as a cloud service and those are just natural.

There’s also a premise-based element associated with this that will not go away but we have to simplify the operational issues associated with that. We have to provide our customers with the ability to move faster through automation and we have to integrate security deeply. I feel like we have tremendous visibility into what we need to do and I think now, after the first year, I firmly believe that it’s all about execution. Given our history, when we get to a place where our success is dependent on our ability to execute we tend to do pretty well.

MC: In that same restructuring announcement you talked about the challenges Cisco faces in its core routing and switching business. What are the big challenges with respect to that core business?

When I think about our core technologies, there are probably three things that our customers want to see. They will resonate from us providing greater analytics out of the core and information about what’s happening. For two decades we have talked about the fact that the network sees everything and we’re in the early days of actually exposing that information to our customers and giving them insights about things going on in their environments that they wouldn’t have otherwise.

The second is that, candidly, we have to simplify the environment and the operating model for the infrastructure because our customers are trying to move with greater speed and that really is going to come through continued focus on automation. You’re going to see a lot of that from us over the next one quarter, two quarters, eight quarters, 10 quarters. That’s a big focus area for us.

Third, again, is security. I think, as I’ve said on earnings calls in the past, the large enterprises, when they have a core infrastructure that is running and meeting their needs, particularly in a time of uncertainty at a macro level, then they’re going to delay the refresh. What I believe is that we absolutely will drive more innovation in our core over the next 12 months than we have probably in the last couple years and I think that focusing on analytics, automation and security will give our customers enough value that they’ll begin to look at that again.

JG: One of the things we had talked about earlier is the Cisco InterCloud strategy. Can you give us an update on that and talk about what you’re doing to make it easier for people to access the big, public cloud infrastructure providers like Amazon, Microsoft, Google?

If you think back to InterCloud, there was an element of taking Cisco’s cloud technology and infrastructure and actually deploying them to service providers around the world to allow them to offer those in the specific countries that they operate and that is still operating today. The second was to create a standardized infrastructure that new cloud [offerings] from Cisco would be built on internally. That’s obviously occurred. Subsequent to that is that we’ll continue to evolve many of our offers to SaaS, to cloud-based offers and that’s continuing to occur across the portfolio.

The third was we wanted to help our enterprise customers build private cloud and enable the movement of workloads to and from different public cloud providers and that’s what we’ve done with a fair amount of work on. We started out with InterCloud Fabric and it has evolved really to be more what we do with our CliQr acquisition. That’s [been] incredibly well received in the customer base. Customers want to take advantage of public cloud but they want to make sure that they’re not being locked into a public cloud provider. They want the flexibility of moving workloads in and out and that’s what we’re helping them do.

Finally, what are your goals and what should people expect from Cisco in year two of your tenure?

We will continue to execute on the things that I laid out in the first year. We’ll continue a relentless focus on innovation. You’ll see a tremendous amount of innovation coming out. We’ve got a big announcement coming out in early November. You’ll see continued relentless execution against what our customers would like to see us drive, particularly around IoT and digitization with security and automation in our core as well as the collaboration portfolio and next-gen data center. [We’ll] continue to focus on the evolution of our business model to one that is more aligned to recurring revenue which, fortunately, is what our customers would like to see, whether they want to buy things as a subscription or as a service and our investors want to see because it leads to a more predictable business mode.

Copyright © 2016 IDG Communications, Inc.

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