Demythologizing Cisco part IV: Nobody ever got fired for buying Cisco

Kevin Jennings

June 03, 2016

But is this the end of the story?

OK, I’ll admit it right out of the gate. I don’t know of an instance in which a person got canned because they purchased products made by Cisco Systems. But is this the end of the story? It used to be said decades ago that, “Nobody ever got fired for buying IBM.” This was a common statement because IBM essentially ruled the world of computing—to an extent even greater than Cisco rules the world of networking today—and it was perceived that, at the very least, going with IBM meant that one was safe from criticism whatever the outcome of the implementation. Note that then, with IBM, and today with Cisco, it never meant that the system would be trouble free. Any honest person who has spent time with networking infrastructure equipment knows that it is never perfect. Release notes from any manufacturer pointing out the known bugs in the system bear this out for all to see, and Cisco is no more immune from this than anyone else.

So, why is the above statement a myth? It all depends on how one looks at the matter. Granted, there is a measure of built in shielding that one inherits by choosing to use the market share leader in any type of solution. If troubles occur, it is less likely that management will immediately look to the manufacturer of the networking gear to point the finger when it bears a famous name like Cisco Systems. And it is highly unlikely that the decision maker who chose to use Cisco will be called on the carpet for betting on a company whose products are chosen more often than any other. Again, how is the statement a myth, then?

Perhaps in Some Cases They Should Have Been

Cisco’s products on the whole work quite well. The commonly accepted fallacy is that the products from other leading manufacturers in the industry do not. And this is the heart of the issue. While it cannot be said that network switching is a pure commodity industry, for there are some genuine differences among various product offerings, there is nonetheless a lot more that is similar about the products from Cisco and the leading players than there is that is different. We all base our products on a defined, limited set of silicon that bears limited differentiation between vendors. As a result, perhaps there are cases where someone should have been fired for buying Cisco—a lot of them, in fact! The justification for purchasing Cisco equipment for the vast majority of circumstances in which it is purchased ignores the fundamental question of value. I would grant all day long that Cisco is the right choice if it really is the only solution that will perform the tasks at hand. The truth is, however, this is almost never the case. At Alcatel-Lucent Enterprise, we very rarely encounter a situation in which our products will not perform a comparable job to Cisco’s, and in some cases they actually perform a superior one. Why, then, do otherwise intelligent people routinely spend 20%, 50%, or, believe it or not, 3X or 5X as much to purchase Cisco versus our equipment or that from another networking infrastructure vendor? If both do an adequate or rather an admirable job as a solution for the requirements, what are we to say of the person who chose Cisco and paid twice what they could have and should have paid? Is it, “Great job, you’re covered and there is no chance anyone is going to fire you. Brilliant move!” Or, should it rather be, “All other things being equal, that was brilliant that you chose Cisco, the market share leader…Except, all other things are not equal. The solutions themselves are both sufficient to meet our needs, but you paid twice what you needed to and squandered the company’s resources. You deserve to be fired!”

How About: “Nobody Ever Got Hired for Buying Cisco”

I submit that the more accurate saying, which applies to far too many real-world instances, is the following: “Nobody ever got hired for buying Cisco.” What? You heard me. Purchasing Cisco in the vast majority of cases means that the customer has massively overpaid for what they are receiving. The exceptions to this rule are those relatively rare, truly competitive situations in which Cisco deigns to lower itself to actually offer a price competitive solution, which are few and far between. Anyway, there are very few companies which when buying products are sophisticated enough to engineer an acquisition to ensure that Cisco is competitive, because doing so means that they actually are willing to purchase an alternative if Cisco chooses not to be. Routinely, Cisco offers its equipment at a premium that ranges from 20% to 30% more than our solutions, to as much as 5X what we are charging for our comparable equipment which otherwise satisfies the requirements of the project. 

Look at it this way. If, on a $3M Cisco acquisition the customer could have implemented an Alcatel-Lucent Enterprise solution for say $2.1M, what happens to the extra $900K that the customer paid? It goes straight to Cisco’s bottom line. It is $900K that is in Cisco’s pocket rather than in the customer’s pocket where it belongs. And how many people could have been hired with that $900K? I guess that it could be said that those whom the company couldn’t hire because it chose to overpay for Cisco equipment have effectively been preemptively fired because of it.

Maybe someone did get “fired” for buying Cisco. Maybe it happens every day. Maybe your company has in effect fired people by choosing to overspend on Cisco.

Cisco is fond of saying that its products may be a little more expensive than other companies’ wares, but it wins when one considers TCO (Total Cost of Ownership). Really?In the next installment we tackle the myth that, “Cisco leads in TCO.”