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Travel Goes the Way of the Dodo at Cisco

February 9, 2009 | Chris Payatagool

cisco_chambers.jpgBy Ashlee Vance

Give Cisco Systems' chief executive, John Chambers, credit for trying.

Mr. Chambers embraced the art of the cost-cutting advertorial, during a conference call Wednesday with analysts to discuss Cisco's second quarter results.

Using his usual smooth delivery, Mr. Chambers told the analysts that Cisco had saved a lot of money during these difficult times by cutting back on travel. These cuts, however, had taught Cisco a valuable lesson that will carry over when the good times return. Employees don't need to travel quite as much.

"So our expense per employee on travel has gone from I think about $7,900 per employee down to almost a run rate of $3,400," Mr. Chambers said. "That will not come back."

The unsubtle context lurking behind Mr. Chambers's message was clear to the longtime Cisco followers. The company sells video conferencing systems and is saving money by using that technology rather than planes, trains and automobiles. "Smart companies will follow the Cisco model" was the obvious message.

Mr. Chambers remains a staunch advocate that a hodgepodge of technology, including video, Web meeting applications and collaboration software, will drive a new way of doing business. In fact, Mr. Chambers may well be the king of the Web 2.0 buzzword, firing off "wikis," "blogs," and "telepresence" at every chance he gets.

Cisco, of course, sells products behind each buzzword.

Cisco now holds 4,000 video conferences a week. Its use of the WebEx meeting software has surged 3,100 percent, and activity on discussion forums has jumped 1,600 percent. The best part of eating the mounds of Cisco dog food comes from installing more routers and switches to handle the network traffic.

"All of these together are loading our networks even in today's challenging times at a growth rate of over 400 percent, which obviously requires additional routers and switches to support the network demand," Mr. Chambers said.

But while Cisco adores its own technology, customers are less moved by it.

Revenue from Cisco's advanced technologies businesses, the stuff outside of routers and switches, reached $2.4 billion during the quarter on the back of just 1 percent growth. Sales of video systems did rise 18 percent year-over-year, Cisco said, and the products now stand as the company's biggest "advanced technologies" earner.

For all his telepresence talk, Mr. Chambers remains committed to the value of face-to-face meetings, flying around the globe on a private jet. Ah, but there's a lesson to be learned even with that, during these grim economic times.

"I own my own plane, and that is a huge cost," Mr. Chambers said, during an interview. "I just got a new one and paid for it myself. I continue to pay for a lot of expenses on my own. I think you should take your salary down when tough times occur, and that's my recommendation for the industry."

[via The New York Times]  

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