Cisco Creates Tech Fund Separate from R&D Budget

What’s a company already spending $5.5 billion on research and development in FY 2012 need with a separate fund to explore new technology ideas?

Just ask Cisco Systems (NASDAQ: CSCO), which has allocated millions dedicated to the long-term development of innovative technology. According to a Cisco technology blog post, here’s the answer: Fully explored brainstorms, unseen on Cisco’s current radar, may turn into revenue-generating products and services for the vendor sometime down the line if allowed to germinate unencumbered.

“The tech fund is there to allow senior technical talent, our distinguished engineers and Fellows in our population to explore ideas in some depth,” said Joel Bion, Cisco senior vice president, Advanced Research and Development.

Cisco wouldn’t specify how much money it plans to put in the fund, other than to say it will be populated with multiple millions of dollars, doled out to support innovators with necessary equipment purchases, underwrite the cost of contractors, and fulfill other requirements to incubate ideas that “may take six, 12, 18 months to explore fully,” said Bion.

Will Cisco’s tech fund benefit channel partners? Not directly and not soon, but in the long run staying ahead or, at the very least, in step with new technology ideas always holds the promise of future revenue opportunities for partners.

With Cisco already allocating such huge sums of money to R&D, why does it need a distinct tech fund? “If you don’t set up a separate fund, these ideas become more difficult to explore,” said Bion. “We want to say right up front at the beginning of the planning cycle that we will sequester an amount of money for the exploration of innovative ideas.”

The application process is short and simple: a statement of goals, expected achievements, equipment and cost estimates is reviewed by CTOs, Cisco Fellow and senior engineering managers with an eye toward the idea’s uniqueness and potential to turn into a future product.

Innovators are under no guidelines to focus on Cisco’s five areas of emphasis: core routing, switching and services; collaboration; data center virtualization; architectures and video. “You can’t just sit and say what got you the money today or what will get you the money tomorrow will continue to provide revenue and growth for the company a number of years from now,” said Bion. “You always have to be on the lookout for what the new ideas are so you can begin the design and implementation of those ideas in time to catch the market.”