Cisco ERP implementation Cisco Systems Cases Cisco Systems is one the most important successful cases on an ERP implement with the internet and since then it has added substantial CRM capabilities for customer service and an extensive portal for internal and customer-oriented knowledge management. Even with its lead, the company never rests: It recently went through another round of reengineering key processes to make better use of available technology. Cisco the company Cisco System, Inc. as founded in 1984; became public in 1990, their primary product is the “router” hardware & software that control Intranet & Internet traffic. The rise of the Internet made Cisco one of the top companies, a company that has been growing by acquisitions. With the rise of Internet technologies demand for Cisco’s products boomed and the company started to domain the market. In 1997 Cisco ranked among the top five companies in return on revenues and return on assets, 1998 just 14 years after being founded, Cisco market capitalization passed the $100 billion.
Initial situation: Cisco relied on Unix-Based software package to support its operations: Financial, Manufacturing & Order Entry, the system lacked reliability and the ability to expand. At that point, the CIO knew that they needed a change however; he wanted to avoid an ERP project. The first approach used was that each functional area would determine when and how it would be upgraded. This approach did not help, little progress was made, up to the point that the systems had put Cisco out of operation for over two days.
This was the point where Cisco realized that a simply “Band-Aiding” the system was not going to work; an ERP project was the only way. Cisco’s process: * An Investigation team was put together * Regardless of what they did, it had to be quick (Big-Bang) and as simple as possible (Standardization) * Selecting an ERP Product * Internal Involvement o Requires people from all areas of the business community External Involvement o Strong partnership to help the selection and implementation o KPMG became their key partner, because they were most experienced in the industry Selecting an ERP Product Information search o Build on the experiences of others. Decision speed was key due to its emergency. o Oracle o Emphasis on manufacturing * Promises:long term development based on the functionality of the package, this was a key factor for Cisco’s success. The promise was not only on a product in was on the capability of this product. o Flexibility since Oracle was close to them When it was time to go to the board key questions had to be answer such as cost and time. The board adopted the decision with a committed of 9 months of implementation and a total cost of $15 million.
Lesson Achieved The “Big Bang” implementation forced Cisco to make things happened, they did not have another option, the company was out of business and they were forced to make the system work. Time was reduced due to its condition and its pressure. Personal argument is that other companies would not use the same tactic, or companies should not wait to be on this situation to implement an ERP system, a simply mistake on the process can easily take them out of business, due to its vulnerability.
What was done right was the execution, strong support and the ability to relay on the capacity of a system and not on the systems promises. This made Cisco saved cost of implementation, maintenance and upgrading the system. However, the real cost of implementation, was not what it was expected, because the downtime of the system was not taken into consideration and other hidden costs, it assumes that the real cost was $ 39 million without taking into account the downtime. What went wrong was: Training
Immature software This was Oracle’s first major implementation of a new software release, so there was a lack of experience. – 26 – Software did not provide all the functionality Cisco required “off the shelf”. Many modifications were required. Lessons learned When the system did go live, Pete Solvik, Sr VP and CIO, said: “I wouldn’t say the company hit the wall, but I would say we had major day to day challenges. ” On average, the system went down nearly once a day until it was stabilized two months later.
The origins of these difficulties could be traced to Cisco’s task rather than business process approach. The implementation team was organized in functionally rather than by process. – Reengineering ERP: Business Processes and Personal Dynamics, May 21, 2001 The project was kicked off on June 2 and went live on January 30, 1995. It succeeded because of the stature of Cisco. The Cisco IT staff, Oracle, HP, and KPMG dedicated almost unlimited resources to insure the project would be completed within Cisco’s time frame. – Reengineering ERP: Business Processes and Personal Dynamics, May 21, 2001 The urgency dictated implementation on an unrealistic basis within almost any other corporate environment. “I call it a 1 per cent effort that gave us 80 per cent accuracy… as opposed to a typical ERP approach, where you go off for six months, and overanalyze it to death. ” – Solvik Cisco CEO. Cisco incorporated their existing tasks within their new ERP system, not framing the design system within carefully planned, desired processes.