Preface
Initiated in 1995 by Secretary of Defense, Dr. William Perry, and continued today by Secretary Rumsfeld, the SECDEF Corporate Fellows Program (SDCFP) is a long-term investment in transforming the DoD’s forces and capabilities. Annually, two senior officers with highly successful operational command and staff backgrounds from each Service are selected to receive their senior service college credit by training with Corporate America. The program’s intent is to allow officers to spend a year outside their traditional career paths to glean the best of change, innovation, and leading-edge business practices that could potentially transform DoD business and operational practices. To date, 65 corporate fellows have gone on to form a cadre of Service leaders, knowledgeable in the organizational and operational opportunities made possible by revolutionary changes in information and other technologies.
To prepare for the fellowship, the fellows spend four weeks in training. Specifically, participating in lectures on current political and military topics such as strategies, technologies, and process improvement methodologies; meeting with senior DoD officials, Congressional delegates, business executives, etc; as well as taking part in a one-week graduate-level business overview provided by the University of Virginia’s Darden Graduate School of Business Administration.
Following the fellows’ corporate assignment, formal outbriefs are provided to approximately forty senior leaders across OSD and the Services regarding their observations and recommendations. Traditionally, these outbriefs include sessions with the Secretary, Deputy Secretary, Service Secretaries and Chiefs, as well as other senior officials.
As a member of the 2004-2005 SDCFP, it was an honor and pleasure to be assigned at Cisco Systems in San Jose, CA. Without exception, the men and women at Cisco provided me every opportunity to broaden my perspective on business practices, leadership, and management. Treating me in every respect as a valued Cisco employee has afforded me the chance to observe the company from the perspective of an “insider” and experience what it is like to serve in a world-class corporate organization such as Cisco Systems.
The fellowship would not have been nearly as rewarding without the tremendous support of a host of people. First, my direct sponsors at Cisco—John Davis and Scott McMahan—orchestrated every phase of the fellowship and spent innumerable hours willingly bringing me up-to-speed regarding the company’s culture, business practices, etc. Additionally, Lance Perry, Vice President, IT Infrastructure, went out of his way to provide open access to his organization and the daily dealings with his Directors, which was key to gaining a true “insider” perspective. These three professionals represent some of the best Cisco has to offer.
While there were many people that were instrumental in making this year a success, a handful routinely went out of their way to ensure my time at Cisco was productive. Michele Martino and Carolyn Johnson kept me “out of trouble” by providing sage counsel with regard to the Cisco way of doing business in the admin arena. All of the IT Infrastructure Directors were generous with their time and insights, but special thanks are in order for Marisa Chancellor and Vlada Maranovich for taking additional time out of their busy schedules to support me in every facet of the program. You are both special ambassadors for Cisco.
IT Infrastructure’s Business Practices (IBP) directorate served as my “home” for the entire fellowship. The IBP team was supportive every step of the way. Special thanks to Mike Snell, Ghyas Ahmed, Julie Martinez, and Tim McCarthy for their patience and understanding as “this old dog learned a few new tricks.” Of course, my Cisco indoctrination wouldn’t have been the same without the regular orientation sessions with my cell mate, Stephen Estes, and Gary Connelly from Cisco on Cisco. Their willingness to spend literally hours during the course of my assignment guiding me through the nuances at Cisco was truly invaluable.
It was a pleasure to share my time at Cisco with two Air Force officers participating in the Education with Industry (EWI) program—Major Don Ternes and Captain Jamie Cunningham. Sharing insights during our assignments and having the opportunity to “speak Air Force” during our regular lunch get-togethers was rewarding and comforting. I look forward to watching (and hopefully serving again with) these two professionals as they continue their careers in the Air Force.
I would like to give a special thanks to Mr. Eric Briggs, Director of the SECDEF Corporate Fellowship Program, for his leadership and advice throughout the program. Additionally, my “fellow fellows” deserve recognition for putting up with this wayward member of the team. It’s been an honor and pleasure sharing insights with each of them and I look forward to serving with side-by-side in our armed forces for many more years with such a talented team. It’s been an honor. Finally, a heartfelt thanks to my family for enduring back-to-back moves to make this year possible. Your unwavering patience, support and understanding are priceless. Lisa, Burke and Jordan…you are a true blessing.

AU/AF FELLOWS/NNN/2004-05 Abstract
We must transform not only our Armed Forces, but also the Defense Department that serves them-by encouraging a culture of creativity and intelligent risk taking. We must promote a more entrepreneurial approach to developing military capabilities-one that encourages people to be proactive, not reactive, and to behave less like bureaucrats and more like venture capitalists.
Secretary of Defense Donald Rumsfeld

As the Department of Defense (DoD) considers ways to transform itself into a more effective force that operates with increasing efficiency, it is clear that industry will play a significant role. Whether forging new ways of doing business, supporting the DoD by developing new weapon systems and capabilities, or by partnering in stronger government-industry relationships to develop best practices that can be leveraged by all, corporate America will be one of the keys to success in our ongoing transformation efforts.
The Secretary of Defense Corporate Fellows Program (SDCFP) is one means to identify these potential transformation initiatives. The SDCFP provides two senior officers with highly successful operational command and staff backgrounds from each of the Services an opportunity to participate with business leaders representing some of the world’s most prominent and successful corporations. The program’s objective is for each officer to spend approximately ten months outside their traditional career path to experience first-hand how industry is leveraging both information and advanced technologies to reshape business practices, organizational structures, drive innovation, accelerate growth, and increase productivity. To date, fellows have been assigned to companies such as ABB, Boeing, CNN, Caterpillar, Cisco, Citicorp, DirecTV, FedEx, Human Genome Sciences, McKinsey, Merck, Microsoft, Mobil, Northrop Grumman, Oracle, PricewaterhouseCoopers, Raytheon, Sun, Sears, 3M, UTC, etc. Over its ten year history, sixty-five fellows have graduated from the program and gone on to assignments of increasing responsibility within the DoD. For more information on the SDCFP, please reference the official website at http://www.ndu.edu/sdcfp/sdcfhom.html.
As one of this year’s seven SDCFP fellows, I had the opportunity to spend nearly nine months working side-by-side with a host of professionals in one of the world’s most successful information technology companies—Cisco Systems, Inc (e.g., “Cisco”). During my assignment, senior leaders and individual contributors alike afforded me complete access to the company and allowed me a true “behind the scenes” look at how Cisco pursues its vision of “changing the way we work, live, play, and learn.”
Additionally, the SDCFP provided the opportunity to examine each of the other sponsor companies—3M, Honeywell, Hewlett-Packard, SRA International, Caterpillar, and Lockheed-Martin. This enabled each of the fellows to grasp how diverse, yet common in many ways, each of these highly successful companies achieve dominance in their industry.
Likewise, the fellows experience highlighted how the DoD and industry face many of the same challenges and try to achieve similar goals. Although corporate America is distinct given the need to generate revenue and profits, the DoD’s tenets of mission readiness and service can be readily enhanced using elements from industry in the areas of strategy development, operational execution, organizational structure, culture talent, and enabling technologies.
Serving at Cisco offered many unique insights into the cutting-edge of the information technology industry. To witness first-hand the culture, drive, and talent of a workforce that dominates almost every facet of the networking industry offer should offer many lessons for the DoD. Specifically, the ability to collaborate across a large enterprise via a global information platform is a powerful mechanism for transformation. By leveraging people, processes, and finally the right technology solutions, Cisco is harnessing the power of information (e.g., networks) in an unprecedented manner. It has a one-of-a-kind chemistry that accelerates this transformation process.
The purpose of this research paper is to highlight the findings and insights deemed noteworthy for the DoD. Towards this end, the paper will first provide an overview of Cisco Systems—its history, culture, role in the networking industry, as well as an overview of its products and business strategy. Next, the paper addresses major findings and insights to include topics such as leadership, culture, process improvement, and technology. Specifically, the power of customer-focused organizations, need to recruit wisely, power of strong leadership during periods of transition, catalytic effects of a networked workforce, efficiencies gained by leveraging the size of large organizations, and effectiveness of a strong methodology when considering “core” versus “context” issues. Finally, the paper assesses a handful of emerging technologies that are possibly outside of the mainstream of weapons system development (e.g., network specific). Note: Having spent time with a number of DoD customers during their time at Cisco, it became obvious that the DoD understands the technology implications associated with Cisco’s core and advanced technology solutions. As such, this final section is aimed instead at several of the non-traditional technology solutions that may hold significant promise for the DoD in a variety of venues, but are not traditional networking or mainstream weapon system solutions. Chapter 1
Introduction
I truly believe that the Internet will change the way we work, live, play and learn in ways we are just beginning to explore. Our industry is maturing rapidly with the convergence of data, voice and video technology over one network. This convergence is creating a world in which technology is used to connect everyone to everything.
