Interview: Phil Smith, CEO of Cisco UK & Ireland

Cisco claims the current opinion of CIOs is that the IT department needs to change for the mobile era. Do they think that or is that what you want them to think?

Businesses are under a lot of economic pressure at the moment and that encourages them to generally improve two things: productivity and innovation. The pressure makes you work out how to do things more efficiently, while from the innovation side, it’s about doing more with what you have.

This pressure is on all businesses… to be able to blend technology to gain a competitive advantage, as well as using it as an optimising cost-cutting measure. If you are a CIO, you know [you] need to be continually bringing things to the business and finding new ways of doing things. It is not just about having new technology, it is about how can you fundamentally change the way we do things.

Some CIOs are very much up for a change agenda because they see that as the advantage for the organisation, but others will be in denial, saying they have enough to do just keeping the company running. That will vary, but what I think the guys here are talking about [are those CIOs] having to react to the pressures of bring your own device (BYOD).

Some CIOs are very much up for a change agenda because they see that as the advantage for the organisation, but others will be in denial

Phil Smith, CEO Cisco UK & Ireland

You talk with CEOs, as well as CIOs, and they were the first to bring in tablets and want to use them in the workplace. They are also the ones cutting the budgets in IT. Why is that?

I am not 100% sure they are doing these massive cuts just yet to the IT budgets. I think most of them are facing those economic pressures that require them to cut down on their CAPEX (capital expenditure) in some cases, OPEX (operational expenditure) in others.

Whether people are cutting down budgets or not, there is always a drive to cut costs and there will be demand to be more productive, do more with less and be more innovative about the way you do things.

Technology innovation can potentially save a lot of money, so the CEO challenging the CIO to find ways, through technology, to make us more efficient and more innovative. It is a real balance.

At Cisco Live, your firm announced its Unified Access products, bringing wired and wireless into one box. Why have companies, especially in the networking business, been making things so complicated for so long?

Now that is a reasonable way of seeing things, although technology does move on and I think the ability to do certain things changes as well.

Take the car industry – it used to focus just on making cars but as technology came along they could do more – like connect with GPS. When I had an accident recently, my BMW called the police and told them my location before I even [got out my mobile]. Those things develop separately.

Those things can seem obvious, but sometimes industries can be quite segmented. In the IT business, there was the WAN environment and the wired environment – the [established] way that people did things. This ‘wireless thing’ was [seen as an] upstart and those who were developing it were broadly competing with [their colleagues] because the more people went wireless, the less people would be wired.

Now, everybody wants to do both, plugging in when you need the capabilities or being connected on the move. So, it has been a matter of time, not so much to do with the technology but to do with the people involved and if they are willing to do it.

Shoving technology down people’s throats tends not to work. It has to be related to the business and mobile versus fixed reflects a societal change. We all want to be more mobile, work from home and be more flexible.

That societal change is happening, but there are even technology companies who don’t have a wireless network available to staff in their offices. Why do you think there is still that apprehension of wireless networks within the enterprise?

It’s true, there is a lot of fear. It is easy to imagine the dangers of wireless when you hear all of the hacking stories where someone got in using a wireless network. I also suspect there is the element that we have all switched our [smartphones] on and seen a whole variety of wireless networks available that anyone can join, which looks less than secure.

The truth is the biggest failing we find with wireless networks are people who don’t have wireless networks. Say, in your office, you decide not to have a wireless network, so someone brings a hotspot in. They broadcast it because it is easy to do and then guess what? Some guy walking past can then get onto that network.

So, it is actually when companies don’t have wireless networks that they are more insecure because people want to use them anyway and set up hotspots on their devices.

A lot of technology for wireless has been emerging to make networks safer, but a lot of companies have all of their Ethernet ports just there anyway. You can sit down in an office somewhere and just plug your laptop in. There is no security at all. Yes, it is a little harder because you need a cable, but it is essentially the same thing as leaving a door open in a bank. You could argue that that is burglary, but the truth is you have left the door open with all the money hanging out.

There is a slight mystique about wireless for those who don’t get it and there are those who say they don’t want wireless because it is insecure. You can build super secure wireless networks but you have to really think about them and plan them. Then it is more secure than people bringing in their own hotspots anyway.

People are going to have to accept it. I think companies are missing out when they leave technology too late and the societal change has [already] said this is the norm.

Do you think Cisco has an ownership of this new world of wireless like it arguably does with the fixed world?

In Wi-Fi terms, we are the biggest market share owners by a long way, but there are clearly other competitors who have positioned themselves in different ways.

One of the areas with Unified Access we were keen to stress is the robustness and reliability. It is what our customers have insisted of us in the last 20 years or so. It has got to be secure, reliable and fast, all the stuff we expected on the wired network. If you are going to go for industrial strength wireless, you have to show the same.

