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Executive interview: Phil Smith, UKI chief executive, Cisco

Cisco’s Phil Smith discusses digitisation, its impact on national productivity, and how enterprises can apply the lessons lived and learned by tech companies to their own strategy

Cisco UK and Ireland chief executive Phil Smith could reasonably be described as a man with quite a few strings to his bow. In his day job he bears the responsibility of leading the world’s most powerful networking technology supplier in one of its most significant territories, while his extra-curricular activities include the chairmanship of IT strategy and skills organisations Innovate UK and the Tech Partnership.

Smith – who placed eighth in Computer Weekly’s 2015 UKTech50, our annual list of the most influential people in UK IT – recognises there is a fair amount of crossover between his work at Cisco and his work on behalf of the scientific and technology community.

“If I look at my role in Cisco the thing I talk about most is technology, innovation, skills and entrepreneurship, which is very coincident with what I do at Innovate UK,” he says, as he sits down with Computer Weekly for a lengthy discussion delving into some of the issues affecting IT departments all over the country.

“I recently spoke at a Cambridge Wireless event and at the European Union [EU], and at both it was quite hard to distinguish whether I was speaking as someone who was running a big business, someone running a technology company, somebody chairing Innovate UK, or someone who has a passion for skills, because actually the subjects are all interwoven in many ways.”

At the Brussels event to which Smith refers, the discussion turned to making Europe a better destination for investment. At a panel session that included Smith, Swedish politician Carl Bildt – the man who opened a Swedish embassy in Second Life – and senior figures from the EU and the European Bank, the panellists talked of little else.

“The only topic anybody talked about for the whole session was digitisation,” says Smith. “Carl Bildt was saying that if we don’t get digital sorted out, then Europe is going to have significant problems sustaining productivity and competitiveness.”

The productivity problem

With British productivity falling at its fastest rate since the 2008 financial crisis, the criticality of digital to sustaining productivity in the UK is not lost on Smith. He contends that unless enterprises are able to create a digital business to compete with emergent ‘born-in-the-cloud’ players, to optimise their processes and use of data, they will create a “significant issue” with productivity at a national level, not just for themselves.

“We have industries such as manufacturing where some are performing well but others, such as Tata Steel, have challenges that need to be addressed,” says Smith.

The potential to improve productivity exists, he argues, it is just a question of defining exactly what is meant by productivity, who stands to benefit from it, and when looking at it from the perspective of an organisation like Cisco or Innovate UK, how digitisation can play a role.

Take robotics, suggests Smith. Currently, the UK lags significantly behind large European markets such as France and Germany when it comes to the use of flexible robotics, for example robots that are not fixed in one place performing a repetitive task – such as in a car factory – but are free to move around. Addressing this would help a lot of businesses.

For the work Smith has been engaged in around fostering productivity, he has been examining two sectors: retail and manufacturing, where if productivity can be improved through digital it could make a big difference to the UK’s economic success.

Virtually every retailer Smith has encountered talks about problems around digitisation. The universal concern, he says, is fairly obviously Amazon, because it competes against them using a completely different set of rules. Grappling with this challenge is difficult for many.

Read more about digital transformation

“An interesting thing about retail is that sometimes they digitise and don’t improve productivity,” says Smith. “Everyone talks about omni-channel, the idea that wherever you are, on the web or mobile or in the store, the store knows you as an individual. That’s great from the user’s perspective, but if you’re online the store is still open, the lights are still on, the heating is still on, which from a productivity perspective is a negative.”

When it comes to manufacturing, he adds, the bigger problem is the prevalence of deeply embedded systems and processes that have been around for decades, many of which are out of support and are being maintained on an ad hoc basis. Extricating businesses from this sort of situation presents extreme challenges.

“You have to look at these things and say digitisation is incredibly powerful at providing a greater customer experience, but it’s actually something that has to go right through the business.”

Smith believes it is incumbent on the tech industry to be more vocal about what IT can do and how it can help improve productivity. Government, meanwhile, is best placed to help in terms of signalling best practice, as opposed to directly intervening.

Networks at the centre of digitisation

Over the past decade or so, the network has become very firmly entrenched at the heart of what IT is all about, and so for Smith, being in charge of Cisco’s UK operations means he is ideally placed to observe its impact on the digitisation of the enterprise.

“When the network becomes a sort of focal point, then a lot of opportunity emerges to say I can add value there,” he says.

The recent acquisition of internet of things (IoT) platform provider Jasper is a case in point, explains Smith, because it will enable Cisco’s customers to gain more insight into what is going on within their network, in terms of how objects are behaving, the data they are gathering, and what is happening to them.