John Chambers, President & CEO, Cisco Systems

The Secretary of Defense Corporate Fellowship Program (SDCFP) is now in its tenth year of partnering with industry to better transform our U.S. and allied military forces and capabilities. Initiated by Secretary Perry and continued today by Secretary Rumsfeld, the SDCFP is a long-term investment and a key part of DoD’s strategy to achieve transformation. Annually, two officers from each Service are selected to receive their senior service college credit by training with Corporate America. The objective is to glean the best of change, innovation, and leading-edge business and operational practices that could be implemented to transform the DoD. In return, participating companies gain the unique insight of military officers with roughly twenty years of leadership and operational experience in their respective Services.
This year’s SDCFP corporate sponsors included 3M, Lockheed-Martin, Honeywell, Hewlett-Packard, Caterpillar, SRA International, and Cisco Systems. It was my privilege to serve at Cisco Systems in San Jose, California. For nine months, I had the pleasure of working with some of the world’s best high-technology talent in the industry. This paper is intended to capture the more noteworthy insights gained from this experience that could help the DoD transform itself. Due to the generosity and patience of the Cisco executive team, my experience as an “insider” provided me with literally hundreds of day-to-day observations. Clearly, there are too many to be meaningful to the average reader. This paper is a collection of the more noteworthy insights about Cisco and the other corporations in the areas of organization, process, strategy, and technology. In my opinion, these insights and recommendations warrant more attention by the appropriate DoD decision-makers.
Finally, this paper is drawn from my personal experiences during my assignment at Cisco Systems. As a result, it is best described as an opinion paper (versus a traditional research paper) since it simply captures a series of thought-provoking findings and my personal recommendations.
Core Assignments
The vast majority of my time at Cisco was spent working with the IT/Infrastructure’s Business Practices team in an effort to revamp the organization’s project, financial, and resource management structure and reporting mechanisms.
During the course of my fellowship, I spent considerable time participating on eight different teams focused on streamlining and reducing redundant program/project requirements, processes, and procedures. Ultimately, the goal of each team was to increase program/project effectiveness while minimizing the management burden on individual contributors. The potential impact on IT/Infrastructure was clearly high given 120+ project managers work on literally hundreds of programs/projects at any given time within a $400M annual budget. Specifically, my role was to act as a catalyst on the teams to question the status quo and provide an outside perspective to achieve better process definition, minimize redundant activities, improve training, etc.
Additionally, I supported the initial development of an Infrastructure-wide Resource Plan (e.g., human resources) to better manage resource planning, allocation, and prioritization. The objective was to address a known shortfall within the organizations -- no central mechanism to manage the resource requirements across the IT Infrastructure organization existed. Our goal was to provide better management insight and oversight related to the workload of ~700 regular employees, plus approximately 500 outside service contractors, vendors, and managed service providers in a more effective manner.
For a short period of time, the opportunity presented itself to support a cooperative benchmarking effort with Microsoft Corporation. The goal was to assess/share best practices associated with each company’s internal IT leveraging activities. One of the highlights during the course of this assignment was a two-day trip to Microsoft in Redmond, WA as part of a 4-person Cisco IT/Infrastructure team. Our objective was to gain insights related to the Microsoft IT “dogfooding” program, and provide similar access to Cisco’s “Cisco on Cisco (CoC)” program. Note: Microsoft’s IT organization “eats its own dogfood” while in production to gauge product readiness and provide feedback to the product groups prior to the product’s full release to customers. Cisco’s CoC program is similar, but is primarily geared to generating additional revenue by sharing insights related to large scale implementation of Cisco products with customers.
Finally, I supported the strategic planning efforts for the IT/Infrastructure organization as the senior leadership began to develop its annual goals, strategies, and initiatives. Our goal was to develop a strategic vision, key strategies, and a management framework to address Infrastructure challenges over next 2-3 years. This support included a 3-day senior leader planning session, as well as a variety of follow-on efforts across three separate teams to refine the strategies for final roll-out to Infrastructure organization in the areas of operations, technology, and clients/customers.
Additional Duties
Early in the fellowship, I was made aware of two Air Force Education With Industry (EWI) participants—Major Don Ternes and Captain Jamie Cunningham. Although we were the only Air Force members on temporary assignment at Cisco for the 04-05 rotation, we were by chance all assigned to the IT/Infrastructure organization…in the same building. This is amazing considering there are 70+ Cisco buildings in the San Jose area. This proved to be a great opportunity for all of us. Regular “Air Force” lunches and easy access to each other allowed us to share observations and insights across very disparate specialties (Maj Ternes assignment was in Business Continuity and Captain Cunningham’s in Finance).
OBSERVATION: Military fellowships and other industry partnerships are not well coordinated across the DoD. Each is run in a “stovepiped” manner with little visibility to other DoD-sponsored efforts. Hence, it can be difficult to determine if other military members are participating at the assigned corporation.
RECOMMENDATION: Improve the visibility of DoD’s activities with industry via a consolidated roster of participants. The benefit is additional insight for each participant, a coordinated approach to dealing with the corporation, as well as increased professional development opportunities for all participants—military fellows, industry sponsors, and program coordinators.
RECOMMENDATION: Having the opportunity to interact with a variety of different fellowship and DoD-industry partnership programs, it is clear the DoD does not leverage the business insights to the extent possible. An opportunity exists to integrate some form of executive business exposure into existing professional military education curriculum. Topics such as financial performance, process improvement, and change management would serve any officer or senior enlisted member well in their career, especially as the DoD continues to out-source/out-task missions (see Chapter 3 for additional details).
Chapter 2
Cisco Systems, Inc. Cisco is truly dedicated to customer success. Our mission is to shape the future of the Internet by creating unprecedented value and opportunity for our customers, partners, shareholders, and employees.
John Chambers, President & CEO, Cisco Systems

Networking Business Environment
Today, information networks are a vital part of business, education, government, home, as well as military communication. The power of information—real-time, relevant data presented to decision-makers in concise formats—is allowing individuals, companies, and countries around the world to increase productivity, improve customer satisfaction, and strengthen competitive advantage. Likewise, the DoD is leveraging the “power of the network” to increase combat effectiveness and support efficiencies across a diverse set of missions.
As the worldwide leader in networking for the Internet, Cisco Systems (e.g., “Cisco”) is at the heart of this revolution. Cisco’s Internet Protocol-based (IP) networking solutions help form the foundation of these networks. As a result, Cisco has become synonymous with the Internet, as well as with the productivity improvements that Internet business solutions provide. Cisco’s vision, “changing the way people work, live, play and learn” aptly describes it role not only in the industry, but in its impact on the world.
Cisco in Today’s Networking Industry
In addition to world-class hardware and software products, Cisco provides a broad range of service offerings to its clients, including technical support and advanced services. Cisco sells its products and services—directly through its own sales force and indirectly through a network of channel partners—to large enterprises, small and medium-sized businesses, service providers, and consumers. The company focuses on three broad areas to guide its business growth: its core technologies—routing and switching; the service provider market; and Advanced Technology markets. Today, roughly 80% of Cisco’s $22B in revenue is generated by its core technologies. Without question, routing and switching have been Cisco’s “bread and butter” and driven its growth and market capitalization. However, the company’s CEO, John Chambers, has forged an ambitious strategy to generate over $1 billion in additional revenue across each of six advanced technology areas. In John Chambers’ words,
“We remain focused on three broad areas for potential growth: our core technologies—routing and switching; the service provider market; and our Advanced Technology markets, which include security, optical, IP telephony, home networking, wireless, and storage. In fact, 40% of Cisco's overall R&D spend ($3.2B in FY04) was devoted to Advanced Technologies, which currently represents approximately 15-20% of Cisco's revenue. These six markets are areas in which I believe Cisco can grow revenue to $1B, and I hope eventually to expand that number to 10-12 markets in the next several years.”

