Cisco's fourth quarter was a strong one, and in his first non-fluff sentence on last week's earnings call, CEO Chuck Robbins said, "Our results demonstrate ... strong customer adoption of our latest innovations...." Cisco is winning on innovation? Most think Cisco does its best to slow the adoption of new technologies. Is "slowing down" tech then the winning approach? Certainly it's a very big factor.
Looking back over surveys CIMI Corp. has done over the last 30 years, one interesting thing I found is that large sellers -- vendors like Cisco, IBM, and Microsoft -- have been the largest consistent influence on buyers. These vendors, as winners in the tech paradigm of the time, were hardly likely to be pushing to change the game -- and they still aren't. Most have adopted the "fast follower" model, which says that you wait till some technology proves to be a threat or an opportunity, then follow the trend, usually by buying another company. So, the research shows that the biggest influencers are likely advising buyers to go slow on tech innovation.
The same surveys show that another powerful force, financial inertia, operates against innovation. Imagine that your company installs a new data center or builds a new network. You'd expect that investment to be good for years, and in fact the survey data says that a company doesn't expect to make a major technology change for an average of five years after a sizable investment. The reason is simple: protection of the investment. Buyers drive a stake in the ground five years' deep, and tie themselves to it.
What we have, then, is evidence that 1) buyers really don't have the financial latitude to make a lot of quick changes, and 2) the strongest influences acting on buyers aren't pressuring them to move either. Thus, most technology revolutions come up short, because the buyer isn't really looking for changes. In fact, tech change becomes harder every year, because tech gets more entrenched and the low-apple business cases for enhanced technology are largely picked.
This raises the obvious question of how we ever got tech progress. Remember, these surveys went back beyond the PC age, beyond the server-data center revolution, even beyond the Internet, and IP as the network technology of choice. The answer, from the same surveys, is a single word: greenfield.
Companies spend money on tech to make more money, a return on investment -- the legendary "ROI." Through the '80s and '90s many business activities had seen little support from technology, and improvements in the productivity of those activities justified the purchase of new technology. During that period, IT and network budgets were, on the average, 35% for maintenance and modernization of current technology, and 65% on off-budget new projects with high ROIs. We advanced because we were advancing the overall benefit case for IT and networking.
Today we have nearly reversed those IT and network spending patterns; 61% of current budgets are for maintenance and modernization. The greenfield opportunities have turned brown, and tech inertia is literally written into the spending plans of businesses, even those that depend on technology. Without support from those key influencing vendors, this cycle is hard to break.
Didn't the big vendors slow-roll their support for new technologies even 30 years ago? They did, but they were somewhat more willing to take a risk because the new technology paradigms that opened new benefits to justify new spending were clearer. They got that way in large part because of non-vendor influence on the buyer.
What, in the '80s, was the largest influence of any kind on buyer strategy? The answer is trusted technology publications. I can remember going into the offices of CIO-level people week after week and seeing a copy of Business Communications Review (a No Jitter predecessor) on the desk. In those days, BCR ran thorough, thoughtful articles of two or even sometimes three thousand words. A buyer could learn enough about a new technology to enter into a vendor dialog, putting pressure on vendors to respond.
Notwithstanding our loss of those wonderful tech publications of the '80s, educating buyers in tech is harder now than ever. We used to worry about two things: hardware and software. Now we have hardware, hypervisors, container or cloud stacks, middleware, and so forth. We have real networking, virtual networking, software-defined networking. We have clouds and serverless too. Worst of all, most real IT plans will require integrating a bunch of these things.
That's why Cisco is proving that inertia can be a good thing. Confront a buyer with a lot of complicated choices and you have a choice yourself. Do you embark on a buyer education process that threatens to take as long as getting an advanced degree, or do you just sing them the half-dozen buzzwords of the moment, pat them on the back, and say you have them covered? Knowledge inertia is another factor; jumping off into the tech unknown isn't a career-enhancing move for any ambitious tech planner.
Maybe the biggest question here is the hardest. Is the inertia we see a good or bad thing? On one hand, it definitely reduces the rate at which we realize new technology benefits. On the other hand, it keeps us from flying off into a dozen different directions as new "revolutions" emerge, and inertia keeps us safe. That's what Cisco's really demonstrating. Taking root in the old technology may not be glamorous, but well-rooted trees don't fall over as easily.
Follow Tom Nolle on Google+!
Tom Nolle on Google+