Cisco Systems ERP – Case Study
Andree Grecchi
Hawai’i Pacific University
2/19/2014
IS 6005
Professor: Ken Rossi

Table of Contents

Who is Cisco? 2
Prehistorical Infrastructure 4
Seeking for a new start 4
Evaluation 6
Conclusion 7
References 8

Who is Cisco?
Cisco is one of the most powerful and successful corporation in the IP network industry. In the fiscal 2013 their revenue totaled $48.6 billion and their Net Income was $10.0 billion (Cisco 2013 Annual Report).
Cisco focuses on delivering products and services that consists in integrated networks for all forms of communication and IT. They provide their customers with an integrated architectural approach that gathers application-specific integrated circuits (ASICs) software, hardware, and services.
In December 1984 Cisco Systems Inc. was founded by two computer scientist at the Stanford University, Len Bosack and Sandy Lerner, husband and wife. The two lovers wanted to communicate by email from their respective offices, but at the time different local area protocols communications didn’t exist. As a result the first multi-protocol router came out.
Since then Cisco lead the networking market allowing “the transportation of voice, data and video within buildings, across campuses and around the world” (Cisco 2013 Annual Report. P.1). This is possible thanks to the routers, its core technology. A router is a device that joins multiple networks together, it allows the connection of networks from all over the word to the Internet.
The Internet is the global network of networks, indeed it enables the convergence of the three main property networks such as phone network, local-area and wide-area network and broadcast network. Therefore, thanks to the Internet it is possible to send voice, data and video over only one network, known as the IP (Internet Protocol)-based network. As the author Richard L. Nolan cites “By 1999 in the United States, it was estimated that data network traffic exceeded voice network traffic. More than 75% of all Internet traffic travelled over Cisco products.”
The location influenced its performance. Cisco was located in Silicon Valley where there was a continuous wave of capital investments and talents due to the appealing technology market that was growing there. The first investor was Don Valentine, who invested $ 2.5 million reserving himself the right to choose the management team.
Consequentially Valentine hired John Morgridge as CEO, in 1988. Morgridge began to build a professional management team. They soon had incomprehension with the founders who as a consequence sold their stocks and left in 1990.
Morgridge maintained a centralized strategy, which was still functional in 2005. Only the product marketing and R&D sectors were decentralized, while manufacturing, customer service, sales, finance, HR, IT sectors remained centralized.
In 1991 John Chambers became part of Cisco’s executive team and in 1995 he succeeded Morgridge. In 1993 Chambers, Morgridge and Ed Kozel implemented a business strategic plan that consisted in gathering a wide product line, systematizing acquisitions as business process, setting industrywide standards for networking, and picking the most suitable strategic partners.
In the mind of Chambers a centralized organization and a “dedication to costumer success” are the basics to success.

Prehistorical Infrastructure
Cisco’s fast growth rate was not followed by a proportional innovation within the internal structure and organization. Indeed when Peter Solvik, ex Apple’s Sr. Director, became the new CIO (Chef Information Officer) in 1993 he was astonished in seeing that a $500 million company as Cisco had such a traditional and internally oriented Information Technology Department. In addition it was running on systems that were obsolete and not flexible enough to encounter management needs and keep up with company growth.
To cope with these issues Solvik changed the IT department from the mere accounting and budget pertaining function it had to a central structure, client-funded, and independent.
The turning point arrived soon. In January of 1994 Cisco systems failed. Thus the inability of the system to perform forced towards the utilization of “unauthorized methods for accessing the core application database” which lead to the corruption of Cisco’s database. Consequently the company shut down virtually for two days.

Seeking for a new start
After the shutdown managers realized that the autonomous approach was not sufficient. There was the need for a more integrated action, indeed separated decisions among the departments would have taken too long. As a result the company gathered an Implementation Team to investigate on the replacement of the application.
Thanks to the previous experience of the SVP of manufacturing Carl Redfield it was clear that the implementation of IT projects can take a long time to be effective. In order to make the implementation as quick as possible Redfield suggested to implement the project all at once and to do not personalize the new system. Projects that are divided into phases and customized tend to take longer time to be efficient, and many times they tend to become only an adaptation of the previous method. He suggested also to make the implementation a priority for every department: the involvement of the entire company is important for the effectiveness of the project.
Other than selecting within the company the best components for the Implementation Team, it was important also finding a partner that could assist and support the company in the selection and the adaptation of the project. Cisco opted for KPMG as integration partner.
Initially the Implementation Team identified the best software packages on the market. After networking and exchanging information with other large corporations they picked the packages that were actually being used by the public. After a week of analyzing the market Cisco narrowed the decision on two candidates: Oracle and another software.
In 10 days the team wrote and sent a Request for Proposal to each vendor. Vendors had two weeks to respond. In the response they had to illustrate how their product could fit Cisco’s requirements and they were invited for a three-day software demonstration.
Eventually Cisco selected Oracle and after the board approval “the project emerged as one of the seven company’s goals for the year”.
The project kicked off in June2, 1994 and was completed on time. In two years the IT platform architecture was replaced and standardized successfully.

Evaluation
The following table illustrates the evaluation of Cisco’s ERP Implementation plan. | Fair | Poor | Good | Excellent | Identification of the problem | | ● | | | Autonomous approach | ● | | | | Recruitment of the Implementation Team | | | | ● | Partners | | | ● | | Time | | | | ● | Cost effectiveness | | | ● | | Awareness campaign | | | ● | |

When Peter Solvik became the new CIO in 1993 he did recognize that Cisco systems were obsolete and not flexible, but he did not evaluate the size of the problem. Since the identification of the problem was poor the autonomous approach adopted consequently was not sufficiently effective to avoid Cisco’s systems shut down in 1994.
The recruitment of the Implementation Team was excellent. Cisco needed a team that was strong and committed to the company so they picked the people that were necessary for the business, people that “the business absolutely did not want to give up” (P.5).
It was important for Cisco to find the right integration partner that could support and in the selection and the implementation of the project chosen. The choice of KPMG was good, considering that they put in their teams people that are experienced in the industry, people that were not present in Cisco. However, since it was a new technology at the time the so called “greenies” offered by other firms might have had a more updated knowledge.
The project was completed in a short time as demanded and respected the deadline required by the board.
As far as cost effectiveness the project cost was amortized within the next years. Indeed the net income more than doubled, going from $421,008,000 in fiscal year 1995 to $913,324,000 in fiscal year 1996, and kept steadily augmenting covering the expense.

Conclusion
Analyzing Cisco experience what mostly comes to the eye is the importance of analyzing problems, especially in their size. As already said above Peter Solvik was aware that Cisco’s systems were not up to date and that they “could not scale to support Cisco’s growth”. Cisco was part of an economic boom that arrived with the discovery of new technologies and continued evolving. Underestimating the issue lead to a system failure that could have been avoided just by hiring experts. The experts could have evaluated the problem right away and figured a better solution than a weak autonomous approach.
Overall, even though began late, the ERP Implementation project was a success. The standardization of the IT platform architecture allowed being more flexible, competitive and lees time consuming.
The centralization of the data made them more accessible. As a consequence it reduced gathering information on new products prototypes from one day to less than 15 minutes, it improved the customer/employee relation thanks to the the web-based technology (CEC) as well, it facilitated the exchange of knowledge and maximized employee productivity.

References
-Richard N. Nolan, (November 28, 2005). Cisco Systems Architecture: ERP and Web-enabled IT
-Cisco 2013 Annual Report