If successful, Cisco will be the first company in the high-technology to achieve this level of growth across more than two advanced technology areas simultaneously. As seen in Figure 1, early indicators look promising as Security was the first to breach the $1 billion threshold in FY04. Figure 1. Cisco’s Advanced Technologies (as of: Sep 04)
Cisco’s Heritage
Cisco was founded in 1984 by a four computer scientists from Stanford University. Since it's inception, Cisco engineers have been leading innovators in the development of IP-based networking technologies, and has continued with industry-leading products in the core areas of routing and switching, as well as several advanced technologies such as home networking, IP telephony, optical solutions, storage networking, wireless local area networks (LANs), and network security. Figure 2. Evolution of Cisco and the Internet
Cisco has been blessed to be one of the leading technology innovators in an industry that has experienced unprecedented growth. To appreciate how quickly the Internet has grown over the last twenty years, Figure 3 provides an interesting perspective by charting the number of active router entries registered around the world during this period. Periods such as the “dot.com” craze can be seen in the late 80s, as well as the “tech bubble” burst in early 2001 and the resurgence of the Internet in the 2002-2005 period. Figure 3. Evolution of the Internet (Active Routing Entries)
In the end, Cisco’s business performance has mirrored this growth to some degree whether for better or for worse.
Cisco’s Culture
Cisco was founded on a culture based on the principles of open communication, empowerment, trust, integrity, and giving back to the community, and these same values thrive at Cisco today. In fact, each employee is reminded daily of the core principles that make up the “Cisco Culture” in the additional badge they wear with their traditional access badge. The badge represents many of the best qualities about Cisco—a relentless focus on the customer, capitalizing on market transitions, continuous improvement, teamwork, etc.
Explosive Growth via Acquisitions
Another key characteristic that drives the culture and personality of Cisco is the company’s acquisition philosophy. Beginning with the first acquisition in 1994 of a small company known as Crescendo, Cisco acquired nearly 100 companies in the following decade. The result is a company with 34,000+ employees that has many of the characteristics of a small start-up firm. Amazingly, over 70% of the acquisitions met or exceeded the target acquisition goals in an industry that historically struggles to achieve 20% acquisition/merger success rates. In fact, the average employee retention rate exceeds 90% more than three years after the acquisition. The impact on growth is impressive when you consider that the companies acquired in FY04-05 alone have already contributed $1.3 billion in revenue for the fiscal year to date (9 months). In my opinion, this success is a direct result of the principles and long-term perspective Cisco insists on when considering and eventually executing an acquisition. The end result is a powerful formula for success in a dynamic industry. Figure 5. Cisco Systems Mergers and Acquisitions (1994 – March 2005)
Business Results
By any standard, Cisco is truly a world-class company and considered one of the few benchmarks in the high-technology industry. The results speak for themselves:
• Generated $22 billion in FY04 annual revenue with only ~34,000 employees
• Achieved 22.9% profit margins for trailing 12 months as of Mar 05
• Generated over $670K of revenue per employee in FY04, and on track to achieve $1M/employee in next few years via productivity improvements
• Recognized as one of only three high tech companies to be named to Fortune Magazine’s “Hall of Fame”—a list of 22 companies that have appeared on Fortune’s “100 Best Companies to Work For” list every year since its inception in 1998.
• Sustained attrition rates well below industry averages (only 3.02% for the most recent 12-month period) As compared to its competitors, Cisco has grown to be a dominant force in each of the industry sectors it participates. A common comparison made at Cisco is to contrast its market capitalization to its competitors (see below). This measure is one reflection of Cisco’s #1 or #2 market position in almost every sector. Figure 6. Market Capitalization – Cisco versus Competition
Products
Cisco produces literally hundreds of products and applications across various business units making it difficult to provide a concise description of the various product lines. For those interested in a more detailed description of Cisco’s products and services, a more in-depth overview is provided in Appendix A.
Cisco on Cisco
Cisco has long been recognized as a pioneer in using the Internet for its own business practices, as well as offering consulting services to help other organizations around the world through its Internet Business Solutions Group. As a result of this “Cisco on Cisco” initiative, the company saved over $2.2 billion in fiscal year 2004 relying on the Internet to provide customer support, offer employee services, sell products, provide training, and manage finances and manufacturing processes. Not surprisingly, Cisco strives to achieve similar year-over-year returns on investment by introducing new applications, enhancing existing applications, and increasing adoption of these applications across the company each year.
In addition to the significant internal savings Cisco captures via their Cisco on Cisco initiatives, the company also leverages the lessons they learn by implementing Cisco solutions internally by leverage a small technical writing team, in concert with IT and Business Units to develop Cisco on Cisco “case study” aimed at helping end customers weigh the business trade-offs of implementing Cisco solutions with their enterprises. Since the team started approximately a year ago, the customer response has been overwhelming. Internet web queries have steadily climbed from a few thousand to well over 100,000 hits/month, with over 44,000 case study downloads a month. Not surprisingly, the team is now translating these hits into legitimate leads for the sales and marketing team.
RECOMMENDATION: For the DoD, the Cisco on Cisco communication model holds potential lessons in how we develop and present material for the operational, acquisition, and training communities. The methods are especially relevant as we communicate an ever-expanding set of high-technology solutions to a more diverse set of users, maintainers, and the public at large.

Chapter 3
Key Findings and Insights
I believe that innovation can truly change the way the world works, lives, plays, and learns, not just from a business perspective, but on a global scale. Therefore, I believe it is the responsibility of those companies, countries, and governments who benefited from the technology in the 20th Century to ensure that no one gets left behind in the 21st Century. We must all find ways of working together in today's environment to reduce threats and increase the prosperity of countries and individuals. In my view, technology can increase productivity and the standard of living for communities and countries on a global basis.
When productivity of a country increases at 1% per year, the standard of living doubles ever 70 years; at 3% the standard of living doubles every generation; and at 5% the standard of living doubles every 14 years. In the U.S., there is a direct one to one correlation between percentage of capital expenditures on IT and productivity increases. Over time, this correlation is also occurring on a global basis. Technology can help bridge the gap between the world's developed and least developed countries and raise the standard of living through better health care and educational opportunities.
John Chambers, President & CEO, Cisco Systems, Inc.

Whether large or small, every day during the fellowship provided some finding or insight…without exception. In this section, I have tried to capture the major ones uncovered during my time spent in industry. As you will see, many do not translate directly to clear recommendations for DoD transformation. However, all hold some measure of insight into better practices for any large organization.
Unwavering Focus on the Customer
At Cisco, the customer is the number one focus. Not surprisingly, this was the case at the other companies visited during the course of the SDCFP—3M, Honeywell, Lockheed-Martin, Caterpillar, SRA International, and Hewlett-Packard. While each company has different mechanisms to deliver products and services, as well as draw feedback from customers, there is without fail a crystal clear focus on the customer and clients (internal customers within the company for organizations like IT).
Most corporations have initiatives that strive to develop the “voice of the customer” (VOC) and “voice of the market” (VOM). In other words, what do individual customers and the market as a whole need from the respective company?
Time after time, decisions were made based primarily on what would be best for the customer (or client) regardless of the organizational implications. In fact, customer satisfaction is monitored in any given process almost as voraciously as employees watch the CSCO stock price. Towards this end, customer-facing organizations are supported wholeheartedly by the rest of the company to ensure success in this area. In this light, it is very reminiscent of the military in which combat unit success relies heavily on combat support units such as logistics, munitions, maintenance, communications, etc.
The difference is in the mechanisms used to hear the “customer voice.” Whereas the DoD uses a fairly complex requirements process to identify, develop, coordinate, and approve requirements, industry is more nimble. By leveraging the fact that approvals do not require outside approval (such as Congress and other regulatory agencies), corporate America moves reacts quickly to customer needs with revised strategies, products and services. In all cases, the CEO or other designated senior leader is empowered to make the decision with regard to supporting the customer. Whether the decision is to build or modify an existing product, develop a new capability, potentially acquire another company that can deliver the needed capability, or partner to achieve the desired results, these senior leaders are able to react as required with little intervention from outside the corporation.
One of the keys to Cisco’s success is that it has built a culture across the organization that listens to customers and strives to deliver at all costs. In Cisco’s eyes, helping a customer achieve business success builds trust and the right reputation in the marketplace with regard to its products and services. According to John Chambers, “Customer success and satisfaction are at the heart of Cisco’s business strategy and key drivers of our current and future success.”
Towards this end, customer satisfaction is monitored daily across the enterprise. Amazingly, specific metrics have been used for over a decade to track the company’s performance in this vital area. The result: a continuous improvement in customer satisfaction ratings from 3.58 (in 1993) to 4.37 (in 2004) on a 5-point scale. Customer satisfaction is also tied to every employee’s compensation via these customer satisfaction survey results. As a result, every Cisco employee’s annual bonus has a customer satisfaction multiplier that makes up a significant amount of the overall bonus amount. This ensures that every Cisco employee remains customer-focused in every aspect of the job.
