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  1. Leadership
  2. Strategy
May 20, 2015

F5 Networks bids adieu to CEO as it struggles with identity crisis

Even after surviving a face-off with Cisco, the company has perception issues.


It is often hard to tell just what it is an IT company does these days.

After all, how much tin does a software company have to shift before it has to be defined as a hardware firm? Do you measure a company by its revenue, by its reputation or by its ambition? And, in the case of the world’s Googles, is it not just easier to list what they don’t do?

Such ambiguity has for some time troubled the folks at F5 Networks. As its chief executive of 15 years John McAdam heads for the door, the firm is spending ever more of its time advertising itself as a software firm, having been known for optimising application delivery from the data centre – and thus mostly thought of as a hardware firm.

The departure of McAdam comes shortly after the firm emerged victorious from its long contest with Cisco, finally putting to bed analyst speculation that the firm would be acquired or defeated by its larger competitors.

Manuel Rivelo, the man who will replace McAdams, spent some 19 years at Cisco, which alongside VMware and HP is now a partner and friend of the firm. From the start of July, Rivelo will move on from his existing position as EVP of strategic solutions and take the helm of F5.

His plans for the company can be condensed into a single sentence. Speaking in Edinburgh this week at a company conference, he told the audience: "As a company we will continue to innovate, will continue to partner and we will continue to acquire."

On that last point F5 has hardly been shy about its motives, unlike some of its West Coast neighbours who prefer to remain mute on the subject. Last year the company acquired and relaunched its denial-of-service scrubber under the Silverline brand.

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Though security is a significant revenue driver for the firm much of the rhetoric focuses returns to that theme of app delivery. In particular Rivelo said customers are telling F5 they want costs driven down and productivity driven up. The answer, according to the new chief exec, is the software-defined network, or SDN.

"I think the hype and the noise about SDN has disappeared," Rivelo told the conference in Edinburgh. What he thinks has emerged is an opportunity to create software-defined application services and connect a ranged of infrastructure from the cloud to the data centre.

"We believe that you’re going to run your computing services over the whole plethora of services that are provided," he said.

Shifting models
All that would probably lead you to believe F5 is indeed a software firm.

But Julian Eames, EVP of business operations at the company, told CBR: "We originally saw ourselves as a software company but we sold it as hardware." He guessed that in five years time the business would be divided evenly between software and hardware, but added that it was a loose estimate.

The company is also having to be cautious about its move over to a more software subscription driven model, which as many in Silicon Valley have found out can involve huge upfront expenses on sales and marketing, with profits only coming later.

Eames did however say the company is not short of new ideas. "Our biggest issue is not what we should do next, but getting through everybody’s good ideas," he said.

For John McAdam’s soon to be former employers the wind seems to be with them. The company is well positioned to capture shifting ideas of how software is used, has some hefty partnerships and, in Rivelo, a technical chief executive to steer to company further.

But is it really a software company?

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