Company Background

Cisco designs, manufactures, and sells Internet protocol (IP)-based networking and other
products related to the communications and information technology (IT).

Founded by two Stanford University computer scientists in 1984.

The name "Cisco" was derived from the city name San Francisco.
In 1995, appointed John Chambers as CEO. (still to date)
By 1997, its first year on the Fortune 500 (till to date)
Cisco ranked among the top five companies in ROR and ROA.
On July 17, 1998, Ciscos market capitalization passed the S100 billion
mark.
Total Employees 74,044 in 92 countries and over 372 locations.
Total Revenue USD 47.14 Billion (Top 46th in the World)

ERP System Implementation - 1994

Peter Solvik appointed as CIO if Cisco in 1993. Cisco then using a UNIX- based software package for
its core transaction processes. Finance, manufacturing and order entry were supported by this
software package.
Solvik let the each functional are to make its own decision regarding the application and timing its
move, as he avoided the implementation of the ERP solution.
By 1994, Cisco already facing many IT problem with the legacy software, which lead to implantation
of ERP:
1. Company's annual growth rate was 80%.
2. Transaction rate had increased drastically. The legacy systems did not have the capacity to handle the
load.
3. Any attempt to improve the applications would crash the system.
4. IT department would spend its time repairing the legacy systems. and

One day, the legacy system corrupted and shut down for 2 days.
This made the company realize that the system is brink of total failure.

QUESTION 1:
How was the decision made to implement
ERP?

Why ERP System needed?

Shortcoming of the existing system

Inability for the system to perform , corrupting the central database

System replacement approach that they adopt is not sufficient to solve the problem
Virtual shut down for 2 days, brink of system failure

Selecting an ERP System

Consistent with the need for a strong Cisco team, the company would also need strong
partner

KPMG as the integration partner

Mark Lee, the program manager from KPMG to help in selecting an

appropriate ERP product

The teams strategy was to build as much knowledge as possible by leveraging

the experiences of others

Decision Made To Implement ERP

Oracles ERP product was the winner of all choices
ORACLE was chosen as the ERP vendor.
The whole process took 75 days (Initiation to Final Selection)
Oracle have been chosen based on their
1. Manufacturing capability
2. Long Term development
3. Location wise (being close by)
Then, critical questions would be
How long the project would take? and How much would it cost?
The project was approved by the Board
Project duration 9 months
The project appears to be the largest capital project ever
approved by Cisco for USD 15 million.

QUESTION 2:
Evaluate the analysis made to recommend
ERP to the Board, and the quality of the
justification.

Going to the Board

In their CIO point of view, Cisco had little choice but to move on.

The best alternative selected was to replace the systems, big-bang

Implementation, with one ERP solution.

Two very important critical questions was answered with critical analysis
approach

The duration of the project and the cost associated with the project
We committed to do it in 9 months for $15 million for the whole thing - Solvik , CIO
You know, careers are lost over much less money than this - Morgridge, CEO
The board ended up approving the project.

QUESTION 3:
What were the key factors that enabled the
team to implement ERP in 9 months at
Cisco?

The Key Factors

ERP project was made as companys top priority
The IT platform architecture was standardized throughout CISCO
Gave the company high level of flexibility
Virtually all business functions used single applications packages
worldwide

QUESTION 4 :
How did Cisco build their I-Net to
electronically connect with the customer?
Identify the benefits that were enabled by
this initiative.

Electronic Connection with Customers

Cisco.com : A comprehensive web based online resource for information and
network application
BENEFITS:

1. Answer question diagnosed network problems and provide solutions and expert
assistance world wide.
2. Primary vehicle for delivering responsive around the clock customer support and
improve customer satisfaction.
3. Customers express higher satisfaction and enjoy a lower cost of doing a business.
4. Orders could be placed via internet from anywhere in the world
5. Customer could use the application to check their order status.

QUESTION 5:
Identify the main benefits of the strategic INet at Cisco, and estimate the range and
type of benefits you think that they
achieved.

Strategic I-Net at Cisco

Benefit:
1. Employee Self-service
provide centralized access to information tools and resources needed to stream line
processes
facilitate knowledge exchange
maximize employee productivity
2.

3.

Communication & Distance Learning

access training modules form their desktop
tracked information about effectiveness and could be assessed to ensure high levels
of effectiveness as the needs of the company changes
making the company seem closer to each employee
My Yahoo

Executive Information System (EIS) & Decision Support System (DSS)

Used by all sales managers & executives (in their day-to-day process)
Sales tracking and reporting

Ciscos Supply Chain Management

Single Enterprise
New Product Introduction (NPI)
Autotest
Direct Fulfillment
Dynamic Replenishment

Financial Results
FY 1995

FY 1996

FY 1997

FY 1998

2,232,652,000.00

4,096,007,000.00

6,440,171,000.00

8,458,777,000.00

Net Income

456,489,000.00

913,324,000.00

1,048,679,000.00

1,350,072,000.00

Total Assets

1,991,949,000.00

3,630,232,000.00

5,451,984,000.00

8,916,705,000.00

No of Employee

4,086

8,782

11,000

15,000

Sales Growth

105%

83%

57%

31%

Net Income Growth

24%

100%

15%

29%

Asset Growth

93%

82%

50%

64%

Net Sales

Since implementation of ERP Cisco recording an USD 2 billion increase

in yearly sales.
Without the new ERP system Cisco unable to cope with such sales
volume
Their Total Asset increased by USD 6 million with-in 4 years of ERP
implementation
The company also increase their total employees by 300%

Conclusion
Why Cisco ERP implementation was successful?
Implementing an ERP system was the top priority in 1994
Best People was put into this project
Strong partners KMPG and ORACLE
Very Timely and Less Costly

After implementation of ERP, Cisco saved around USD 500 million on overheads per year.
Cisco also managed a write-off of USD 2.5 billion on parts and inventory in its warehouses

The web enabled ERP also benefits Cisco in term of :

Available for 24*7 / 365 days
Improved Customer Service
Research New Markets
Automation of Productivity and Profitability
Customer Feedback
Improved Advertising

Thank you..

Putra Business School / Management Information System / 2014 / Group 4