Does this imply that the DoD is not “customer focused” (e.g., warfighter focused)? Negative. However, stronger emphasis at all levels with regard to developing a better understanding of warfighting requirements would serve the DoD well. The use of key metrics that help drive individual contributor’s behavior is also a powerful tool successful companies use to monitor, motivate, and improve performance.
Recruit Only the Best
To have a world-class organization and produce world-class results mandates that one recruits, hires, trains, and tries to retain the absolute best people in the industry. As a result, Cisco’s goal is to only hire from the “top 10%” in the industry, especially with regard to its senior and mid-level leadership positions. The bottom line is successful corporations are the ones that win the war for talent in a given industry.
While the size of a company like Cisco allows it to be more selective in its hiring as compared to the DoD, the fact that organizations will leave an internal job billet unfilled if they can’t find a highly qualified candidate speaks volumes. In contrast, the DoD is in an enviable, yet challenging, position in that it must develop its uniformed talent from the ground up. In other words, the DoD is in a constant development to grow the next generation of officers and NCOs to meet future challenges. It cannot hire a candidate off the “free market” to fill mid- and senior-level leadership positions. Instead, all the Services fill these positions from within by developing the necessary talent over a 5-, 10-, 20- or 30-year period.
RECOMMENDATION: It is imperative the DoD increase its awareness of not just the quantity of recruits entering the Services, but ensure standards are held high.
Strategically, Cisco is transitioning to a more pronounced offshore staffing model as a means to drive costs lower and offer equal (or improved) capabilities. Like most high tech corporations, it is leveraging the information technology strength of countries like India to address shortfalls.
The existing requirements related to many national security programs and activities such as U.S. citizenship and background checks will present an increasingly difficult challenge as a larger percentage of the workforce becomes more global, especially as more intellectual property related to networking and other information technologies is developed overseas.
OBSERVATION: In essence, the DoD is competing with private industry for many of the same talented and skilled individuals that industry is recruiting, especially among the younger generations. While the DoD will never be able to compete “head-to-head” with industry from a compensation perspective, there is room for improvement with regard to making DoD employees aware of the monetary worth of various benefits such as health care, retirement, on-base services, etc. Improving ways to highlight the value of these benefits such as including on monthly pay statements seems in order. The result will be military members that are armed with powerful information as they interact with potential recruits (e.g., family, friends, and colleagues).
A Wired Workforce is a Powerful Transformation Enabler
Across corporate America and around the globe, employees have increasing access to information when, where, and how they need it. Cisco is no exception, and is considered one of the leading-edge companies in this area along with Microsoft, Oracle, and a handful of others that are actively managing a truly “connected” workforce.
From my personal experience, Cisco has developed an environment that is nearly “paperless” by providing unprecedented access to information and the ability to communicate up, down, and across organizations in real- or near real-time. With rare exception, every employee and contractor has access to the information and applications needed to perform their job. The ease with which this relatively large, global organization communicates across the Internet is impressive. The combination of laptops, broadband access, and wireless connectivity using collaborative applications such as E-mail, Instant Messaging, Virtual Meeting Rooms, Video Conferencing, and Electronic Calendaring are dramatically accelerating employee productivity.
Companies that proliferate these technologies are experiencing a competitive advantage. At Cisco, reliable access to information across secure means is almost assumed. Everyone expects to have the ability to coordinate with anyone, anytime, on any subject while remaining up-to-date on virtually any topic from anywhere—office, home, airport, etc. Meetings are held virtually with teams around the world sharing information (e.g., briefings, spreadsheets, etc) over the web. In over ten months of participating in team discussions and meetings on a wide variety of subjects, I was handed a piece of paper in connection with the meeting possibly 10-15 times. Instead, the standard operating procedure is virtual collaboration.
Some examples best illustrate this phenomenon. Upon arriving at Cisco, I naturally tried to attend my first meeting or two in the traditional DoD fashion…with pen and paper in hand ready to review handouts or PowerPoint slides projected on the screen. Of course, the odd look was cast my way since there was no laptop under my arm when arriving. In typical Cisco fashion, almost every session is via the web with attendees participating either physically or virtually using collaboration tools on their personal laptops. In most cases, participants have dialed into a conference from remote locations around the country or from overseas. Since employees are encouraged to expense their cell phone and broadband access costs, many participants attend virtually from home with little effort.
This focus on delivering services via the web permeates all areas. Despite trying to uncover the “hidden” process or two, I only came across one process that requires a physical piece of paper. Upon returning from a business trip and submitting an on-line voucher, employees are asked to drop the actual receipts into an envelope and mail it via distro to a central collection center in case the trip is audited. Otherwise, all actions are via the web—whether its reporting operational status, scheduling configuration changes, arranging business travel, rating subordinates, signing up for (as well as attending most) training classes, ordering equipment, accessing the Cisco employee directory, managing network services, checking the menu at any Cisco cafeteria around the world, updating any one of thousands of e-mail distros, viewing the latest presentation by the CEO, checking the current price of Cisco stock, as well as thousands of other daily activities. In the words of a Senior Director in Cisco’s IT Infrastructure, “If a function isn’t on the web, no one will take it seriously.”
Of course, this is expected from a company that has transitioned almost all of its business transactions to the web. Amazingly, Cisco generates over 95% of its revenue via its customer-facing “cisco.com” website…$40,000 per minute…24 hours a days, 365 days a year. To support this capability, Cisco operates over 50 data centers, has fielded 63,000+ Internet Protocol phones, and supports an impressive networking backbone—3,100 access points, 2,395 routers, 1,300 remote & voice gateways, 3,165 switches, and 275 content engines.
Interestingly, the only time I experienced trouble participating in a session was during a permissive TDY while staying at a local Air Force base. The reason: No broadband access in the Visiting Officers Quarters. The solution: Jump in the rental car and drive to a local bagel shop that provided complimentary Wi-Fi access.
The robust network at Cisco supports an environment that collapses time and locations by allowing employees to work 24 hours a day, 7 days a week based on their personal schedules. It is definitely a capability that drives productivity across an organization, especially one that has a “Silicon Valley” culture of innovation. However, some maintain that the same ability to communicate on a 24 hours/day basis is also a disadvantage with regard to work/life balance. In other words, it is becoming increasingly difficult to be productive and competitive unless individuals are connected and available a greater portion of the day (e.g., 50-80 hours a week). Based on my observations, this strong work ethic is one of the underlying keys to Cisco’s success.
CHALLENGES: Finally, as with all things…there are some “downsides.” Unless carefully nurtured, traditional teambuilding benefits built on interpersonal interactions (a core strength in the DoD) can wither on the vine, especially in distributed teams. As mentioned, the challenge between work and the traditional personal time also begins to blur given the easy access to the network via broadband communications. Hence, it becomes relatively easy to spend large portions of time “at work” during off-duty hours. The plus is flexibility regarding when and where an employee works…the negative is that there is little “downtime” for people.
CHALLENGES: Clearly, security risks are considered to be one of the major challenges facing this type of virtual collaborative environment. In fact, industry recognizes and is constantly dealing with the same challenge. If we think of the external threat in terms of target, scale, and time, it is clear that the latest generation of threats hold the potential for regional, if not global, impact (see Figure below). To address these and other security challenges, Cisco is teaming with a formative set of partners (IBM, Microsoft, Symantec, Trend Micro, and McAfee Security) to develop more integrated security capabilities to include layered defenses, self-defending networks, identity management, etc. Figure 7. Evolution of Security Challenge
RECOMMENDATION: For the DoD, it is imperative that we determine how these new capabilities will merge with our existing culture(s) that revolve around deployments, garrison duty, off duty periods, leave, etc. Additionally, the DoD’s formal customs and courtesies will most likely be “challenged” by many of these emerging technologies that can be more intrusive (e.g., laptops open during meetings, PDAs active during meetings, members multitasking between virtual and physical environments to gather information and resolve issues in real-time). To better integrate these technologies, the Services will need to determine not only what technologies are encouraged, but also address their use within the distinct military culture.
RECOMMENDATION: The DoD should accelerate the proliferation of broadband access to military members on a broader scale as a foundational step to supporting emerging applications in the areas of virtual collaboration and communication. The ability to access Unclassified material from anywhere at anytime is a powerful productivity enhancer (e.g., “force multiplier). Security is the one clear constraint, but should be balanced with the potential gains in overall effectiveness of the armed forces.
