Cisco announces reorganization

Cisco Systems unveiled a reorganization plan that the vendor claims will let it respond to customers’ product needs more quickly and use resources more efficiently.

No layoffs are included in the new structure, which places all product development under a single umbrella featuring 11 technology groups, though Kevin Kennedy, senior vice president in charge of the service provider group has resigned. The heads of those 11 groups will report to Mario Mazzola, the company’s new chief development officer who was senior vice president of Cisco’s new business ventures group. Previously, products were developed within three separate lines of business serving the enterprise, commercial and service-provider markets.

While the line-of-business model helped Cisco address the needs of nascent markets during periods of rapid growth, it has become cumbersome during the economic slowdown, according to Bill Nuti, Cisco’s senior vice president for service-provider operations worldwide. Most notably, the company has discovered examples of engineers in different lines of business developing essentially the same product.

By centralizing development, Cisco plans to avoid such duplications and redeploy its engineers in a manner that will accelerate product development.

“Inevitably, we will experience some cost savings by removing redundancies, but this is less about cost savings and more about speed to market,” Nuti said.

In addition to helping products be developed more quickly, the reorganization will free resources to created customized solutions for customers, Nuti said.

“The key message here is to evolve our organization around getting closer to our customers, … particularly our service-provider customers,” he said.

Nuti replaces Kennedy who has been rumored to be a candidate for several CEO openings. In a prepared statement, CEO John Chambers said Kennedy is pursuing “external opportunities.”

As part of the reorganization, Cisco’s marketing efforts also will be centralized. New Chief Marketing Officer James Richardson previously was the company’s senior vice president of the enterprise line of business.

Other executive changes call for Charlie Giancarlo, formerly senior vice president of the commercial line of business, to run four of the technology groups reporting to Mazzola. Also reporting to Mazzola will be Mike Volpi, the former chief strategy officer who will head the largest technology group, Internet switching and services.

While Cisco’s announcement focused on its organizational chart, market watchers were encouraged by Chambers’ statement that the company’s business is “stabilizing,” with sales for the quarter tracking guidance. However, Nuti said the service-provider sector remains an exception to this optimism.

“We are seeing things stabilize overall, but the service-provider market remains very challenging,” Nuti said. “I’m not prepared to say the service-provider market has hit bottom, and I don’t think any of my colleagues in the industry are either.”