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Inflection Point: Cisco Sets the Pace of Mobility Innovation

At Cisco, we take very seriously our ability to anticipate and catch market transitions. A few years ago, we saw a market transition that would affect our Service Provider customers in the area of Mobility. With 3G, 4G and Wi-Fi deployments rising, the world was clearly shifting from Coverage, Capacity to Services… and the importance of customer experience rising amongst operators worldwide. As a result, we set in motion a new strategy for our Service Provider Mobility Group (SPMG). The key to our strategy was to develop an architecture that would enable Service Providers to offer a differentiated experience to their customers.

Our Mobility CTO Paul Mankiewich refers to the new mobility operator requirements as “the Grand Challenge.” The inflection point is here. Not only do our key SP customers recognize it, but our competitors are also seeing the tremendous business opportunity represented by the “Grand Challenge,” especially as it relates to emerging Monetization use cases that are propelling the market’s rapid growth.

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Cisco Announces Intent to Acquire SolveDirect

The network is emerging as the central nervous system for business in today’s hyper-connected world. As a result, it will be expected that people, things and sources of data are all connected and communicating with each other in real time. Today, I am pleased to announce Cisco’s intent to acquire SolveDirect, a privately held company headquartered in Vienna, Austria that provides innovative, cloud-delivered services management integration software and services.

The move towards multi-sourcing and cloud services is accelerating the development of large ecosystems of companies – from enterprise IT and manufacturing, to SaaS providers – that need to share data in a secure and scalable way. Most of the interactions between these service partners today require manual effort, growing cost and complexity for an organization as their number of service partners grows. SolveDirect’s cloud-based solutions offer enterprises and service providers a flexible way to integrate with service partners, and automate sharing of processes, data, and workflows in real-time by eliminating manual practices and bottlenecks, driving significant operational efficiencies. SolveDirect’s capabilities will enable Cisco to extend our portfolio of smart and connected IT services to our global ecosystem of customers, partners and resellers.

Acquisitions and investments are a key part of Cisco’s build, buy and partner innovation strategy. The SolveDirect acquisition aligns to Cisco’s goal of developing and delivering innovative solutions that streamline data and workflows across a unified network. The SolveDirect team will join the Cisco Services team, under the leadership of Mala Anand, senior vice president, Cisco Services Platforms Group. Under the terms of the agreement, Cisco will acquire all shares of SolveDirect. The acquisition is subject to various standard closing conditions and is expected to be complete in the fourth quarter of Cisco’s fiscal year 2013.

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M&A: Taking Action When it Matters Most

Innovation is the engine that powers Cisco. Its machinery was first assembled by an entrepreneurial husband and wife team with a great idea to connect the computers of two departments at Stanford University. It has since been turbo-charged by the simple notion that an open, standards-based communication protocol can be extended across the many ways of bringing together people, process, data and things to create networked connections. Now, that innovation engine is driving Cisco to become the world’s leading IT company with the power of capturing the next phase of the internet – the Internet of Everything – to make networked connections more relevant and valuable than ever before. Cisco will do this through building on in-house R&D and investing in employees, alongside acquiring great technologies, business models and talent during this time of massive industry change, when it matters most.

Our build, buy, partner approach is at the heart of Cisco’s innovation culture. It is an integrated toolkit that is critical to maintaining sustainable long-term differentiation, particularly as markets go through major transitions and disruption. Cisco first led innovation in the hugely disruptive routing arena by building incredibly relevant solutions during the infancy of the Internet. We then expanded into new disruptive markets, such as switching, with pivotal acquisitions of companies like Crescendo, Grand Junction and Granite. Later, Cisco extended into areas where major transitions continue to take place today, such as collaboration, mobility, data center and video with deals like WebEx, Starent, Meraki, Nuova, and NDS.

So where are we now and how did we get here?

