Cisco Systems Case
Essay Preview: Cisco Systems Case
Report this essay
Cisco Systems, Inc. is the leader in the networking and communication devices technology industry. With a market capitalization of $ 111.15 billions and a quarterly revenue growth of 0.05, Cisco has exceeded its growth expectations. This success could not have been sustainable without the implementation of an Enterprise Resource Planning (ERP) system in 1994. ERP is a valuable tool for companies at it helps them achieve a desired level of global integration.
Before 1994, Ciscos IT infrastructure consisted of a UNIX-based software package that supported the companys core transaction processing and the functional areas of finance, manufacturing and order entry systems. This system is adequate for small companies ($50 to $250 millions in revenue) but can not support the needs of a fast growing business. The system failed to provide the degree of redundancy, reliability and maintainability Cisco needed. In addition, modifications of the legacy system to accommodate the business needs were impossible. Cisco recognized that an ERP system has all these capabilities and beyond. As a result, Cisco casted off all its legacy system at once to install an ERP system across the entire company. This Big Bang strategy was costly and massive but necessary to align the information systems to the needs of the company and support its business model of the business. Considering the nature of the industry cisco performs in and a business model which focuses on global networking, the implementation of an ERP system made sense. Importantly, ERP allows for the integration of IT within the core business processes of the company. In addition, ERP ties all departments in a company together into one common system, as well as the company to its suppliers, customers and partners on a global level to share data and visibility. The flow of information is essential for Ciscos ability to operate on a global platform and improve its supply chains. This system offers several benefits that can support Ciscos business model including business process automation, timely access to management information and improvement in the supply chain via the use of E-communication and E-commerce. In addition, this system is consistent with Ciscos tradition of standardization as ERP enable standardization of business processes which results in higher levels of efficiency and greater ability to enact best practices. As a result ERP can help companies better understand their business, customers and environment which can enhance their competitive advantage.
However, a company may not realize the full benefits of an ERP system if it is not ready for integration or does not have the proper structure to implement the system. The successful implementation of ERP at Cisco was attributed to several factors. Importantly, Cisco recognized their problems and need for an ERP system to sustain their growth. The ERP project was not an IT-only effort, it was essential to integrate all departments. Thus, cross-functional teams including Ciscos best and brightest were formed. Employees were effectively trained, engaged and committed to the project. In addition, the vendor was diligently chosen to ensure the product and services meet Ciscos business needs and provide them with the flexibility needed. Cisco formed strong strategic alliances with the vendor (Oracle) and consultants (KPMG). The expertise and commitment of Oracle and KPMG were paramount to a successful implementation. Importantly, the contract with Oracle was based on promised capabilities, a cost-conscious decision. The project was also a high priority and was supported by Ciscos senior management and executives. The requirement that the ERP be installed with limited customization was also essential to achieve the expected benefits ERP offers. It is noteworthy that the creation of a centralized data warehouse was the most significant modification occurring during the ERP implementation process. Altogether, these factors contributed to the timely and in-budget implementation of the ERP system. The latter was tested during the third phase of implementation on a small set of data corresponding to a full day of business activities, and by each track separately. While the test was successful, several problems emerged following the implementation. The instability of the system resulted in a reduced business performance. In addition, the database lacked capacity to process the required transaction load/volume within Ciscos environment. Several initiatives could have pre-vented these issues. A bigger volume of data should have been used to assess the capacity of the system. In addition, the system should be tested in a more integrated manner and with a fully loaded database. It took three months to solve the problems, stabilize the system and add capacity to the system. At that point, the ERP system could support