Will Cisco's big bet pay off?
Cisco Systems Inc. made a major announcement in June during their annual user conference, Cisco Live. The company introduced intent-based networking, a new approach to networking that company officials say can recognize intent, mitigate threats and learn over time.
"Intent-based networking signifies a paradigm shift for our industry and a completely new era of networking," Scott Harrell, Cisco’s senior vice president of product management for enterprise networking, said at the time.
Cisco’s struggle to reinvent itself under a shifting tech landscape has been well-publicized, particularly with its several rounds of layoffs. The introduction of intent-based networking is an effort to remain relevant to the enterprise.
But Cisco’s radical change is also part of a broader shift in how enterprise technology is bought and used, and it’s proving disruptive enough to drive Cisco — the long-time networking king — to gamble on a major shift to its core business and reshaping the future of the company.
The new era of enterprise IT
Digital transformation is driving a huge amount of change in the enterprise. Gone are the days when companies bought integrated systems consisting of black boxes and built-in software. Today, the lines continue to blur between hardware and software, and there are many more aspects of the stack built into the enterprise infrastructure.
"Networking was once [primarily] a closed loop solution," said Rohit Mehra, vice president of network infrastructure at IDC. "But today, ecosystems are becoming larger than life and no one vendor can pull it off all by themselves."
Because no one vendor can be best of breed in all areas, companies are putting together multiple vendor solutions where the sum is more than the individual parts. But Cisco is used to working alone, primarily because it never had a need to collaborate before.
"People used to buy networking, security, management, servers, storage and software and everything worked well with each other," said Mehra. "There was no big need for everything to interoperate 24/7."
But today, Cisco needs to play well with other best of breed industry solutions.
"The increasing need for automation has brought about this realization that interoperability between all aspects of IT systems is absolutely critical," said Mehra.
At the same time, the world is moving toward a subscription-based model rather than traditional perpetual licensing.
"In terms of the way you operate, manage, configure and deploy a network, all of that is being made much easier and more automated through software," said Jim Duffy, senior network analyst at 451 Research. "Switches and routers are not as important as automating through software, orchestrating operations and abstracting the difficult hardware element from the logical operation of the network — being able to more easily reconfigure the network and more easily provision services through software."
In other words, Cisco’s move is really about going where the industry is going.
"Cisco is responding to the industry and they're being led by their customers as well," said Duffy. "Their customers are demanding more software-based agility, simplicity and automation in their networks."
All the right moves?
Cisco’s struggles are well-publicized, but the company may be in better shape than some estimate. Last month, financial analyst Pierre Farragu said Cisco Systems is performing better than common perception would have people believe, according to Barron's.
Cisco's results have been held back by a slow teleco market, but taking that segment out of the equation reveals the company has grown at a steady pace for the last five years, according to Farragu.
Some experts have questioned whether betting on the emerging category of intent based networking was the right move. But others argue that offering new software designed to make it easier for corporate customers to manage and monitor their networks is a step in the right direction, especially considering slowing sales in the company’s traditional businesses.
"The bottom line is they want to deliver more value to their customers," said Mehra. "This is a way they can do that."
Meanwhile, the company continues to make strategic investments to help it modernize and meet evolving customer needs. Last month, Cisco announced its intent to acquire Observable Networks, a privately held software company that provides "cloud-native network forensics security applications delivered as a service," according to a Cisco blog.
And reinvention at Cisco has also given rise to a growing focus on partnering.
"Cisco’s innovation strategy has always been to either develop internally, to buy a company, or to partner with a company that offers a particular expertise in an area they're looking to address," said Duffy. "They're trying to bring together a best of breed portfolio of products. Whether they can develop that themselves or buy it or partner for it, they'll pursue whichever avenue is more advantageous for their customers or more timely in a go-to-market instance."
Whether Cisco’s ambitious vision for a new era of networking pays off is yet to be seen, but Cisco, which did not respond in time to comment for this story, clearly sees intent-based networking as a critical part of the new era of networking, where network engineers that manage hundreds of devices today will be expected to manage one million by 2020.
"Companies that are managing their networks through traditional IT processes will not be able to scale in this new age," according to a Cisco announcement.