“Build, Acquire, Partner” Strategy
One of the keys to Cisco’s tremendous growth has been their “build, acquire, partner” philosophy. The majority of Cisco’s core technologies (e.g., switching and routing) mature into integrated services by building the initial capabilities as a separate box or appliance. As the technology matures, they will migrate the capability to a blade, then eventually to a chip or integrated feature depending on the complexity and cost. Given the large investment in internal R&D ($3 billion) in FY04 and the in-house engineering talent (17,000+ engineers), it is no surprise that Cisco holds a dizzying array of patents in the networking industry.
If Cisco determines it is not feasible or cost effective to build a capability in-house, it will then assess whether a strategic acquisition is suitable. As eluded earlier, it is important to note that senior leadership considers acquisitions a “core competency” of the company. Whether another company has a shared vision, compatible chemistry, and is able to execute soundly are key drivers to determine if an acquisition will produce both long- and short-term win-win situations. Whether it provides a “new market entry” opportunity such as in home networking (Linksys) or storage networking (Andiamo Systems), or a “market expansion” opportunity such as in security (Riverhead Systems, Protego Networks, Perfigo, Okena, Twingo Systems, and Psionic), wireless networking (Airespace), voice over IP (Netsolve, DynamicSoft, Meeting Place, and SignalWorks), or core technologies (P-Cube, Jahi Networks, PARC Technologies, Procket Networks, and BCN Systems), the goal of every acquisition is to strengthen Cisco’s core business and products. Fundamentally, Cisco is looking for potential leadership, sales channels, new revenue sources from markets in transition, and/or new capabilities to expand or improve existing/adjacent product lines in each new acquisition. This core competency is vital to Cisco’s successfully meeting its growth objective. In military terminology, this area would be termed a “force multiplier” for the company. Figure 8. Cisco System’s “Internet Ecosystem”
Finally, Cisco realizes that it can’t pursue its vision on its own. Therefore, it works closely with other leading companies to bring the best possible solutions to the customer in an environment they call the “Internet Ecosystem” (see Figure above that represents just a few of the hundreds of companies). Ultimately, the senior leadership also develops strategic “go-to-market” alliances with a limited number of companies. These strategic partnerships help Cisco overcome steep barriers to entry by accelerating new market and technology growth. For the customer, these partnerships also enable Cisco to complete the value chain in a more timely and cost effective manner while creating much larger market opportunities for not only Cisco, but the entire industry. In John Chambers’ words,
“Time has continuously redefined success for business. In the 1980s it was companies that had effective internal product development. In the 1990s, it was companies who could mix internal development with the ability to effectively acquire and integrate. In the new millennium it will be those companies that can do the above and effectively partner.”

RECOMMENDATION: For the DoD, the “buy, acquire, partner” strategy offers a different perspective when considering short- and long-term alliances, especially in the area of joint and combined weapon system development. The decision framework mirrors many of the same criteria and considerations being weighed by senior DoD leaders as they make recommendations to the administration and other agencies. Hence, it merits further examination by the DoD.
RECOMMENDATION: Additionally, the “buy, acquire, partner” model could be adapted when considering out-sourcing/out-tasking options. Once a function is determined to be core or context (e.g., mission essential), this methodology holds many lessons learned with regard to performance criteria and identifying “strategic gaps.”
Transforming the Workplace
By merging wireless and IP telephony technologies in an innovative office environment, tremendous potential exists to achieve three disparate objectives: reduce real estate costs, improve productivity, and increase employee satisfaction. Specifically, Cisco’s prototype efforts in their “Connected Workplace” solution leverage several workplace trends to achieve dramatic improvements in cost, productivity, and employee morale over more traditional office solutions.
Key Trend #1: With an increasingly global workforce and customer base, Cisco realized its workforce is working more “non-traditional” hours and styles. This trend is in concert with several recent studies in work styles that show the percentage of work performed in the office is increasingly collaborative in nature. Figure 9. Work Style Trends (Gartner Dataquest Study)
Key Trend #2: An increasing number of professionals in industry are more mobile. In other words, the adoption of mobile phones, PDAs, and laptop computers is driving more time away from the corporate network. Specifically, Cisco studies found:
• Over 40% of the workforce is now defined as “mobile”
• Approximately 60% of senior management time is spent away from the desk
• Approximately 35% of its U.S. workforce spends at least 20% of its time away from a primary workplace
• European business professionals are spending more than 25% of their time away from their desk (projected to increase to 40% by 2006)
• Approximately 60% of Cisco’s field staff time is spent away from the office
• By 2006, the U.S. and Western European mobile worker populations will reach 104 million and 83 million, respectively

Key Trend #3: Based on these trends, workspace needs are also rapidly transitioning from the traditional office environment to a more flexible, collaborative workplace. The virtual and physical solutions are quickly converging via integrated space, technology, and service solutions (see figure below). Figure 10. Transition of Workplace Environment Requirements
Despite these trends, Cisco—like most companies—employed a traditional office space solution in the majority of their facilities with the assumption that offices and cubicles would be used during regular work hours (e.g., each employee assigned a separate desk, computer, and phone). The company’s experience has been office/vacancy rates well over 30% and a shortage of meeting rooms. Clearly, this was a waste of high-value assets. Mark Golan, Vice President for Cisco’s Worldwide Real Estate and Workplace Resources, stated it best, “Nobody would consider building a manufacturing facility to use just one-third of the time. And yet that’s what we routinely do with work space. We realized that assigning resources based on utilization would significantly reduce Cisco real estate costs.” To address these shortcomings, Cisco created a proof of concept (POC) to address the needs of four categories of workers—engineering, sales, call centers, and general administration. Leveraging internal and external workspace studies, focus groups, employee interviews, surveys, and simple observation, Cisco developed an innovative workspace solution that takes advantage of open spaces for employees to meet informally, common areas for breaks, as well as enclosed offices and meeting rooms. Wireless LAN and IP telephony solutions were used to achieve even greater mobility and options for employees within the workspace. Feedback regarding the proof of concept has been very positive throughout the organization. According to Ms. Christine Ross, Manager in the Workplace Effectiveness Team for Cisco Workplace Resources, “…most employees like the choice of work environments, cutting-edge technologies, light, openness, and the opportunity for inter-organizational collaboration.” In addition to increased flexibility of office space for swings in needs for workers, the Connected Workplace lays the technology and cultural foundations for Cisco’s next wave of improvement known as intelligent buildings (e.g., NETbuilding).
Additionally, the savings have been impressive—ranging from 37 to 60 percent per employee depending on the specific cost category (see chart below).
Cost Category Savings Real estate rent: Accommodating more people in the same amount of space 37% Construction: Building a smaller space than typically required for 140 employees 42% Workplace services: Reducing utilities and maintenance costs, and nearly eliminating the costs of moves, adds, and changes for workspaces through the use of flexible Furniture settings 37% Furniture: Purchasing less (& less expensive) furniture than typically used in cubicles 50% IT capital spend: Spending less on switches and switch ports 40% Cabling: Reducing the number of wired IP cables required per workspace 60% Equipment room space: Racking fewer switches because of wireless infrastructure 50%
Figure 11. Initial Savings – Cisco Connected Workplace Proof of Concept
CHALLENGES: Cisco’s solution works well in a high technology company given its culture of open communication, flexible work hours, and global communication capabilities (e.g., robust network). The more disciplined culture of the military with regard to work hours and its limited network infrastructure in certain locations could present challenges.
RECOMMENDATION: The DoD should take advantage of the accelerated fusion of wireless, collaboration, and IP technologies by leveraging the work being done in corporations to both reduce costs and increase productivity in certain work environments. A vital element to successfully reaping the potential rewards in this area is to ensure a strong partnership between facilities developers/managers and IT teams exists as new workspace solutions are designed, developed, fielded, and sustained. If implemented correctly, a variant of Cisco’s Connected Workplace solution could be adapted in any typical administrative area that relies on small teams to accomplish their mission such as system program offices, base support operations, staff organizations, etc. Assuming security requirements are met, the concepts employed by Cisco may also prove effective in a deployed environment, especially in relatively austere locations requiring high collaboration, flexibility, and a small footprint.
Corporate Training
During the course of the fellowship, I had the opportunity to attend several traditional training sessions to gain a better understanding of Cisco’s business practices. Without exception, all were well run (similar to my DoD experiences) and proved insightful. Specifically, I participated in a two-day Six Sigma (e.g., “DMAIC”…define, measure, assess, improve, control) process improvement course with the IT Infrastructure leadership team. Additionally, the opportunity presented itself to participate in a two-day Change Management course that proved to be a valuable companion course. Unfortunately, I was one of the few people that had the opportunity to attend both sessions. In retrospect, these would have been more valuable if run in unison with similar attendees since they formed the “process” that Cisco’s IT team began using to drive several process improvement initiatives.
