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 THE STAT 26Percentage of wireless customers who use their cell phones to take picturesMore Vitals
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MAY 12, 2004
Cisco's Secret Weapon Susan Bostrom of the giant's Internet Business Solutions Group keeps customers happy by paying attention to their needs On the morning of May 3, when Cisco CEO John Chambers got together with his top execs for a quarterly powwow, Susan Bostrom had much to smile about. As usual, Chambers recited statistics on how many customers each team member had met with during the past quarter and how satisfied, on a scale of 1 (low) to 5 (high), those customers were with the meetings. Bostrom ranked a 4.9, a figure that's old hat for her. She has been a high scorer and a high flyer -- literally and figuratively -- ever since joining Cisco (CSCO ) back in 1997. As senior vice-president of its Internet Business Solutions Group (IBSG) and also of its government-affairs operation, Bostrom clocks so many air miles visiting customer sites and regulatory meetings that she says she knows the flight attendants on some routes. Indeed, while Bostrom's IBSG division might still carry some of the scars of the dot-com boom and bust, her star has continued to rise. As customers cut their spending during the tech downturn, she redoubled her efforts to take advantage of Cisco's Web products internally -- and helped it cut billions in costs and raise productivity by double digits over the past three years. That was crucial in boosting operating margins amid weak sales. PERSUASIVE POWERS. So in late 2002, Chambers put Bostrom, who reports to him, in charge of Cisco's government affairs -- an area of increasing strategic importance. The revenues of the world's largest Internet networking company can take a hit or take off depending on which way legislators decide on issues such as allocating wireless spectrum and regulating phone connections over the Internet, called voice over Internet protocol (VoIP). Considering that much key telecom regulation will be decided this year -- including rules governing VoIP -- Bostrom is juggling one hot potato. So far, she has been up to the task. She has honed her powers of persuasion in recent years by shifting Cisco's focus away from selling technology and leaving it to customers to figure out how to use it. Now the focus is telling customers what the technology can really do for them. "Sue has helped to transform our industry, and especially Cisco, from a laser focus on technology to how to use the network to change business models and drive...the huge productivity gains that we are seeing today," Chambers writes in an e-mail. STARTING INSIDE. Though the IBSG division is small, Bostrom "is selling people on ideas," says Erik Suppiger, an analyst with Pacific Growth Equities in San Francisco. It's her job to get customers interested in new applications -- such as online supply-chain management -- that Cisco's infrastructure supports. To run that software, customers often have to buy the switches and routers Cisco sells for sending data over communications networks. So in essence, Bostrom's team helps increase the sales of other business units. One of her selling points is that Cisco already has implemented much of this technology internally -- with impressive results. By nudging the company's different divisions to adopt various e-commerce, customer care, and supply-chain-management software, developed both externally and internally, Bostrom helped it gain $2.1 billion in efficiencies just in its last fiscal year, ended in July, she estimates. In large part, the savings resulted from persuading Cisco customers to place more of their orders over the Web -- 93% in 2003, vs. only 4% in 1996. These savings have had a profound impact on Cisco's financial performance, particularly during the recent economic downturn: It reported $3.6 billion in profit in its most recent fiscal year, ended in July -- up 90% from $1.9 billion in fiscal 2002 -- on the same $18.9 billion in revenues. On May 11, Cisco reported third-quarter earnings of $1.2 billion, or 17 cents a share, up 21% vs. last year, on revenues of $5.6 billion, a 21.7% increase year-over-year. The revenues were slightly ahead of analysts' expectations, and earnings per share were a penny ahead of expectations.
BW MALL
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