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

It’s been a little over a year since from the venerated John Chambers. In that time, the face and pace of the IT realm has transformed — from Dell buying EMC and HP splitting up to the swift rise of IoT and harsh impact of security challenges. Robbins has embraced this rapid change and, he says in this wide-ranging interview, moved the company forward with relentless speed to address everything from hyperconvergence to application-centric infrastructures.

Robbins recently talked with Chief Content Officer of IDG US Media John Gallant and Michael Cooney, a Network World Online News Editor, about how the company will transform now that some of its most well-respected innovators have left the company as well as how it plans to further implement SDN technology while bolstering its core networking gear.

John Gallant: You and I first spoke just a couple of days before you started as CEO, a little more than a year ago. How is Cisco a different company today and what would you point to as your major accomplishments during that period?

When I took the role, John, we talked about my desire to move with greater speed. I wanted to drive a level of clarity and simplicity internally in how we communicated. I wanted to create a leadership structure that gave us the opportunity to do both of those things. I also was very interested in evolving our portfolio to one that comprised more recurring revenue made up of subscription and software and SaaS-type businesses and overall I’m pleased with the progress that we’ve made. We worked hard on communicating more clearly to all constituents; customers, partners, press, as well as our investors. We’ve begun to articulate how our business model transition will occur and I believe the speed aspect is reflected in what I think is the incredibly robust pipeline of innovation over the next six, 12, 18 months that the teams are working on right now. I’m very pleased with where we are.

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JG: At that time, you talked about Cisco driving the deployment of what you were calling a hyper-distributed architecture. Can you first remind readers what that means and then tell us what progress you’ve made on that front?

As we think about, particularly, enterprise customers, the perimeter of their infrastructure continues to extend to the furthermost point that they have devices connected, whether those are users or whether those are mining facilities or vehicles. [The infrastructure] continues to become more and more distributed and the need for security and the ability to process data, do analytics filtering, all of those things throughout the infrastructure is the point that I was making. This is not going to be a centralized IT solution. It is going to be IT capabilities, technology capabilities deployed all throughout.

We’ve made a great deal of progress, particularly as we’ve added Jasper to our portfolio and giving our customers the ability to really integrate their native IT connected devices with machine-to-machine connected devices. {Ed. Note: Jasper is an Internet-of-Things technology platform.} We’ve made a tremendous amount of progress with our security architecture, driving security into the network all the way to the edge and all the way through the cloud. Giving our customers the ability to push compute capabilities and analytics to the edge for the purpose of processing data and gaining insights from these new connections, I think the teams have made good progress on too. I’d say we’re in the early stages but overall, really good progress.

JG: What surprised you about being CEO of Cisco in the year that you’ve been doing that?

The most surprising thing to me was, I guess, was the readiness from the organization to adapt to the change that we needed to adapt to and the speed at which they were prepared to move. That’s probably been the most positive surprise for me; that the organization is embracing the push to the business model shift, the accelerated pace that we want to drive, the simplicity, the clarity. It’s been very refreshing.

JG: Since we last spoke, there has been some pretty dramatic change in the IT industry. You’ve got, among other things, the largest merger ever with the creation of Dell Technologies. You have a huge company, Hewlett-Packard, splitting up into the consumer and enterprise components. You have IBM and Oracle going through these giant transitions to the cloud with some success and some failure along the way. What risks and opportunities have these changes created for Cisco as you strive to be the most important IT company, which is a phrase John Chambers used in a number of interviews with us in the past?

What’s clear, based on the decisions that all of the major IT players are making, including the four that you mentioned, is that the environment and the industry and our customers’ expectations are moving faster than they ever have. Whatever that leads you to from a business conclusion perspective, you have to get there and you have to be decisive. All of these companies and Cisco have made decisions they believe were appropriate for them in light of the transitions that are going on. The overarching message is that all of us in technology and every industry around the world have to adapt very quickly, have to be willing to make the decisions that we need to make in order to remain competitive, in order to meet the changing dynamics in the marketplace.

As it relates to opportunities for us, some of the companies you mentioned are partners and some are competitors. Anytime there are either major divestitures or major integration work going on, typically it gives an opportunity to us – assuming that we’re competing with that particular company – to gain market share and to continue to be a steady presence with our customers. I feel like our culture and our environment is quite prepared to make the decisions that we have to in order to deal with the changing landscape.

JG: When you think about HP Enterprise or Dell in particular, those are companies that are in security and in networking, in the server market. Specifically, how will you capture market share now as they’re going through such big changes with customers, as well as internally?

I think about those two companies differently, obviously. Dell and EMC, we continue to think of them more from a partnership perspective. We clearly have some competitive overlap with VMware but there is still an opportunity. The VCE partnership continues to be positive for us and we continue to talk about how we can look at joint opportunities together in the marketplace. As it relates to HP, they have been largely a networking competitor for many years and we don’t see a significant shift in how they’re approaching the market right now. We will continue to compete much like we have historically.

