SAN JOSE: Looking to recapture its glory days of consistent double-digit growth, 30-year-old Cisco Systems, networking’s 800-pound gorilla, is currently stuck in commodity hell, suffering the outrageous slings and arrows that have beset two of the computer industry’s four pillars – compute and storage. Fortunately, the fourth pillar – software – has proven more resilient than the hardware, and as we learned at last week’s 2014 Global Editors Conference, Cisco is “moving more and more to be a software company”, according to Chairman and CEO John Chambers.
He added that they’re also becoming “more and more a services company”, and those two transitions are intended to figure prominently in Cisco’s future. In Part 1 and Part 2 we looked at the networking giant’s past and present, and in Part 3 we’ll look at some of what Cisco is counting on for the future.
Chambers said the company made a big push on security 18 months ago, and 12 months ago it was collaboration; and now its data and analytics. “We aren’t there yet, but boy, this is one big step.”
The “big step” is Cisco Connected Analytics for the Internet of Everything, a ‘comprehensive data and analytics strategy and solutions portfolio’, which includes ‘easy-to-deploy software packages that bring analytics to data regardless of its location’. Chambers said data analytics was “the one area we were missing”, and combining it with IoE is intended to position the company for a big chunk of the $19 trillion IoE market expected to be available during the next 10 years. Which is not to say that connecting 50 billion things – “on its way to 500 billion” (Chambers) – isn’t good news for either the networking or data center infrastructure portions of Cisco’s not-so-little ($47.1 billion FY14) IT kingdom.
However the magic – the margins – isn’t in the plumbing, the hardware, but in the turning data into knowledge, said Chambers. “$7.3 trillion of the $19 trillion is tied to data, analytics and data in motion.” It’s not about connecting things, “that’s the easy part,” but how do you make use of that data, he said.
The number one issue for IT is that people can’t get access to information in real time, according to new Cisco research. Getting insights from the data is the biggest challenge for clients, said Chambers. The study involved 1,200 executives, evenly split between IT and business, and from 16 countries.
In which of the following areas does your organization need to improve the most to make effective use of IoT solutions?
–data (40%): effectively capturing, storing and analyzing data generated by connected things;
–process (27%): updating our business and operational processes to benefit from IoT solutions;
–people (20%): enabling workers to effectively use IoT solutions through means such as training and providing user-friendly systems; and,
–things (13%): connecting the right things to capture useful data.
IoE requires a new approach to analytics, and only Cisco can provide from that edge to core for cloud, data center, mobility, security and collaboration, using the existing infrastructure, said Chambers.
The key is to bring the analytics to the edge, to the data. Cisco is pulling it all together – mobility, cloud, social, big data analytics – “in a way our competitors are not.”
Edzard Overbeek, SVP, Cisco Services, calls this new approach Analytics 3.0. In 1.0 analytics could be done in days and hours; which was reduced to hours/minutes/seconds in 2.0. But for 3.0, analytics need to be done seconds/milliseconds. “We have been in analytics for quite awhile… [and] “only we can do this”.
The Cisco Connected Analytics Ecosystem of Partners includes: SAS, Microsoft, SAP, mongoDB, Oracle, IBM, Cloudera, Pivotal, Tableau, Hadoop, Hortonworks and MAPR. Overbeek said the company has approximately 1,000 data scientists, and its services portfolio includes: consulting, data science services, advanced services and solution support services, including 3rd-party support.
In addition to analytics, cloud – and its little brother, fog computing (Cisco IOx) – are also expected to play an increasing role. Cisco’s Kip Compton, VP and GM, IoT Systems and Software Group, said the company’s engineers came up with the concept of fog computing as the piece that goes between the device and the data center/cloud. It’s the piece where three of the IoT challenges – limited bandwidth, latency and network reliability – can be addressed.
Announced at the end of January, IOx – not to be confused with 10x, or a tenfold increase – was designed to enable applications to run directly at the network edge to overcome ‘rising operational costs and spark new innovations in the Internet of Things’. In October Cisco announced the second phase of its IOx platform for industrial-scale IoT deployments, including more partners, new hardened IoT platform support and the IOx Application Management Module.
Which brings us back to the IoE and the edge. Cisco SVP and Chief Marketing Officer Blair Christie said the company believes IoE is “the next wave of the Internet.”
According to the new survey, the top three business drivers are: demand for faster product or service innovation; increased level of globalization; and demand for better customer experiences. “Without a doubt innovation was at the top of their mind,” she said.
However that all depends on doing more with more data, and we already have more data than we know what to do with, said Christie. “According to IDC, less than 1% of data is analyzed”.
Within three years 37% of respondents believe most data will be processed at the edge. That’s a huge change, but also increasingly critical: 42% believe analytics is the most important technology enabler.
Rob Lloyd, President, Development and Sales, Cisco, further outlined the importance of the cloud to Cisco, which claims to be the number one vendor in cloud infrastructure, hybrid cloud and IoE platforms. “There will be thousands of clouds… and we’ll spend the next decade connecting those clouds”, he said.
By 2018, 78% of all workloads will be in the cloud, and 70% of those workloads will be in the private cloud. The network impact will be huge, he said, a 4x increase in cloud traffic, most of it software as a service (SaaS).
Cisco is the number one or number two vendor in 17 of its 18 product groups, said Chambers, first in 12, and third in the 18th, but the history of Cisco is in market transitions, and that’s where he sees the company today, transitioning to IoE and analytics. The future is about connecting everything, and benefitting everyone, he said.
What differentiates Cisco is the intelligence throughout the network and its focus on making this practical throughout the organization, said Chambers. The company has laid its bets for the future; we should know within the next 12-18 months if they were the right bets.
DISCLAIMER: Cisco, which is in my investment portfolio, but is not a customer, looked after transportation and accommodation expenses.