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Reflections on the Fortune Global Forum: How businesses will win in the midst of the biggest revolution of high tech

I had the great privilege of attending and speaking at Fortune Global Forum this week, which gathers business leaders to discuss the most pressing challenges we face and to set the global business agenda. The theme of this year’s conference was “winning in the disruptive century” and focused on how businesses must operate in order to stay competitive in this environment. One common concept fueling discussions around the disruptive market we’re navigating was connectivity. CEOs across industries – manufacturing, technology, healthcare, finance and so on – are recognizing the need to not only digitize, but to reinvent themselves to stay ahead. As I reflect on the conversations I had at the Fortune Global Forum, here are some of the points that really resonated with me:

Businesses are poised to lead on digitization if we make it our priority.

Current forecasts around the number of connected devices are too conservative. By 2030, I believe that there will be closer to 500 billion connected devices. With digitization every aspect of day to day business will change, from supply chain to customer interface to productivity, every company will become digital. However, according to The Global Center for Digital Business Transformation, only 25 percent of executives have a proactive plan to address digitization. Leaders at Fortune Global Forum agreed that value is created by not just connecting things, but by how you use these new connections to make an impact on not only business, but also on governments and society.

I’ve met with government leaders in France, Israel, UK, Germany and India who not only understand the impact of digitization, but they’re moving quickly to bring it to life for their countries. I think we have something to learn from these leaders. First, that digitization should be a priority on our national agenda here in the U.S., as technology strategy will play a critical role in our success as a country in the digital world. Second, that digitization should also be at the top of the corporate agenda. If governments are moving on digitization with this type if tremendous speed, our businesses have to move even faster and be even more dynamic to realize the full potential of this opportunity.

Your company is defined by much more than just your core products.

Most companies today make 90 percent of their revenue from two or three products that have been in their portfolio for some time. To stay competitive in today’s disruptive environment, you can’t stay doing the same thing for too long. Business leaders must have the courage to expand into new emerging areas ahead of market transitions. This takes courage!

An overwhelming majority of leaders at the Fortune Global Forum noted that this challenge keeps them up at night, and that it’s made even more pressing by the increasing number of connected devices that are coming online. For instance, with the rise of mobile, my fellow panelist BT CEO Gavin Patterson saw an opportunity to make a foray into a new market and had the courage to expand his business beyond voice. This was just one of countless examples of how BT reinvented itself over its hundred-year history. This theme of reinvention rang true for others too, including Wells Fargo. To be successful in the digital world, leaders must find new profit streams and tie everything back to customers’ expectations.

Your competition today may not be your competition tomorrow.

Forty percent of market leaders will be displaced or eliminated by digital disruptors in the next 10 years. In my opinion the average time to disruption (meaning a “substantial change” in market share among incumbents) is now about 3 years, a dramatic escalation in the rate of competitive change versus historical levels. These disruptors offer differentiated products and services and better value than incumbents. This creates a hyper-competitive landscape driven by digital disruption, where lines between industries are blurring and markets are changing exponentially.

Companies that fail to keep up with the accelerating pace of innovation in this environment will be left behind as new competitors grab hold of market share. We saw this type of disruption occur with cloud and mobile, for instance, and we must always be thinking about the next transition. It’s important to remember that the disruptors of today look much different than they have in the past. If we don’t pay attention to this next generation of competition, we risk being left behind entirely.

The Fortune Global Forum agenda has made it clear: business leaders recognize the tremendous sense of urgency around our digital future. We are in the midst of one of the most revolutionary changes in technology we have ever seen which will have 5 to 10 times the impact of the Internet to date and will impact all industries – manufacturing, telecommunications, financial services, healthcare, and others. To win in this new age, businesses must make digitization a top priority.

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The Digital Age: Work Reimagined, Value Reimagined

I’m an entrepreneur at heart, and I love coming up with wildly innovative ways to solve problems and create business value. This entrepreneurial mindset is a requirement in today’s digital age—as technology changes business landscapes and rules.

If you read the media, you associate entrepreneurs with start ups and small companies. But as technology rapidly disrupts every industry, the challenge for every enterprise—small and large—is to rethink their business models and enable their entrepreneurs to drive their digital strategy. I can tell you first hand that there is amazing entrepreneurial talent hidden in large enterprises like Cisco. This hidden talent can help identify new revenue streams, increase productivity, or even transform an entire industry.Slide1

That is why I am so excited about my mission as Cisco’s Chief Digital Officer. I have license to rewrite the competitive and operational playbooks for Cisco—to unleash the capability and innovation across the company. And I have the opportunity to do it for every one of our customers, in every industry, who wants to rewrite their playbooks with digitization at the core.

We’re well on our way to making Cisco the best example of a digital company. It’s a journey for every aspect of our business—from our systems and tools, to our engineering, to our people, and I am thrilled by the partnership, energy and commitment across the company.

As I talk with customers about what we’re doing and what they want to do, the conversation always goes to “Where do we start?” I thought I would share a few critical observations and conclusions I’ve drawn:

Driving a digital transformation is not automating existing workflows or layering new tools and technologies on top of traditional processes. It isn’t an IT strategy trying to catch up with a business strategy. It isn’t cloud, collaboration, systems or applications. And it isn’t just a technology issue.

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Cisco Announces Intent to Acquire 1 Mainstream; Helping Customers Deliver Outstanding TV Experiences to Any Device

In today’s rapidly evolving market, the lines continue to blur between PayTV, such as premium subscription content, and over-the-top (OTT) streaming video service offerings. Service providers, content providers, media companies and broadcasters are all launching services of their own. OTT is fast becoming the new normal, where open, cloud-based technologies allow innovation at a rate simply not possible with traditional TV technologies.