Michael Cooney: Speaking of VMware — at Cisco Live Zorawar Biri Singh, CTO and senior vice president for Cisco’s Cloud Services and Platforms, said the company has a roadmap that could include convergence between Cisco’s ACI and VMware’s NSX platforms. Can you talk about this potential partnership with such a large rival?

One of the things that I firmly believe in is that you have to be able to rationalize competition with the ultimate integration and interoperability work that has to be done to benefit customers. One of the examples historically that you can point to is that Microsoft and Cisco have competed in collaboration for a very long time but if you ask our customers, there’s a great deal of interoperability that they would like to see us drive. Our responsibility is to make sure we’re clear about the competitive nature of our partnership with VMware, Microsoft or whomever and the areas that we should be interoperating more effectively for the benefit of customers. Without going into details around the different technology areas, that’s the way I think about these partnerships. It doesn’t mean that we won’t still make decisions based on a competitive dynamic but we have to be a little more open to both sides of that.

JG: I want to talk about the hyperconverged infrastructure market. This morning I had the opportunity to speak with the CEO of Nutanix [Dheeraj Pandey] and he basically said there were two companies in hyperconvergence. There’s VMware and there’s Nutanix because they’re approaching this from a software solution and ultimately it needs to all be agnostic to the hardware. Do you agree with that and can you clarify a little bit the progress you’re making in the hyperconvergence arena?

I like to take it up a level and talk about the fact that our customers are looking for different solutions to run different workloads in their data centers. There are applications that lend themselves to containers. There are still virtual-hypervisor-based solutions. There’s OpenStack and then there are these hyperconverged solutions that exist out there. That that’s one piece of what our customers are looking for. I personally do not buy into the fact that everything is about the software and that the hardware element of it, that they’re agnostic to it. Perhaps you’re agnostic assuming that the performance level of the hardware is good enough. But these data centers need application performance in wire speed, with analytics and security that you’re ultimately going to want to drive in the data center so that you have visibility to what your applications are doing, you have greater security visibility to what may be going on as an anomaly in an application flow.

Those are going to require high-performance hardware to happen. That’s just a fact. All those use cases are areas that we want to focus on with our customers. As it relates to our hyperconverged offer, we said in our earnings call that in Q4 we added 500 customers and it was very early in the solution that we’ve brought to market. We have more innovation planned over the coming quarters. I think 500 customers making that decision in one quarter says that we’re moving in the right direction.

MC: In John’s interview last year, you talked about creating a simpler management structure with more diversity. There’s been a lot of change since then obviously but what do you think you’ve accomplished in that arena?

From an organizational perspective, we have a relatively diverse leadership team. One of the other key things that I wanted to drive was more technology representation at the leadership team and now we have not only multiple engineering leaders sitting at the table but I also think that many of the other leaders that are in the discussions have a very deep understanding of technology. I’m very pleased with where we are there. The entire leadership team has bought into where we’re trying to go, there’s a great deal of alignment. When you’re moving at the pace we are and you’re trying to impact things like business model transitions, it’s important that operations and sales and services and engineering and all these teams are moving against a single plan and I feel very good about our team and their ability to do that.

MC: Can you talk a little about how you will develop future innovative technologies now that so many of your top technology developers have left the company over the past year?

First and foremost, innovation should be, and is, a core requirement across every element of Cisco and cannot be isolated to one group. One of the things that we are spending a lot of time doing is a constant review and iteration with our teams around what our customers are telling us they’re looking for. How does that translate to how we think about it? How do we give our teams permission to innovate in a way that might not correlate to how we’ve done business over the last couple of decades? Imagine that you’ve built a product and you’ve sold it as a net 30 product and now customers are asking [us] to deliver that as a service. You almost have to give the teams permission to transition how they think about building those solutions. You see examples like Tetration [analytics] coming out as a subscription. You’ve got Cisco Defense Orchestrator that came out, Cisco Umbrella capabilities. All our acquisitions have fit into that. There’s broad-based energy around this empowerment to drive innovation in the way that our customers would really like to see from us.

MC: Is the notion of a spin-in really dead at Cisco at this point?

No. I’ve said that if there are situations where spin-ins make sense we will absolutely consider them and execute against them. We have multiple levers we pull on innovation. We have our own R&D capability. We clearly have our acquisition strategy. We now have deep strategic partnership capability in addition to our historical success in our classic ecosystem. We have the ability to invest from our balance sheet which we’ve connected more tightly to our overarching strategy and we’ve begun to really execute on this co-development effort with customers around this iterative design process. In the acquisition space, we’re absolutely open to spin-ins if the requirements of what we’re trying to accomplish align more directly with that as a solution.

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.