In addition to these traditional sessions, the Cisco University and internal website proved a valuable resource for viewing a variety of video on demand (VoD) courses. During the course of the fellowship, it was extremely simple to pull up VoDs on everything from John Chambers’ latest briefing to the latest Cisco product release, a virtual orientation to the corporation, a series on program management, or even a tutorial on networking concepts. Amazingly, these could be accessed whether at work, on the road, or in the evening while sitting on the couch at home (using a secure, Cisco wireless router).
Of note, was Cisco’s externally-facing training program known as “Cisco Academy,” which has been enormously successful and generated worldwide interest from governments and educational institutions. Currently, there are 400,000+ students actively participating in an array of technology-based programs across 10,000+ separate academies in 150 countries being delivering the content in 9 languages. Not surprisingly, each is web-enabled to include the first Academy in Afghanistan at the University of Kabul.
RECOMMENDATION: Continue to leverage industry standards across the DoD to proliferate training material via the Internet. With today’s broadband access, rich media solutions are becoming much more supportable and provide convenient access for users. Additionally, the DoD and Services should take the initiative to provide single point portals based on topic(s) to facilitate user requirements to complement the traditional presentation of material using an organizational model. Clearly, standards will need to be addressed to support such a training model.

Chapter 4
Conclusion
From an architectural perspective we continue to see the evolution of what we believe will be four generations of network architectures. First, the basic convergence of data, voice, and video into system-integrated best-in-class networks. Second, end-to-end IP networks. Third, what we believe will continue to evolve into network of networks, and fourth, what we discussed in our analyst meeting last December, an evolution to the Intelligent Information Network.
As this evolution continues, we believe that networks will grow to include the embedding of resources into the network and the virtualization of applications and services. This is what we call the Intelligent Information Network, our three- to five-year vision for the evolution of networking, from connectivity products to intelligent systems.
Over the next decade, if these process and productivity applications are implemented across an organization, the productivity and profitability implications can be huge. Time will tell if this concept is fully realized. However I believe that we are uniquely positioned with a deep management bench of seasoned industry leaders who will lead Cisco through the next 20 years, and longer.
John Chambers, President & CEO, Cisco Systems, Inc. The opportunity to participate in the SECDEF Corporate Fellowship Program has been a unique experience that has definitely improved my leadership and management skills, insights regarding best practices, as well as offer improvements to the DoD. Cisco Systems has offered a tremendous laboratory for this experience. Cisco’s consistent position as an industry leader is no accident. It is the result of strong leadership, innovative culture, and a commitment to business success across the company. The DoD has learned a wealth from this leading-edge company, and in return my hope is the company has taken away some small measure of insight in return.
Given our common goals between the DoD and industry—to continually improve the manner in which each conducts its mission—my belief is the program has been a success. The ability to share best practices, insights, and establish lasting professional and personal relationships is a powerful catalyst for change. Given the size of each community (DoD and industry), even the smallest of change that results from the SDCFP will have a tremendous impact on the respective organization. For the DoD, the SDCFP is clearly a step in the right direction as we take on the challenge of transforming a force with over 3.2 million soldiers, sailors, airmen, Marines, and civilian members responsible for executing $400+ billion annually.

Appendix A
Cisco Business Areas
As highlighted, Cisco has achieved tremendous growth in the last 20 years. The company’s strategy has always been a continued focus as a company on execution, catching market transitions, and listening to customers. To accomplish this the Cisco remains solely focused on three broad areas for potential growth: core technologies (e.g., routing and switching); the service provider market; and Advanced Technology markets (which currently include security, optical, IP telephony, home networking, wireless, and storage). By investing over 40% of Cisco's overall R&D spend ($3.2 billion in FY04 or 15-20% of Cisco’s revenue) to Advanced Technologies, the objective is to grow $1 billion in revenue in each of these six advanced technologies. In the next several years, Cisco’s leadership intends to expand this list to 10-12 markets.

The following business and product overview is an expert from the Cisco’s official website at www.cisco.com:

Core Technologies
Routing
Innovation in Internet Protocol (IP) routing is one of Cisco Systems' strongest technology commitments. As new uses for the Internet are created, the need for a "smart" network becomes even more critical. Cisco technology provides the intelligence on the network and serves as the foundation for delivering services such as voice and video, quality of service, and security.
Internet Protocol (IP) routing is the foundation of the Internet and one of the most important technologies of the past 20 years. IP routing technology forwards packets of data to the appropriate networks, creating efficient use of network bandwidth.
Software, specifically the Cisco Internet Operating System (IOS) Software Family, provides the intelligence on the network and serves as the foundation for delivering services such as voice and video, quality of service, and security. These network services are helping to drive the growth of the Internet through the creation of new applications such as real-time trading, interactive support, on-demand media, multi-site communications, and unified messaging. As such, much of the over $2 billion annual research and development budget at Cisco is devoted to advancing the Cisco IOS Software Family.
Ongoing innovation in Cisco IOS quality of service is important to ensure available bandwidth and minimum delays for the increasingly important, time-sensitive IP telephony and video solutions.
IP multicast is a key feature of the Cisco IOS Software Family for both enterprises and service providers. It makes it possible to simultaneously transmit content, including live video and audio, over the Internet to receivers at multiple sites-with no impact on bandwidth or quality degradation. Through the Internet Broadcast Initiative, Cisco delivers new IP multicast technologies and end-to-end solutions for various market segments. Cisco works with partners and industry leaders to encourage the development and deployment of rich content, applications, and solutions.
Advancements in CiscoWorks network management software allow network professionals to more easily manage wide-area networks, local-area networks, virtual private networks and security, and service-level aspects of their networks.
Cisco innovators were also significant contributors to the development of Version 6 of the Internet Protocol (IPv6), the future standard protocol for routing over the Internet. IPv6 is intended to scale the Internet to a much larger size.
Cisco holds several key patents in IP technology: U.S. Patent 5,088,032 - Method and Apparatus for Routing Communications Among Computer Networks: An improved method and apparatus for routing data transmissions among computer networks. The computer networks are interconnected with a series of gateway circuits. Each gateway identifies all destination computers to which it is connected and identifies the path or paths to each destination computer. U.S. Patent 5,473,599 - Standby Router Protocol: A system and protocol for routing data packets from a host on a local-area network through a virtual address belonging to a group of routers. A standby router, also from the group of routers, backs up the active router. If the active router becomes inoperative, the standby router automatically begins emulating the virtual router. U.S. Patent 6,097,718 - Snapshot Routing with Route Aging: A method for maintaining and updating routing information in a packet-switching network for a set of quasi-dynamic routes, in which intermittent routing updates are permitted. In this setup, routes are no longer always static or always dynamic. Instead, they may alternate between static and dynamic over time, and are treated accordingly. U.S. Patent 6,147,996 - Pipelined Multiple Issue Packet Switch: A pipelined multiple issue architecture for a link layer or protocol layer packet switch. This architecture processes packets independently and asynchronously but reorders them into their original order, thus preserving the original incoming packet order.
Switching
In the not too distant past, businesses owned and operated numerous networks of information that delivered multiple services to their customers and employees. For each application delivered, a custom network was built. Voice communications required a telephone network, video broadcasting required a broadcast network, and data networks were constructed to transport computer data. More recently, storage-area networks were created to move information from disk arrays to servers.
One network—the Internet, based on the Internet Protocol (IP)—was designed to transport all forms of applications, and allow individual organizations to take advantage of IP to build their own unified networks. Operational and capital expenses are greatly reduced, the complexity of operating separate networks is eliminated, the unified network can achieve dramatic scale and robustness, and information that previously only existed on one isolated medium can now be shared across the IP network, making employees more productive and increasing the organization's return on investment.
Switches are at the heart of all computer networks, including unified IP networks. They can be simple devices that connect components to the network, select a path for sending a data unit to its next destination, or, like routers, they can select both the route and the network point for a data unit. Providing capacity and speed, switches are used to connect networks, easily transmitting both low- and high-bandwidth data. Switches deliver multiple advanced services and applications over a unified network, eliminating the cost of building and maintaining more than one network.
Cisco engineers have developed innovative switching products for data centers and distribution applications and have created a service infrastructure for security and content networking. These switching innovations include the following:
• Several years ago, a team of Cisco engineers recognized that none of the content switches on the market could scale to high connection rates. At the same time, there was a strong need for an integrated load-balancing blade for the Cisco Catalyst 6500 product family. So, the team set out to create a system that would simultaneously meet both those needs. The result is the Catalyst 6500 Content Switching Module. This device is placed between clients and servers in a network and allows intelligent scaling of Web sites to a large number of servers. It achieves its high-performance load balancing through the innovative use of a pipeline of network processors and distributed software.
