N+I: Chambers pushes spending on converged networks

In his keynote Tuesday at N+I, Cisco Systems CEO John Chambers said companies that invest in intelligent networks and applications can expect to see productivity gains of between 2% and 10% a year. While attendees found merit in his strategy, which he has been advocating for some time, few seemed eager to spend on the technology today.

LAS VEGAS -- In the opening keynote speech at Networld+Interop 2003, Cisco Systems Inc. CEO John Chambers detailed his vision for high-bandwidth converged networks and the continuous boost in productivity they can provide.

Though it's a theme that Chambers has focused on for some time, he told a sizable audience that companies that invest in intelligent networks and applications -- where all offices have the same access to rich multimedia data -- can expect to see productivity gains of between 2% and 10% a year.

He produced a number of examples demonstrating how the strategy has helped Cisco increase its productivity, and he detailed the resulting research and development investments the company has been able to make, especially during the last two lean years.

Chambers pressed the concept of constant, high-bandwidth connectivity as the engine that will drive business productivity. He and several other Cisco employees performed a skit that demonstrated how a construction firm could tailor applications to facilitate communication, allow multiple parties to link to and manipulate building plans, communicate instantly over video while looking at slides, and talk on Cisco's new wireless voice over Internet protocol (VoIP) phone.

With a combination of local area network, wide area network and wireless links -- and the right applications -- companies can more efficiently solve problems and change the industry forever, even though many feel the construction industry will be slow to adopt new technologies, Chambers said.

But adoption may be a long way off, even for some high-tech companies. Jaime Villarreal, a test engineer with Sun Microsystems Inc., said that, in the manufacturing portion of Sun's business, those ubiquitous high-speed networks and integrated applications are not really on the map yet.

"I suppose we'll get there some day," Villarreal said.

Because companies will be looking at end-to-end network solutions for issues such as security and communication, Chambers asserted that single-vendor systems -- such as those from Cisco -- will become increasingly important to businesses, while point solutions are more likely to fade.

Chambers also spoke optimistically about an economic turnaround. While Chambers could not predict when the economy will turn around, he feels that, when it does, IT spending will follow within three months.

Neil Peterman, a partner with Peterman and Associates, a consulting group in Springfield, Ore., said that many of the companies he works with are already starting to spend on infrastructure again. For example, he said that he is on his way to Montana this week to work with a lumber milling company that is making a $500,000 investment in its IT infrastructure, despite the uncertain economy.

Peterman agreed with Chambers' comment during his keynote that companies are beginning to see that one way to stay ahead of the competition is through smart investment in IT infrastructure.

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