CISCO RESTRUCTURING: Customer-centric Model to Product-centric Model

The changing requirement of the customers in the 21st century has forced
Cisco to move from the company’s existing line of business structure
(organized under three heads–service provider, enterprise, and small/medium
business) to a centralized structure where engineering and marketing operations
can co-exist, and the organization can come closer to the customer.

Justifying the change, John Chambers, president and CEO, Cisco, said
"When Cisco created its line of business structure in April 1997, our
enterprise, and commercial and service provider customers, were building
separate networks with predominantly unique product requirements, but today, our
customers want a network of networks that is seamless and has transparent
integration across the Internet, intranet and extranet".

With restructuring, Cisco has moved from a customer-centric model to a
product-centric model thereby, giving more focus to technology. The new
product-centric model will help to restructure and centralize the existing
structure into two–the engineering and the marketing division.

The engineering operation will be headed by Mario Mazzola, chief development
officer, Cisco, who will focus on eleven technology groups of Cisco. These
groups are access, aggregation, Cisco IOS technologies division, Internet
switching and services, Ethernet access, network management services, core
routing, optical, storage, voice, and wireless. The marketing function will be
headed by James Richardson, chief marketing officer, Cisco,who will focus on
communicating Cisco ‘s unique technology differentiation to its wide range of
customers.

The new structure is aimed at building better coordination between technology
and marketing groups. It will help Cisco to come closer to its customers and
encourage teamwork, and also eliminate product and resource overlaps. Coming
closer to the customer, would enable the company to incorporate their feedback
taken by the marketing team, by working in close coordination with the
engineering team, thereby, providing greater customer satisfaction in the long
run.

It seems Cisco’s new strategy is focused more on the technology front, as
it will help in accelerating innovation and technology differentiation. It will
also expand Cisco’s product-leadership capabilities, consistent with the
customer expectations for a single product architecture, with clear road maps in
the future.

In the past, Cisco’s restructuring has been a good sign for the company.
Lately when it reorganized its business structure in 1997, it helped the company
to move from a turnover of $6.4 billion in 1997 to $22.3 billion in 2001.

But with the economy not doing well and with the increase in competition, it
will not be easy to repeat the same success. But, it is still believed that
restructuring will definitely help in cutting costs, by conserving on the
marketing resources within the company.

Pravin Prashant