Shortly after John Chambers, CEO of the $48-billion networking major Cisco, predicted a brutal consolidation of the IT industry at Cisco Live, the company’s annual event in San Francisco, Cisco announced a “bold move” that is expected to change the way the company relates to its customers.
A decision has been made to create a Global Service Provider (GSP) business segment this fiscal , which will be effective from August 1, when Cisco begins its financial year.
The new GSP team, led by Nick Adamo will bring together more than 90 top wireline, wireless, cable and web providers under five regional leaders for EMEA, APJ, Americas Telco/Mobility, Americas Cable & Media and Canada. And, for the first time, Cisco will integrate product and services sales under one team in GSP. Additionally, the company will be forming a new service provider (SP) go-to-market team, which will be organised across engineering, services delivery and sales that will serve all SP customers. While services delivery will be aligned under Cedrik Neike, GSP Engineering will come under Kelly Ahuja and GSP Sales under Nick Adamo.
By combining solution sales, services sales and service delivery and SP Engineering under a shared P&L, Cisco expects to enable greater cohesiveness and flexibility around its offerings; ensure a consistent strategy; and drive products and services collaboration across all five regional teams to fuel growth for the company.
Closer home, in India, Cisco’s SP customers are Tata, Reliance, Bharti, VSNL, BSNL, MTNL, Sify and Idea Cellular. While the new combined product and services sales structure (under a single client director handling a large SP account) will benefit Cisco’s SP customers as they will have a single point of contact, sources say the new sales structure may see many heads roll.
“The new structure is a positive development for Cisco because execution is key to the success of SP contracts which take anywhere between 12-24 months” said Naresh Wadhwa, who headed Cisco’s India business until January this year.
Instead of the product team selling, after which the services team executes , now there will be a single point of contact for selling and execution. This creates greater accountability, rapid response and tighter execution cycles, enabling quicker revenue accruals. Cisco has also not found a replacement for Sanjay Rohatgi, MD for service provider business in India after he quit to join Symantec as its India head this January.
While the third quarter ended April saw Cisco moving back to the growth path, largely led by growth in the US products (7 per cent), commercial and enterprise businesses (10 per cent each); orders in emerging markets declined and Chambers said he expected it to continue for several quarters. Brazil was down 27 per cent, Russia down 28 per cent, China declined 8 per cent, Mexico and India declined 3 per cent and 1 per cent, respectively.
“If the new model for GSP segment works well, Cisco will extend it to its large Enterprise and Government business, much like the IBM model of appointing one Client Director for a $1 billion plus customer” said a Cisco insider. It remains to be seen if this new strategy gets Cisco out of the red in its India business.