• Furthering its leadership in Gigabit Ethernet technology, Cisco engineers developed the industry's first 10 Gigabit Ethernet switching interfaces. The Catalyst 6500 Series 10 Gigabit Ethernet modules offer increased scalability in performance and intelligent network services to meet the needs of today's fast-growing enterprise and service-provider networks.
• Cisco engineers developed a high-density Gigabit Ethernet-over-copper module for the Cisco Catalyst 4000 family of switches. This module enables customers to deploy Gigabit Ethernet over copper to the desktop through every port.
• Cisco engineers developed the Catalyst 4000 Supervisor Engine III, an innovative control module for a family of scalable modular switches that extend network control from the backbone to the network edge. It integrates multilayer switching capabilities to deliver control in the form of intelligent network services, including sophisticated quality of service (QOS), nonblocking Layer 2/3/4 switching, advanced security, and comprehensive management. The key to this new engine is the single-chip design, which offers more control for shaping, sharing, policing, and rate-limiting traffic without performance degradation, even with advanced features enabled.
• Cisco has taken a leadership role in developing the IEEE standard for Ethernet in the First Mile (EFM). The EFM standard will pave the way for cost-effective, high-performance broadband access over fiber-optic networks and voice-grade copper to residential homes, business complexes, multi-tenant units, and multi-dwelling units. Ethernet, as the Layer 2 protocol of choice and the most widely used LAN technology, is well positioned to capture the "first mile," considered the critical connection between business and residential users and the public network. The result: easy access to many megabits of bandwidth.
• Cisco engineers developed new products for the Cisco Catalyst 4000 family of switches to support Ethernet in the First Mile (EFM) in metropolitan area networks (MANs). Cisco's Catalyst 4000-based EFM solutions enable service providers to deliver the next-generation of broadband access over fiber-optic networks while benefiting from revenue generating services through the delivery of gigabit Ethernet connections to residential homes, business parks and multi-tenant units. Advanced Technologies
Home Networking
With the acquisition of Linksys in 2003, Cisco Systems entered one of the fastest-growing segments in networking-the consumer and small office/home office (SOHO) markets. Industry analyst firms Dell'Oro and Synergy forecast the multi-billion dollar home networking market to grow from $3.7 billion in 2002 to $7.5 billion in 2006. According to Ovum, worldwide home networking growth is expected to continue at 51 percent annually-further proof that home networking is poised to become a mass-market phenomenon. Cisco plans to drive innovation in consumer/SOHO networks by combining its technological leadership with Linksys' consumer experience to enable next-generation applications and features.
What is home networking?
Home networking is ideal for consumer and SOHO users. It can provide the sophisticated functionality of a local-area network (LAN), including voice networking, shared Internet access, resource sharing such as files, music and printers as well as smart device control. Home networks are typically comprised of wired or wireless network routers and access points, and wireless adapters for laptops and desktops. While the components of home networks are similar to those used in major corporate networks, home networking solutions are engineered to provide easy installation and daily use.
Capitalizing on trends
The rapid growth of home networking is due to a number of trends. Spurred by changing corporate cultures, clean-air acts, and cost-cutting measures, many employers are implementing telecommuting practices. Telecommuters need access to files and stored network information and therefore require a high-quality, secure, multiple-line network.
Small office environments are also on the rise. According to Forrester Research, more than 13 million households contain a business or small office. These start-ups need networking solutions that work well in a home environment.
Another factor driving demand for home networking is the growth of multiple-PC homes. By the end of 1999, 52 percent of U.S. households had at least one PC according to International Data Corporation. By 2004, IDC expects this figure to reach 62.4 percent. A large part of this growth will be the increase in multiple PC households. One in every four of U.S. households (25.3 percent) at the close of 1999 has multiple PCs. By 2004, it is predicted that this figure will be 43.3 percent of all U.S. households.
Escalating demand for high-speed Internet access in the home-both cable and DSL-is driving growth for home networks. Dataquest, a division of Gartner, Inc., reports that the rate of broadband Internet use in the U.S. nearly tripled between 2000 and 2002, increasing at a rate of nearly 9 percent each month. Analyst firm Forward Concepts predicts that the number of DSL and cable broadband subscribers worldwide will exceed 192 million by the end of 2006. Broadband access opens possibilities for new types of applications such as videoconferencing that require home networking solutions.
Smart devices are also a part of the home networking trend. An increasing number of smart devices allow users to control and monitor events in consumer-based appliances, home electronics, and home security systems. As these devices become more common, the need is increasing for a home-networking strategy that will allow access and control of smart devices.
Linksys: The Market Leader
Linksys has a well-respected consumer brand that is at the top of the list for most consumers and influencers in this market. Linksys' products are developed using off-the-shelf silicon and software and focus on ease-of-use, price, and features important to consumers. Linksys offers more than 70 different networking products-the most extensive line in consumer/SOHO networking, all with a consistent interface for the end user. To promote consumer satisfaction, Linksys products have easy-to-use setup wizards that guide users through the initial installation process. Linksys also offers free 24-hour unlimited technical product support.
Building the Future
The combination of networking expertise from both Cisco and Linksys consumer leadership will help enable consumers to benefit from new functionality for an even easier, feature-rich home networking experience. Today, the Internet offers fast and easy access to information through, services such as online banking, shopping, stock trading, news postings, email, and more. Home networks can help consumers not only connect to these services, but also help them stay connected to friends, family, coworkers, and virtually anyone in the world with PC access.
Looking toward the future, new paths for data transfer are being forged to achieve interoperability among PCs, TVs, cellular phones, PDAs, cameras, and other multimedia devices such as DVD players and PVRs. As data transfer finds new paths and wireless technology frees it from physical lines, a complete package for voice, data, and entertainment convergence is emerging.
Hybrid devices are already combining multiple technologies and hardware functions into a single multi-tasking device, such as set-top boxes for merging TV and PC data and residential gateways for handling home network security and high-speed Internet connections. To take it one step further, gateways are expected to evolve into a single device, controlling home security on top of network security, as well as networking household appliances like refrigerators and central air conditioning.
With the acquisition of Linksys, Cisco is helping to build an exciting future for consumers who want to take advantage of home networking to manage their households, work, and play in fun, efficient, and as yet unforeseen ways.
Optical
At its most basic, an optical network consists of flashing light traveling down a series of glass rods. The light transmits information - phone calls, videos, music, live TV transmissions, Web pages, and more.
One of the major benefits of optical networking is its ability to transport enormous quantities of data at high speeds. Optical networking is the "10-lane highway" for most service provider core and metro networks and is the backbone for many enterprise networks, providing significantly more bandwidth, and over greater distances, when compared against typical copper-based electrical connections.
Cisco innovators have created optical networking products that are tightly integrated with Cisco IP routing, Ethernet, and storage platforms. This strategy brings together the speed and high availability of an optical network with the packet intelligence and service capabilities of packet-based networks.
Known as COMET (Complete Optical Multiservice Edge and Transport), the Cisco approach moves beyond layering data packets and IP on top of optical transport; it integrates voice, video, data, and storage applications over a high-capacity, high-availability, next-generation multiservice optical network to increase productivity and reduce the total cost of ownership. By integrating the local-, metro-, and wide-area networks with a comprehensive set of innovative optical technologies, such as wave division multiplexing (WDM), SONET, SDH, Gigabit Ethernet, and 10 Gigabit Ethernet, Cisco technologies satisfy the most demanding application requirements while providing scalability, reliability, and resiliency for future networking needs.
Cisco engineers have taken an innovative approach to optical networking:
• The Cisco optical team was challenged to come up with technology to help service providers deliver optical transport in remote locations. The result was the Cisco ONS 15327 SONET Multiservice Platform, a product that offers the ability to deploy unprecedented, on-demand bandwidth in a compact, multiservice solution to the edge of the network, including business parks, campus environments, and multitenant locations.
• Faced with ever increasing storage needs for business resilience and disaster recovery applications in the enterprise, Cisco engineers focused on the problem of providing high-density storage and Ethernet connectivity between geographically separate locations. The Cisco ONS 15530 and 15540 platforms use technologies such as dense wave division multiplexing (DWDM) to provide up to 320 Gbps of bandwidth over a single fiber. Packet multiplexing technology also allows customers to aggregate multiple storage services over a single wavelength much as Ethernet switches and routers would with IP packets.