Today, we are pleased to announce our intent to acquire 1 Mainstream Inc., a privately held company that offers a cloud-based video platform designed to quickly launch live and on-demand OTT video services to a variety of connected devices. 1 Mainstream helps service providers, broadcasters, media companies and emerging digital content companies deliver their media content to almost any connected media device, from Apple TV to Microsoft Xbox.

1 Mainstream plays a key role in the OTT PayTV and media industry, sitting at the intersection between content and connected devices, and seamlessly moving content across connected devices. The company’s platform is widely used by major content providers and traditional service providers, to deliver their content across most of the video streaming platforms available today.

According to Cisco’s Global Cloud Index announced today, global cloud traffic will more than quadruple by the end of 2019. With the acquisition of 1 Mainstream, Cisco will enable our customers to leverage the cloud to deliver new services faster and accelerate their own TV services.

1 Mainstream’s technology complements Cisco’s new ‘Infinite’ suite of cloud-powered video entertainment solutions designed to help service providers, broadcasters and media companies to deliver outstanding TV experiences to multiple screens, utilizing one cloud, on any network. Today’s acquisition will enable service providers, broadcasters and media companies to make their entire channel lineup and content library available to their customers on the internet via their TV, tablet or connected devices, either within the home or on the go.

Acquisitions are a foundational element of Cisco’s build, buy, partner, invest and co-develop approach to innovation. 1 Mainstream represents the third acquisition announced by Cisco this week and highlights how we are applying our unique approach to innovation to capture key market disruptions in areas such as cloud (1 Mainstream), analytics (ParStream) and security (Lancope).

1 Mainstream will join our Service Provider Video Software and Solutions Cloud Engineering Group, under the leadership of Conrad Clemson, senior vice president and general manager. The acquisition is expected to be complete in the second quarter of Cisco’s current fiscal year.

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Acquisition of Lancope to Boost Cisco’s Cybersecurity Threat Defense Capabilities

As enterprises digitize their businesses and 50 billion devices come online over the next five years, cyber attackers are perpetually trying to stay one step ahead of these trends and becoming more adept at exploiting security weaknesses and avoiding detection. To help customers address these nascent risks, Cisco is focused on delivering solutions across the extended network, what we call Security Everywhere. We are embedding threat protection capabilities from the enterprise infrastructure to the data center, from mobile to the cloud, and through to endpoints.

To address this proliferation of security threats and help our customers protect their networks and endpoints, we are pleased to announce Cisco’s intent to acquire privately-held Lancope, Inc. Lancope, through its StealthWatch system, provides network behavior analytics, threat visibility and security intelligence to protect enterprise networks against today’s top threats.

Lancope has been part of Cisco’s security solution for many years through a successful commercial relationship and now we are coming together as one team. Our combined solutions help secure customers’ resources and critical assets by using their network as a sensor—extending protection further into their networks and allowing them to see more threats and to identify these threats faster. Together, Cisco and Lancope will advance Cisco’s Security Everywhere strategy of providing advanced threat protection across the full attack continuum—before, during and after an attack.

The acquisition of Lancope compliments our other recent security acquisitions including OpenDNS, Portcullis, and Neohapsis. We look forward to welcoming the Lancope team to Cisco’s Security Business Group led by David Goeckeler, senior vice president and general manager. We expect the acquisition to close in the second quarter of Cisco’s current fiscal year.

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Cisco Announces Intent to Acquire ParStream

As the burgeoning Internet of Things (IoT) becomes a reality, it’s estimated that 50 billion devices and objects will be connected to the Internet by 2020. With this massive number of new connections, valuable data will be created at an even faster pace than most companies can manage. That’s why we are pleased to announce Cisco’s intent to acquire ParStream, a privately-held company based in Cologne, Germany that provides an analytics database that allows companies to analyze large amounts of data and store it in near real time anywhere in the network.

Speed is critical for helping companies to generate value from data in IoT environments. ParStream’s highly specialized database is built for IoT environments. It allows customers to compute and analyze large amounts of data at the edge in real time, with minimal infrastructure and operating costs at the edge. Using innovative compression and indexing capabilities, ParStream’s technology helps customers access data faster and at scale, rapidly analyzing and filtering billions of records and getting information to the business in near real-time. This acquisition complements Cisco’s current data and analytics portfolio, improving our ability to provide analytics at the edge of the network, where data is increasingly being generated and in huge volume. The value of IT has always been derived from the intelligence contained in data. Analytics are at the heart of Cisco’s strategy for a hyper distributed intelligent infrastructure.

ParStream’s technology, for example, can help a renewable energy company track and monitor thousands of wind turbines at once by providing the information to optimize the performance of each turbine and quickly adjust to changing environmental factors like wind direction and temperature. Instead of sending this data to a centralized server, now a company can store the data at the edge of the network, closer to the turbines and sensors, and track results even across a highly distributed network. Real-time access to data derived from the connected equipment can lead to benefits like decreased equipment downtime through predictive maintenance, increased productivity, and historical analysis of environmental patterns.

ParStream was part of the Cisco Entrepreneurs in Residence start up program. The ParStream team will be integrated into Cisco’s Analytics and Automation portfolio, joining the Data and Analytics Group. The acquisition is expected to close in the second quarter of fiscal year 2016.

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