Cisco restructure will not affect Australia

Cisco's decision last week to restructure the company into 11 distinct technology groups to address what it sees as consolidation in the communications market will not impact the Australian organisation in any way, according to local managing director Terry Walsh.

The new structure, which will include groups focused on areas such as network management services, routing, and storage products, will replace its current structure, which was geared towards addressing three "lines of business" -- the enterprise, service provider and commercial markets, Cisco said in a statement.

The line-of-business approach worked in the past because the vendor was dealing with distinct customer segments and product requirements, Cisco chief executive John Chambers said in the statement. However, consolidation in the market for communications products has blurred the lines between those segments, he said.

Commenting on the directive from Cisco's US head office to realign the company into 11 new product groups, Cisco Australia's Terry Walsh said the decision was aimed at tightening product development cycles.

"We develop a lot of products for telecomms service providers, and at the same time large enterprises are buying those service provider offerings, so we were faced with the danger of duplication in some of our product development," he said.

The company is making the changes at a time when it is starting to see signs that its business is stabilising, Chambers said. Although the company "can't predict the future", its orders for the first weeks of the current quarter are in line with the expectations it discussed when it reported its fourth-quarter earnings earlier this month, Chambers said.

The other technology groups the company is reorganising itself into are access, aggregation, Cisco IOS (Internetwork Operating System) Technologies Division, Internet switching and services, Ethernet access, optical, voice, and wireless.

"All of the 11 [new] product areas we've reorganised ourselves into will be our focus for the next few years," said Walsh.

One analyst applauded the change. "By consolidating a large number of items under a fewer number of managers, there's more focus," said Tam Dell'Oro, of market research firm Dell'Oro Group California. "When you have one person overseeing a broader number of things, they can more quickly make comparisons."

If the reorganisation helps Cisco cut costs it will benefit the company as the technology sector starts to recover, she said. "The company that moves quicker to match expenses with lowered revenue is probably going to be the healthier company."

Those engineering groups will be complemented by a marketing group that will focus on promoting what Cisco sees as its technological advantages, the company said.

The 1000-person Cisco Australia is primarily a sales and marketing organisation with a few hundred staff employed in sales support and just under 100 in engineering and R&D, and the subsidiary's senior management team will not be reshuffled under the US directive, Walsh told Computerworld.

"These organisational changes are US-centric," he stressed.

Local company spokesman Peter Witts added: "We can't predict the future, and business will always depend on the [health] of the world's largest economies, but we do not expect to reduce staff numbers immediately."

As part of the reorganisation in the US, Kevin Kennedy, who was senior vice president of the company's service provider business, will leave Cisco after eight years of service to pursue "external opportunities", the company said. He will retain a role as an industry and technical advisor to the company, Cisco said.

Mario Mazzola, former senior vice president of Cisco's new business ventures group, has been named chief development officer and will oversee the 11 technology groups, reporting directly to Chambers.

Michelangelo Volpi, formerly Cisco's chief strategy officer, will lead the Internet switching and services group, which will be the largest of the new technology groups. Charlie Giancarlo, who was senior vice president of the commercial division, will run four of the other groups. Both men will report to Mazzola, Cisco said.

James Richardson, formerly senior vice president of the enterprise division, becomes chief marketing officer under the new scheme.

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