Introduction
Cisco Systems is one of the leading providers of Internet Protocol-based (IP) networking suite of solutions for the Internet. Two Stanford Computer Scientists founded Cisco in 1984. After six years, in 1990, the company went public and was listed in NASDAQ under the ticker symbol “CSCO.” For the first time in 1997, the company was listed in Fortune 500 and was ranked as top five companies for return on revenues and return on assets. Microsoft and Intel were the other companies in the list. Cisco’s core business started with manufacturing routers. Routers enabled the internet network usage. Cisco provided solutions on three proprietary networks: data, voice, and video. With the advent of digitization, the three networks converged. The rise of open standards and internet created too many competitors for Cisco. Among these were 3Com and, Nortel, and Lucent. Don Valentine, a partner at Sequoia Capital and vice-chairman at Cisco board was the initial venture capitalist who invested in Cisco. In 1988, Valentine hired John Morgridge as the CEO of Cisco. Morgridge was an experienced executive in the computer industry. Following some clashes with the board and the executives, the two founders departed from the company. Some believe that this incident proved to be fruitful for Cisco and led to its phenomenal growth. After the founders had left, Morgridge was free to implement his plans. He installed an extremely disciplined management structure and exercised centralized control. Morgridge hired John Chambers in 1991. Chambers was very customer focused, and the two executives helped the company soar new heights.
Peter Solvik joined Cisco as CIO in 1993. At that time, Cisco was $500 million Company. Cisco was running traditional financial manufacturing and order entry systems. Solvik saw two major challenges with the company. First challenge was that Cisco’s IT was traditional and very much internally focused. The IT department was viewed as a cost center that was reporting through accounting department. Second challenge was the scalability of the IT systems. The current IT systems were not flexible and robust enough to meet the requirements of the management. Mr. Solvik made some reforms to meet these challenges.
In 1994, the legacy IT systems at Cisco failed dramatically. The central database of the company was corrupted leading to a two day virtual shutdown of the company. It was clear that the current systems did not work. This shortcoming could no longer be ignored (Irma-international.org, 2014). The IT systems were running in silos and needed integration between manufacturing, order entry and finance either by upgrading the current systems or replacing it with a new robust ERP system. The need of the company was big and urgent. The project was one among the top seven goals of the company for the year.
The Solution
The management understood that a full-fledged ERP implementation was the solution to all problems. The next step was to select ERP systems. For Cisco, it was not just the IT selection process. It was a project that needed help from the business community because everyone was aware of the fact that these implementations could go wrong. Cisco needed a consulting partner who could understand their problem. Solvik selected KPMG to be their partner for this project and help them match their needs with the solutions offered by different ERP suppliers. A team of twenty people did extensive research on ERP providers. The team shortlisted five suppliers within two days, and then shortlisted two suppliers for the final process. The team took 10 days to draft the RFP for vendors. The entire selection process took 75 days.
Why Oracle
At the end of the evaluation process, Cisco finalized Oracle to be their ERP supplier. The Oracle 11i application suite was selected as the best choice for customer call management and service logistics (Cisco, 2007). This meant an implementation of many new modules for Cisco, as well as the use of relatively new technology from Oracle. While the Oracle 11i suite introduced risk, the team agreed it was the best solution. The other supplier shortlisted was significantly smaller than Cisco. The need was such that Cisco did not want to deal with a significantly small player. Since the project was big, Oracle was equally motivated to make the project a success. The project was the first major implementation for the new release of the Oracle ERP product, and as the company needed references, they were under equal pressure to do the job efficiently.
Post vendor selection
After the vendor selection, the focus of the project was on “Cost” and “Time taken” to complete the project. The executive team made efforts to convince the board. Due to the pressing need to fix the IT systems the board agreed. The project was worth $15 million with a 9 months’ timeline. It was largest capital project ever approved by Cisco. The Cisco project ended on time, on budget.
Result
Within two years, Cisco replaced all IT applications and platforms for $115 million – $100 Million for web-enablement and $15 million for ERP implementation. Cisco web-enabled all employee self-service (internal applications), distance learning for employees, and self-service for customers. Cisco pioneered the e-commerce after this project. This change was very positive for Cisco as it could integrate a lot of acquisitions. Most acquisitions were integrated within 60 to 100 days. After the success of this project, Cisco purchased 19.9 percent stake in KPMG’s consulting wing.
Various Metrics of Software Implementations
Although Cisco was able to meet its ERP system budget and time line, there are many cases where customers fail in an ERP implementation. Below is a matrix that can help in successful software implementations.
Conclusion
The main reason an ERP implementation takes off is the management back up. The next most important point is vendor selection, and the implementation team structuring. The implementation team comprised of people from Cisco, KMPG and Oracle. A lot of discipline, hard work and joint effort went into making this implementation a success. Usually projects go over time and over budget. But this was not the case with Cisco. To have an ERP up and running within nine months with an initial budget estimate of $15million is a vision.
Reasons of Success
- Recognized the problem early on and developed a realistic plan of action
- Project was a top priority for the company
- Senior management supported the project
- Diligent consultant and supplier selection
- Limited customization
- Meet target implementation dates and budget
This case study is an ideal example of successful ERP implementation.References
(2013). Information Technology & Project Management Blog: Harvard Business Review: Case Analysis - ERP Implementation at CISCO (699022-PDF-ENG) from Strategic Role of IT perspective.Project-management-sj.blogspot.in. Retrieved 22 June 2014, from http://project-management-sj.blogspot.in/2013/05/harvard-business-review-case-analysis_15.html
Cisco. (2007). Business Applications Case Study: How Cisco IT Migrated to an ERP Technical Support Module - Cisco on Cisco. Retrieved 22 June 2014, from http://www.cisco.com/web/about/ciscoitatwork/business_of_it/ERP_technical_support_web.html
Irma-international.org. (2014). Retrieved 22 June 2014, from http://www.irma-international.org/viewtitle/3244/
Ahagar, D. (2009). The business insight: ERP implementation at Cisco. Babylies.blogspot.in. Retrieved 22 June 2014, from http://babylies.blogspot.in/2009/03/erp-implementation-at-cisco.htm
Nolan R. (2005). Cisco Systems Architecture: ERP and Web-enabled IT, Journal of cases on information technology ,Vol 67 ,page 46
Tarun. (2008). TECHNICAL TARUN: ERP Implementation CISCO. Technicaltarun.blogspot.in. Retrieved 22 June 2014, from http://technicaltarun.blogspot.in/2008/12/erp-implementation-cisco.html
