Can IT strengthen the economy?
October 15, 2008, 2:46pm PDT | Length: 00:04:13
At the Garner IT Expo in Orlando, Fla., Cisco CEO John Chambers predicts that as the economy turns, many company heads will be looking for flexibility along with cost effectiveness--aspects that video conferencing and social networking provide. He forsees that, soon, IT and business strategy will be so intertwined we won't know the difference between them. Interviewers: Ken Dulaney and Tom Bittman of Gartner.
>> Narrator: Obviously everybody's worried about the economy today. I want to ask about the economy, not necessarily how you save money, but how can IT play a role in bringing their respective enterprises out of the economic doldrums.
>> Narrator: Well I think there's the generic answer that all of us want to hear which is IT's role was to help do that. But I think we want to be very candid. In some companies, in some government organizations IT is viewed as an expense. And in that scenario, what the leaders are going to ask IT to do is cut expenses. In other environments they're viewed as the enabler of the business strategy and will actually, during periods of economic slowdown, you'll use IT to gain huge competitive advantage. That's clearly what Cisco's going to do. We're going to grow our expenses regardless of what the economy does in IT by 10 percent this next year, very heavily...
>> Narrator: By 10 percent.
>> Narrator: Through collaboration and video implementation on it. But I think it goes back to a more basic issue. Where are the market transitions going on. And it will vary by industry. And then how to use IT, not just to enable that strategy, but I would argue that it is not too great a leap of faith here. And I don't expect people to agree with me today, but it'll be fun two years from now, and four years from now, assuming you all invite me back, to see how far we've come. I actually think for the first time, collaborating IT, especially using video data and voice combined, will be so intertwined with the business or governmental strategy you won't know the difference between the two. So IT will move from being in well run organizations or government agencies, enabling their strategy to the strategy will almost be one in the same. You won't be able to tell how collaboration really works in customer support versus what was IT, versus what was your traditional business.
>> Narrator: Right, well let's take that further. When these people come back from symposium, they're going to want specific things that they should do.
>> Narrator: Yes.
>> Narrator: Based on what's happening in the economy. What specific advice would you give them.
>> Narrator: Okay. You want to pick and choose which areas have the most high productivity, and which areas have the most cost effectiveness. You want to be realistic on where your CEOs attitudes are. Just as recently as three months ago, the CEOs were probably focused on top line growth, bottom line growth, and productivity. Today they're focused about flexibility because the market showed that you got to, none of know for sure which way it's going to go. They're after speed and skill in terms of capability. And how to do able cost cutting, not necessarily of IT, but within the organization in terms of the leverage. What is exciting, if we go back to the future, and we look at the mid-90's when we predicted the productivity increase would not be what Greenspan thought it would, one to two percent a year. But three to five percent was very doable and it did occur in '97 through 2002, 2004. You're going to see an instant replay. And unlike the early 90's where you had to put in a big ERP implementation, which at Cisco took three years and 3,000 people to implement and almost crashed the company in the process. Now these technologies that we bringing together with a common architecture, combining the concepts of social networking with Face Book and You Tube technologies, except we use a directory in Cisco C-Vision, we'll do 26 priorities this year, we'll drive productivity at 10 percent a year, and we will have done that in 12 months with 50 people focused on it. These are over the top type of applications. So when you go back, I would take a real hard look about is collaboration as big as I think it's going to be? Is it as easy to implement, and it's got to be top down. You talk to an A.G. Lafley at Proctor and Gamble, Filippo who's a CIO, they get it, they're changing their whole business models of the company. You show video capability like with TelePresence, to Jeff ML, to GE. He doesn't talk about travel savings, he talks about how's he going to transfer them services. You show him the automotive industry, what technologies are capable of doing. They think of the car of the future, even though they're in a period of hurt. So I think it varies by industry. But I would say, think about how you use collaboration. Especially video driven collaboration, to gain competitive advantage or for speed of movement.