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'100-Year Flood' of IT Abates; Better Times Ahead Tuesday, 8 October 2002 View the Webcast John Chambers, president and CEO of Cisco Systems, has not lost his glass-half-full perspective on the IT industry. During the Mastermind Keynote Interview Monday morning, Mr. Chambers reminded his questioners, Joe Baylock, Group Vice President and Research Director of Gartner and Mark Fabbi, Group Vice President and Research Director of Gartner, that 18 months ago he predicted the current economic slump would be the "100-year flood" of IT. Now, he said, better times are ahead. "I'm the optimist of our industry." Nevertheless, he added, "I think the IT industry has to be very careful about being realistic on returns. It isn't just putting in a network or putting in the applications that gets you returns. If you don't change business process, you're not going to get the productivity, and your CEO is going to be disappointed." Asked by Mr. Baylock how Cisco is moving toward a real-time model, Mr. Chambers said, "People forget we've been doing this for ten years. We did one-third of the world's e-commerce eight years ago. We were closing our books with 24 hours' notice four years ago. "Our biggest productivity opportunity - and challenge - is now cross-functional applications," he said. "That requires a different model. We don't always have an unlimited budget for IT." Mr. Chambers said one big challenge to increased productivity with the real-time enterprise is the increasingly short tenure of many enterprise CEOs. Most CEOs have a life expectancy of less than five years, he said, and as a result, are uneasy with IT projects that take more than 12 to 18 months. This often interferes with an IT organization's ability to build a network with common architectural standards, which is key to ultimately producing productivity gains. He added that networks have to be designed to permit flexibility. An enterprise's network must allow, for example, for future integration of video or voice over IP technology. Mr. Chambers stressed the importance of buy-in from the business organization of any enterprise in effective technological change. "It starts at the top," he said. "You can have an IT organization that walks on water, but if their CEO does not believe in it, you're not going to be successful." Mr. Chambers said he believes the role of the IT organization is changing dramatically. "That might be the most fundamental change of the last four years. Four to five years ago, most CEOs thought IT was an expense item, and, in candor, it was." Now, he said, IT organizations are being more tightly integrated into the business decision-making process. Turning the conversation to a different tack, Mr. Baylock asked Mr. Chambers how he felt about the corporate scandals that have dogged the business world in recent months. "I believe you can trust most Americans," Chambers said. "I believe you can trust most people around the world; I think you can trust most CEOs." He added, "I think you've got to be very careful not to paint a picture of everyone with the same brush. We as a country tend to occasionally do that." Echoing remarks made earlier that morning by Gartner CEO Michael Fleisher, Mr. Chambers said he agreed that government should not try to regulate business to the point where CEOs couldn't make needed changes. "I think it would be a huge mistake to get away from the principle of empowerment and the basic principles of holding people accountable for results," he said. "Now, what accountability means is that if you misuse that, you should absolutely be taken to task for it…. I think what you're going to see in this environment is that companies will disclose dramatically more." On the topic of Cisco's competition, Mr. Chambers said he looks forward to locking horns with companies like Dell Computer. "I think it's very healthy for the industry," he said. "But I remind everyone that this is the fifth generation of [Cisco] competitors. So, we have handled competition very, very effectively. "I think Michael Dell's a tremendous leader. I have tremendous admiration for him," he added, complimenting Dell on his ability to build a business that has thrived not just in good times in the computer business but also during the slow times. Mr. Chambers stressed the importance of CEOs working with IT organizations to drive productivity gains. "The CEO has to say 'I believe in this productivity' and create a process to drive it down through his or her company. I think the role of the IT organization, both reporting and functionally, is going to be higher than ever, but understand now it's more of a business role with IT expertise than an operational role minimizing costs." Michael Calvert Gartner Staff |
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