We have a good position in there as many of the big enterprise or industrial wired networks today are built on Cisco technology. There may be a router for wireless that is slightly faster than ours or has one particular feature but it doesn’t mean every customer will go over to them. They already have a big investment in us, they have in-house expertise – people who know how to configure [our kit] – and they have probably got trust in Cisco, in what we provide and our services capability.

The position we have had in wired and wireless markets up until now probably gives us a good start to be doing that in this type of network.

Networking is different now – it has begun to attract new talent, new start-ups and get ‘sexier’ as a technology. Do you not think you are under more pressure and more danger when it comes to holding your position?

There is a positive and negative to it. The positive says thatif start-ups are coming in and people are challenging you, you are in a good market. They wouldn’t challenge you if it was a boring, old market.

I think companies are missing out when they leave technology too late and the societal change has [already] said this is the norm

On the innovation side of it, yes, small companies can innovate quicker and these start-ups will do anything to survive, but I think we [still] have the advantage. We still spend a great deal in R&D – over $5bn a year – so we are continually innovating and think we have leading technologies and capabilities. But also we are highly involved in acquisitions…

We have always been told the acquisitions are your main focus ahead of R&D…

Well, it is probably still the minority of what we do in terms of development, but of course, it is very visible. We acquire quite a lot. The last few months, there have been quite a number of acquisitions [and] there are a whole load coming on a regular basis.  

What we have got to recognise in a company like Cisco is we have got the robustness, the trust, the customers know how to acquire from you, how to be supported and there is the innovation we bring to it and the innovation we acquire.

But, we have always liked the competition, as it drives you on.

I remember when I first joined Cisco, 3com announced a card that was something like 20 ports instead of 16, and we had at the time [roughly] 90% market share to its 2%. Yet we still would run about madly trying to see what we could do to challenge it. There is a healthy paranoia that drives us on and it is really a good thing in many ways.

As I said, if it was a boring market, people wouldn’t want to be part of it and the fact that they are a part of it and we are willing to compete either through organic innovation or through acquisition has kept us in a good position.

Software defined networking [SDN] is where a lot of these smaller competitors are coming up. Rivals have slammed your SDN position saying you haven’t developed from the ground up and are looking to wedge other technologies into your portfolio, as well as somewhat avoiding the open standards. How do you answer those criticisms?

I am not sure that is completely fair. We have announced the OnePK, the open interface that allows others to build applications. We are clearly on many of the standards bodies working on the various protocols and processes within SDN and I think we recognise that there is a change to the way the infrastructure might work, which is a really interesting development. 

I think the other thing we recognise, however, is [networking] is not a simple thing. My background is technical, I have built networks for most of my career, and you can’t simply say I have something here [which] changes the network and suddenly everything works. It just doesn’t work like that.

Networks are built with switches, queues and priorities, that is the way they work. You have to make sure some traffic goes faster than others. Yes, in some places that has been complex and there can be a good argument for simplification.

At Cisco, we have a network has all the intelligence within it and this is something we have to continue to help the market to understand as well as develop the technology for it.

We have to find some way of extracting that, providing it to the control plane, allowing us to make whatever analytical decisions there are and then to programme the network using various techniques, whether that be OpenFlow or other ways of doing it, but certainly providing an openness to the network.

There is a lot of development going on in our core OS (operating system), as well as in the other switching capabilities, to see how we can extract that information and allow it to be optimised and orchestrated. If I want to add something to the network, how can I add that when there is a quality problem with the network or something? If you don’t know that stuff, then I can’t quite understand how you can programme a network.

But [the market] has to recognise that we can’t just say tomorrow, you don’t have any more Cisco networks, you just have open networks. It just wouldn’t work. You have to move from where you are today to somewhere else.

We are very committed to working on SDN and I actually think we are doing some really interesting innovation.

We are very committed to working on SDN and I actually think we are doing some really interesting innovation

But you don’t want to let all your secrets out by making it entirely open?

No.

Though other smaller companies – if not your bigger rivals – are happy to walk to the table and lay down all the technology they are working on.  Just think if Cisco, with all its knowledge and resources, put everything behind OpenFlow, what it could achieve…

I think we are very involved in OpenFlow and very involved in the standards bodies. We have customers already trialling capabilities using Open Flow mechanisms and so on.

But I think the difference is this. You have a start-up saying this particular box is open source, here is all the code, here is the kit, all using OpenFlow, therefore everything is fine. That is fine in a pure, brand new environment if someone was fitting out a room for the first time.

But, for the millions and millions of customers that have got networks already running today made up of Cisco, they have to move from where they today to where they want to be in the future. That is a journey and one we have to go on with them.