• Cisco engineers created the first true 10-gigabit router - the highest capacity for any router available in the market today. The Cisco 12400 Internet Router had its greatest impact on Internet service providers, replacing slower routers in the core of the Internet.
• Cisco engineers created a new technology called Dynamic Packet Transport (DPT) to provide a more cost-effective way to build networks. DPT combines the bandwidth-efficient and service-rich capabilities of IP routing with the bandwidth-rich, self-healing capabilities of traditional fiber rings.
Security
Network security technologies reduce risk and provide a foundation for expanding business with intranet, extranet, and electronic commerce applications. The innovative virtual private network (VPN) solution from Cisco allows organizations to establish secure, private network connections over the Internet or other shared networks.
Network security technologies enable new business applications by reducing risk and providing a foundation for expanding business with intranet, extranet, and electronic commerce applications. Security solutions also protect sensitive data and corporate resources from intrusion and corruption.
Using advanced security technology, Cisco has created powerful virtual private network (VPN) solutions to allow organizations to establish secure, private network connections over the Internet or other shared networks. A VPN employs the same security, management, and quality of service (QOS) policies applied in a private network, but it allows a wider range of connectivity.
Additionally, Cisco IOS software delivers a sophisticated set of security capabilities for a comprehensive, layered security approach throughout a network infrastructure.
Cisco engineers have developed several security innovations:
• Cisco engineers developed a method of integrating hardware encryption technology into the Cisco 1700 family of routers by shrinking the technology to fit into a space the size of a Personal Computer Memory Card International Association (PCMCIA) card. The result is a tiny, affordable device that provides a complete security access solution, including high-speed encryption, a stateful inspection firewall, an intrusion detection system (IDS), and a VPN tunnel server.
• A team of Cisco engineers developed the Catalyst 6000 IDS, also called a "security switchblade." The product addresses network security switched environments by integrating IDS functions directly into the switch, which combines both switching and security functions into the same chassis. It allows security and network administrators to monitor network traffic off the switch backplane rather than using external IDS sensors connected to a port.
Storage Networking
Today, the storage networking industry is still too dependent on proprietary technologies that limit customers' ability to fully leverage the benefits of storage consolidation. As data storage capacity requirements continue to increase, the level of innovation in storage networking must keep up match customer needs.
Cisco's storage networking portfolio leverages Cisco's expertise in data networking and management to provide multi-protocol, highly scalable and highly manageable platform. Upon this, Cisco will integrate industry standards and leading storage industry partner solutions to enable our customers to build and manage larger, consolidated storage networks more cost effectively and efficiently.
Voice
Cisco harnesses Internet protocol (IP) to deliver voice communications within the walls of a building or to connect offices around the world. Known as IP telephony, Cisco uses the communications foundation of the Internet to transport voice conversations alongside corporate data. Unlike traditional circuit-based analog phone service, IP telephony segments voice conversations into separate digital packets. IP telephony requires IP phones, a data network, and gateways to run a company's voice communications.
Cisco is the worldwide leader in IP networking and IP telephony hardware and software. More than 10,000 organizations now use Cisco IP Telephony products to eliminate costly, inflexible, and redundant proprietary circuit-switched "PBX" office phone systems.
The Cisco Architecture for Voice, Video and Integrated Data (AVVID) provides a standards-based framework for converging not only voice but also video over an IP data network. IP Communications is the name for Cisco's comprehensive technologies for business-class communications delivered by AVVID-powered networks.
Cisco IP Communications lets organizations consolidate all communications onto one network, helping lower infrastructure costs and management expenses. Besides cutting costs, Cisco IP Communications helps companies boost productivity with integrated data applications, as well as delivering unified voice, email, and fax messaging.
Cisco IP Communications products have a proven return on investment with quality-of-service mechanisms that assure voice quality equal to or better than standard phone service. And since Cisco IP Communications operates over an integrated network, companies benefit from the flexibility and productivity of using multimedia applications with their office phones.
Cisco provides a wide array of applications which work in conjunction with Cisco IP Telephony and IP Communications products. Cisco Unified Communications, for example, offers such personal productivity tools as Cisco Unity and Cisco Personal Assistant, both aimed at managing the litany of messages employees receive from an assortment of telephone, fax, email, pager and other devices. Cisco also offers technology for contact centers as well as audio and video conferencing. And by combining Cisco's industry-leading wireless networking equipment and the Cisco Wireless IP Phone, employees can always have their office phones by their sides.
As a leader in IP Communications, Cisco has created several key patented technologies for IP telephony. These include:
US Patent No. 5,883,893 - ATM Voice Transport Protocol: A transport layer protocol for compressed voice, facsimile, and modem data. This protocol includes a voice packetization sublayer, a voice transport sublayer, and a voice payload segmentation and reassembly sublayer. The voice payload segmentation and reassembly sublayer breaks up user data packets into segments.
US Patent No. 6,188,760 - Signaling State Management System for Packet Network Gateways: A signal state management (SSM) system avoids the overhead of maintaining call state and complex signaling in a packet network gateway, while simultaneously providing a more scalable system by not placing too great a state or processing burden on the signaling or call processing server.
US Patent No. 6,044,081 - Bridging and Signaling Subsystems and Methods for Private and Hybrid Communications Systems, including Multimedia Systems: A subsystem for communicating a private network signaling message over a packet network, plus bridges for communicating a Media Access Control (MAC) layer frame over an isochronous channel and for communicating an isochronous signaling frame over a non-isochronous network.
US Patent No. 5,937,057 - Video/Audio Communications Call Center and Method of Operation Thereof: A system that allows an audio automatic call distribution system (ACD) to route an incoming audio/video call into a call center. This is for use in a call center that has a plurality of agent stations and an ACD that can route an incoming audio call from a communications network to one of the plurality of agent stations.
Wireless
Cisco innovators have combined wireless and IP technology to creating anytime, anywhere connections to the Internet and enterprise networks. High-speed, secure wireless technology enables users to be constantly connected-even as they move between wireless cells or in and out of wired environments.
Cisco is combining wireless and IP technology to create anytime, anywhere connections to the Internet and enterprise networks. Whether in a campus environment or distant mobile location, Cisco's high-speed, secure wireless technology enables users to be constantly connected-even as they move between wireless cells or in and out of wired environments.
The mobile wireless segment of the telecom sector is one of the highest growth areas of the business. Operators are asking Cisco innovators to assist with the transition from circuit architectures to IP-based packet systems to deliver their new mobile data services.
Wireless innovations from Cisco include:
• The Cisco wireless team has received nearly 30 patents in areas related to wireless networking, including roaming, spread-spectrum technology, and ASIC design. They also took leading roles in the definition of wireless LAN standards, known as IEEE 802.11. The years of pioneering work on wireless networking by the wireless team are reflected in the Cisco Aironet 340 and Aironet 350 wireless LAN solutions, which are 802.11b-compliant, run at 11 Mbps, and boast industry-best security features.
• Cisco engineers developed two new chips: one that holds an entire radio receiver operating at an impressive 5 GHz, and one that holds a modem. The innovation provides an inexpensive, high-performance solution for wireless connectivity, and moreover, it is implemented in commonly available digital technology.
Cisco innovators have developed new security methods for wireless networks:
• Until recently, wireless users would access a corporate network through a network interface card (NIC) using a static encryption key, establish contact through an access point, enter another password for network logon, and encrypt data for transfer. Cisco engineers used the IEEE 802.1x security standard on Cisco Aironet access points and wireless network interface cards. The standard, which provides a framework from which users can establish dynamic session keys, or passwords, put an end to shared passwords. No password swapping is necessary, and no chance for unauthorized users to access private information.
• Cisco engineers developed a pre-standard version of Temporal Key Integrity Protocol (TKIP) available to customers today, which further secured wireless communications, allowing safe encryption and decryption of transferred text.
Additionally, Cisco holds several key patents in wireless technology:
US Patent No. 6,049,533 - Network Communication System with Information Rerouting Capabilities: A network communication system in which access points providing wireless access to the system reroute misrouted information packets in the event the location of a mobile unit has changed. Regardless of whether a host computer or other network device is capable of updating in its position table the changing locations of the mobile units, information packets directed to the mobile units from the host computer or other network device are still properly delivered.
US Patent No. 6,018,650 - Cellular Communication Devices with Automated Power Level Adjust: A cellular communication device for a cellular communication network which includes a radio-frequency (RF) transmitter for transmitting an RF signal at an output power level to one or more other devices in the cellular communication network.