After disappointing earnings, Cisco announced it’s merging two of its biggest business units and renaming its cloud division
The latest reorganization at Cisco is more than just shuffling the deck chairs; it’s an attempt by the networking and enterprise software vendor to better align with the evolving needs of its customers. The realignment will likely force a realignment among Cisco partners too.
The Lowdown: Cisco announced that it’s merging its enterprise and data center business units to gain greater economies of scale while simultaneously better aligning with customer needs for hardware and other supporting equipment. Additionally, Cisco is renaming its cloud computing software unit to “Cloud Strategy and Compute,” which will sell software building cloud-enabled data centers and management for enterprise workloads.
The Details: The reorganization comes with a series of management changes, including the appointment of Scott Harrell to lead the new enterprise and data center group; Liz Centoni, who has led Cisco’s Internet of Things (IoT) business, will lead the new Cloud Strategy and Compute group; and Kip Compton, who was head of the cloud unit, is taking over the networking and security business group. Also, Cisco CTO Dave Ward is moving on to another undisclosed position in the organization and is being replaced by Ronald Acra, who was the head of the data center business unit.
The Impact: Cisco says the reorganization is more about aligning to the evolving needs of customers. Consequently, partners will feel the impact of these changes even before customers. Cisco partners will likely see a shuffle in the account rep assignments and confusion over who owns what resources. Reorganizations such as these often lead to changes in partner training and certification requirements, discount and incentive plans, and available resources.
Background: The Cisco reorganization comes a week after the company reported quarterly earnings that saw only 1% growth. The sluggish performance sparked concerns that Cisco and other vendors are facing an IT slowdown. Cisco is also among the hardware vendors negatively impacted by the U.S. trade war with China and the tariffs imposed on technology goods.