Cisco Systems, Inc.: Implementing Erp Case Study for Case 2.6
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“Cisco Systems, Inc.: Implementing ERP
Case Summary
Cisco Systems, Inc. was founded in 1984, and became a publicly traded company in 1990. They were a $500 million dollar company running a UNIX based software package to support its core transaction processes. In late 1993, they were constantly fixing their existing IT system, which lead to decreased productivity. The shortcomings of the current system could no longer be ignored and the search began for a replacement system.
Problem Statement
Ciscos legacy environment was quickly deteriorating and being upgraded through an incremental modification approach that left them with a system unable to provide redundancy, reliability, or maintainability.
Analyzing the facts
Within this section, a large collection of facts is listed and superficially analyzed. Later, the important facts will be identified and further examined for content, overall affect, and cause-effect relationships.
Ciscos first year on the Fortune 500 was 1997. During this year, Cisco ranked among the top five companies in return on revenues and return on assets. Even more impressive, on July 17 of the year 1998, about 14 years after Cisco was founded, the companys market capitalization passed the $100 billion mark.
As of 1993, Cisco was using a UNIX based software package to support its core transaction processing. The functional areas supported were financial, manufacturing, and order entry. Cisco, as a company, predicted heavy growth in the near future. This application failed to provide the degree of redundancy, reliability, and maintainability in accordance with the companys significant growth prospects. To make matters worse, in 1994, Ciscos legacy environment failed dramatically. The companys central database was corrupted and the company was largely shut down for two days.
The system failure made it quite obvious to the company that an alternative approach to systems replacement was necessary. Solvik, Pond, and several other Cisco managers discussed implementing a more centralized IT system altogether. The managers eventually decided on the creation of a whole new ERP (Enterprise Resource Planning).
Numerous steps followed pertaining to the implementation of this system, but the first was the identification of an integration partner. KPMG was chosen as Ciscos integration partner for providing support as it pertained to adapting each of the various parts of the ERP system to work together. The next step in the system implementation was the selection of a vendor. The Cisco team selected Oracle as their primary vendor based on several factors, including Oracles willingness to commit to the software package among other reasons.
At $15 million, the ERP project was the single largest capital project ever approved by the company. During phase 1 of implementing the new system, known as CRP0, Cisco began to realize they couldnt avoid modification of the ERP software as it came to them from Oracle. It soon became clear that many changes would be required, and some of them would be substantial. During the later phases of the ERP implementation, project scope eventually expanded to include major modifications and even an entirely new software package for sales support. After implementation, business performance plummeted as users attempted to deal with a new system that proved to be incredibly unstable.
Analyzing Business Model
Within the business context analysis, we found that the environment is quite favorable because of the demand for products that Cisco offers. They are a Fortune 500 company, which ranked among the top five companies in return on revenues and assets, and their market capitalization passed the $100 billion mark in just 14 years.
As for the customer analysis, the rapid growth of Internet technologies caused demand to rise steeply and Cisco dominated the market. Their customer base can only grow, as the demand for Internet technologies will grow with the popularity of it. We have seen the outcome of this today, as the router market is still dominated by Cisco. They are the most visible brand name when it comes to Internet IP technologies.
We found that the case was focused on the internal system of Cisco, and competitors were not the focus, therefore the competitor analysis revealed little. We can only assume there are some smaller competitors, but no real threat to Cisco at this time.
Within the business network analysis, Cisco had a couple of very integral relationships that were fostered and greatly benefited the implementation of the new ERP system. Oracle engineers were brought in to supervise and help implement the new ERP system. Oracle was dedicated to succeed in this implementation, as they were looking for a strong starting point for the newest release of their software system. Also, KPMG was hired to help with selection and implementation of whatever system Cisco chose to implement. They partnered together and experienced staff from KPMG was put on the case, so that the success of implementation would be an asset for both companies.
For the process and infrastructure analysis, we saw that Cisco needed to have only the most qualified individuals working on this implementation. They hand-picked members from different departments throughout the company, looking for only the best and brightest, that would prove an asset to the project. They had a very structured hierarchy for reporting and management. This included the Steering Committee that sat at the top of the implementation pyramid, and were there only to provide sponsorship, ensure visibility and motivate the team. Directly under this committee was the Program Management Office, which functioned as liaisons between the different tracks and the Steering Committee, and also worked together to overcome larger problems and difficulties facing the implementation. The different tracks included Order Entry, Manufacturing, Finance, Sales/Reporting, and Technology, each made up of one or two leads, business consultants, IT consultants, and users.
For the people and partner analysis, Cisco hand-picked the brightest employees for each track, offering them advancement, and a chance to be involved in one of the largest implementations in the companies history. Employees understood what they were walking into by accepting work on this project, and realized it was no small task. Members working on this implementation performed superbly, successfully implementing the most far reaching system in only 15 short months.
Within our organization and culture