Case Analysis: Cisco Systems: Presented by Group 4

CASE ANALYSIS: Presented by Group 4
CISCO SYSTEMS
CASE SYNOPSIS: WHAT THE CASE
IS ALL ABOUT
Cisco Systems development of an ERP – Enterprise Resource Planning system in the
company
Performance bonus allocated - $200,000
Case reviews Cisco’s system approach to implement Oracle’s ERP software product
Analyses the critical factors and obstacles faced while implementing ERP
CASE SYNOPSIS: ABOUT THE
•
COMPANY
Founded in 1984 by two Stanford scientists and offered for IPO in 1990
• Primary product – router and in 14 years, market cap crossed $14 billion mark
• Don Valentine, the VC who invested in Cisco – bought in John Morgridge as CEO in 1988
• Morgridge believed in Centralization. Product Marketing and R&D were the only verticals
which were decentralized
• Pete Solvik – CIO in 1993 – felt that expansion was the way to go (avoided ERP but had to
follow Morgridge’s Centralization approach)
• Solvik let each functional area (amongst Financial, Manufacturing, Order entry system) make
its own decision regarding the application and timing – to avoid ERP
CASE SYNOPSIS: WHAT
TRIGGERED THE CHANGE TO
ERP
● Traditional transactional processing system – involved in series of system outages and
deterioration of legacy environment
● In Jan 1994, legacy environment failed so dramatically (corruption of Cisco’s central

database) that company was almost shut for 2 days
● Decision: too long for the applications to get in place from separate implementation
CASE SYNOPSIS – GETTING
ONBOARD WITH ERP
● Requirement of skilled people business didn’t want to forego and KPMG as an integration
partner ( prerequisites: technical skills, business knowledge)
● Team of 20 formed to identify the best software packages. Narrowed down to Oracle and
another major player.
● Selection of Oracle:
 Strong manufacturing capability
 Long term development
 Flexibility
● Expected cost: $15 billion and time duration: 9 months

CASE SYNOPSIS: THE
●
IMPLEMENTATION TEAM
Appointment of KPMG’s seasoned personnel
● Expansion of team size to 100 from a meager 20
● Team comprised of: Cisco Information Systems, Cisco Business Leader, Business and IT
Consultants
● Managed by: Cisco and KPMG’s project managers
● Headed by Executive Steering Committee: VP Manufacturing, VP Customer Advocacy,

Oracle’s senior VP of applications, Partner’s in charge of West Coast consulting for KPMG
CASE SYNOPSIS:
IMPLEMENTATION
Rapid iterative prototyping through conference room pilots (CRPs)
CRP0: Training the implementation team and setting up technical environment
Majority in immersion training, rest in tiger team
Result: cannot use unmodified software
CRP1: To make the system work for specific areas
Result: huge numbers of business processes that the software couldn't support
CRP2: project scope expanded to include major modifications and a new after sales
support package
Point to point approach to data warehouse for single sourse of information
CRP3: Test the full system and assess company’s readiness to go live.
CASE SYNOPSIS : CUTTING
OVER TO ORACLE
Overall business performance plummeted
System was very unstable; crashed once a day
Problem with hardware architecture and sizing, additional purchase averted as
hardware vendor expected to deliver capacity not units
Tests had not been simultaneous, they had been of individual transactions
System stabilised after two months
WHAT IS ERP?
● What is ERP?
● How ERP works?
● Benefits of ERP
● Challenges for implementing ERP
DETAILED ANALYSIS
● What factors made the difference between success and failure
● Where had they been smart
● Where had been lucky
● Could they do it again

HISTORY OF CISCO
● Founded by two Stanford computer scientists in 1984
● In 1990, both founders sold all of their stock and left the company
● Entered fortune 500 in 1997
● Cisco's market capitalization passed the $100 billion mark in 1998

DEFINING MOMENT
● Systems replacement difficulties of functional areas deteriorated Cisco’s legacy
environment
● Systems outages became routine
● In 1994 company was largely shutdown for two days
● Autonomous approach was not sufficient!
● An alternative approach was needed

SELECTING AN ERP PRODUCT
● Acquired the best people
● Chose KPMG as the integration partner
● Narrowed down the choice to 5 software packages within 2 days
● Each vendor was invited for three days software demonstration
● Finally oracle was chosen

GOING TO THE BOARD
● Before going to the board for approval two important questions needed to be answered-
 How long would it take?
 How much would it cost?
● Total time and cost for the project were expected to be 9 months and $15 million
respectively
● The project was approved by the CEO and then the board too
BUILDING THE
IMPLEMENTATION TEAM
● Relationship with KPMG was extended to implementation team
● The team had to expand from the core 20 members to about 100
● Team members from Cisco were placed onto one of five tracks
● These tracks were managed by a Project Management Office
● At the top was an Executive steering Committee

IMPLEMENTING ORACLE
● Rapid Iterative Prototyping strategy was employed.
● 4 CRPs were used.
● Learning from each CRP stage was propagated to the next stage.
 CRP0 involved brainstorming of ideas.
 CRP1 shifted focus to increased documentation and identifying gaps betwwen legacy and ERP BPs.
 CRP2 involved finishing all the pending developments and implementing after sales package as well.
 CRP3 involved final dry run (pilot test).
● At the top was an Executive steering Committee to decide on Red (high priority/highly
time consuming/ high customizing BP gap)
PRODUCTION DEFECTS AND
RESPONSE
● Incompatible H/W architecture to support the Oracle database (servers maybe?)
● Long query time.
● Strong customer support from Oracle, H/W vendor and KPMG consultants.
● Extra long hours of effort were put in by the top brass for taking strategic decisions.
● Stabilised in three months.

THANK YOU

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CASE ANALYSIS: Presented by Group 4

Performance bonus allocated - $200,000

● In Jan 1994, legacy environment failed so dramatically (corruption of Cisco’s central

 Long term development

● Expected cost: $15 billion and time duration: 9 months

● Expansion of team size to 100 from a meager 20

● Managed by: Cisco and KPMG’s project managers

● Headed by Executive Steering Committee: VP Manufacturing, VP Customer Advocacy,

● Where had they been smart

● Where had been lucky

● Could they do it again

● Founded by two Stanford computer scientists in 1984

● Entered fortune 500 in 1997

● Cisco's market capitalization passed the $100 billion mark in 1998

● Systems outages became routine

● In 1994 company was largely shutdown for two days

● Autonomous approach was not sufficient!

● An alternative approach was needed

● Acquired the best people

● Chose KPMG as the integration partner

● Narrowed down the choice to 5 software packages within 2 days

● Each vendor was invited for three days software demonstration

● Finally oracle was chosen

● These tracks were managed by a Project Management Office

● At the top was an Executive steering Committee

● 4 CRPs were used.

● Long query time.

● Stabilised in three months.

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