In 2012, M&A deal volume in the industry dropped more than 15 percent while overall deal consideration dropped by a dramatic 30 percent. Despite this trend, 2012 represented the most active M&A year for Cisco in over a decade with 14 acquisitions and nearly $8 billion in transactions. After two of the quietest years for M&A at Cisco, why have we kicked our M&A motor into high gear? Well the answer can be found in the journey we have been on over the last couple of years. That journey started with a new Strategy. It has been fueled by Readiness. And, it has arrived through Actionability.

2010 and 2011 were challenging times for Cisco in which the company wrestled with driving growth across many priority areas—arguably difficult for any one company to handle. That, in combination with downward pressure on the business within Cisco’s market segments, resulted in sharpening the company strategy in 2011. We refined our focus from 30+ market adjacencies to 5 foundational priorities. This shift allowed for the development of a reinvigorated corporate strategy as well as individual market initiatives closely coupled with the priority areas.

In late 2011, with a solid strategy in place, management turned its attention back to what it had always done from its humble beginnings: lead in strategic categories and extend leadership to new markets. With a breadth of talented leadership, fresh ideas began to flow to key posts across Cisco’s engineering, sales and services ranks.

The combination of good strategy and exceptional leadership inside the business allowed Cisco to aggressively seek out opportunities in the market during a time when the tech M&A landscape seemed to be largely void of meaningful activity. As an example, the steady-step execution of a clear Cisco Mobility strategy has delivered for our customers in a big way. In the span of a quarter, Cisco acquired Cariden, Broadhop, and Intucell—all of which are part of an overall drive to bring more intelligence from the very ends of networks to the IP edge where Cisco can add value and solve customer problems. Other examples include leadership in Unified Access and Data Center where deals like Meraki and Cloupia enable Cisco to continue to stress next generation enterprise architectures and business models that are adjacent to Cisco’s core business. Finally, in the area of Video, Cisco delivered on its software-based Videoscape architectural strategy through a series of well-mapped acquisitions, culminating in the $5 billion acquisition of NDS, the largest tech deal of 2012.

As we drive a higher pace of M&A, we have kept a close eye on how to “save to invest”, ever-clarifying the portfolio through carefully selected divestitures such as the sale of Linksys to Belkin. These kinds of moves continue to help sharpen our focus in areas where Cisco can compete to win.

We continue to evaluate exciting new opportunities to lead the industry in a time of powerful market transitions and disruption. Cisco will be active, but disciplined, in our M&A approach—which has been, and always will be, built on a platform of solid strategy, operational readiness, and market actionability.

I look forward to sharing more about our moves as they unfold in 2013.

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Cisco helps Australian Community-based, Non-profit Achieve its Goals

Relationships Australia WA is a not-for-profit which provides counselling for persons who have experienced domestic violence and family disputes. Relationships Australia WA also has a strong presence in the Aboriginal community, working with Indigenous communities across a range of issues.

Western Australia is the largest state in Australia by a long way (roughly three and half times the size of Texas) and is also the least densely populated state in Australia. In fact, its capital, Perth, is the most isolated capital city in the world. It is due to this tyranny of distance that Relationships Australia WA has plans to roll out collaboration technology such as IP phones and videoconferencing in order to improve the levels of collaboration between its 35 geographically diverse offices.

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Teleworking Supports Innovation in New Zealand’s Bay at Bay of Plenty District Health Board

Collaboration and video technologies support innovation and improve patient outcomes at one of New Zealand’s fastest growing District Health Boards

Bay of Plenty District Health Board provides health and disability services for the fastest growing District Health Board (DHB) in New Zealand.  It delivers health services through two major hospitals and a network of community based facilities across one of the country’s largest DHB geographies.  It is committed to continuous innovation in its service delivery to meet the changing and growing needs of the region.  

A key to the Bay of Plenty District Health Board’s future success is its ability to evolve its IT capability to meet the needs of its patient population. Collaboration and video technologies introduced by the DHB are improving the way hospital, community clinic and clinician communicate and work together across the region.

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