“When you feed that back to applications, that makes the network become much more interesting. This is why the whole Jasper acquisition, which is about improving the substance of the network, is so important to us,” he says.

One area where Cisco has been accused of missing the boat – including by Computer Weekly – has been around the transition to software-defined networking (SDN). Smith concedes Cisco’s messaging around its SDN architecture – what it refers to as Application-Centric Infrastructure, or ACI – took a while to find its feet.

“I think we recognised our messaging had been less than articulate in the early stages,” he says.

As Cisco started to set out its proposition under the ACI banner, shares Smith, it recognised that as applications are deployed, particularly in converged datacentre or cloud environments, network owners need to be smarter about the way they programme the network to deal with that.

We now have much better understanding in the marketplace of what we’re doing with programmable networks

Phil Smith, Cisco UK and Ireland

“As someone who came from a technical background myself, many years ago if I needed to do something to make an application secure or high priority or accessible for only certain subsets of users, I was literally hand-cranking the network. If you’re a multinational enterprise and you consolidate 150 datacentres down to four you don’t want to do that, it doesn’t make sense, it’s way too expensive and too people-intensive.”

Cisco’s position is that having an environment where the network can be programmed by the applications – ACI – gets to the heart of what SDN actually is.

“We’ve really moved the value proposition by explaining it better and delivering the technology to do that. And we now have much better understanding in the marketplace of what we’re doing with programmable networks,” says Smith.

The Cisco experience

The process of adaptation to face the digital world is one that Cisco has gone through itself. A mere five to 10 years ago, the supplier was essentially a hardware business, flinging boxes out of the door as fast as the channel could shift them.

These days, says Smith, Cisco’s users no longer want to buy physical objects, they want things to be provided as a service, and so he has had to change as well.

The example of Meraki [a 2012 cloud-networking acquisition] is a great one, because Meraki is growing like mad in the UK, and essentially it’s a model where everything is in the cloud,” he explains.

To the same degree, Cisco has asked itself how expensive it is to run its business, and so if therefore it should be digitising all its own processes.

“We're on the same path as all the companies I’ve mentioned,” says Smith. “Actually we may be a little further ahead than others because of our natural propensity around digital.”

Shortly before the accession of Chuck Robbins to the post of CEO in the summer of 2015, Cisco hired its own chief digital officer, former Accenture, IBM and Salesforce man Kevin Bandy, whom it has charged with digitising a number of processes in the business that have not yet undergone this transformation.

For Smith, this transformation is not just about efficiency of business process, but improving engagement with Cisco’s enterprise customers. He compares the insight he currently has into what his users are doing to the insight generated by a natively digital business such as Netflix.

“Netflix knows all their customers, and knows exactly how they behave. Imagine the insight that gives to someone who is trying to schedule or commission content. That level of insight is incredibly powerful.

“If you think of Cisco, the fact that we’re in the heart of the network essentially means we have visibility of everything that’s happening there, we have a really interesting opportunity to change things for the better. For example, we provide a set of cloud services now which are informed by the latest real-time security environment, so we can route customers over secure connections or offer encryption.”

Understanding digital

Enabling Cisco’s customers to understand what SDN, or in Jasper’s case the IoT, actually does, relates to the wider digitisation narrative, because change in the enterprise is rarely to do with technology, but with people and business processes, and how they go about exploiting tech, according to Smith.

“I think it’s true that CIOs have struggled with this – some have done a great job, but all the same there’s a lot of talk in the industry about IT budgets moving away from the CIOs towards lines of business and so on,” he says.

“More than ever, we see in the digital word the potential for people to go and have little bits of technology and implement it for departmental or functional reasons, which they can do because these are cloud services bought on demand, per user.”

Smith continues: “Obviously in enterprises it’s much more complicated than that, but either way CIOs have to find a balance between providing the basics of business IT, and providing the dynamism, flexibility and competitiveness that they’re going to need to compete.

“CIOs, I think, universally understand digitisation as an issue, but there are so many different stages within organisations as to how far they have embraced and adopted it.

“I would probably comfortably say now I’ve not talked to a single CEO or CIO in the past year who hasn’t got digital very highly on their agenda in some form or another. Either they’re doing it, or thinking about doing it, or they’re threatened by it, or they’ve got a strategy but haven’t done anything about it, or they’re well down the path.

“It’s such a pervasive capability that people are coming into our briefing centres and saying I need to think differently here, help me do that.”

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