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Cisco Systems, Inc.:
             Implementing ERP

             Case Study Analysis by:
             Djadja Achmad Sardjana
                   STMB -Biztel


7/20/2009         DASMR-Biztel: Cisco-ERP   1
Case Facts: Introduction
• Pete Solvik, Cisco Systems ClO,
considered the last remaining line item of
his ERP implementation budget.
• Cisco had a history of rewarding
performance with cash bonuses.
• The amount allocated for rewarding the
ERP team, over $200,000, was
unprecedented.
• To be sure, they had delivered a lot in a
time frame that no one had believed
possible    It had not been easy either.

7/20/2009        DASMR-Biztel: Cisco-ERP      2
Case Facts: Cisco History
• Cisco Systems, Inc.:
   – Founded by two Stanford computer
   scientists in 1984
   – Became publicly traded in 1990.
• By 1997, its first year on the Fortune 500,
Cisco ranked among the top five companies in
return on revenues and return on assets.
• On July 17, 1998, Cisco’s market
capitalization passed the S100 billion mark
(15 times, 1997 sales).
• In 1988, Valentine (One of major
shareholder) hired John Morgridge as CEO.
• Morgridge believed that many Silicon Valley
firms decentralized too quickly     Loosing
Control

7/20/2009         DASMR-Biztel: Cisco-ERP       3
Case Facts: Cisco History




7/20/2009   DASMR-Biztel: Cisco-ERP   4
Case Facts: Cisco IT History
• Pete Solvik joined Cisco in January 1993 as
the company’s new CIO.
• At the time, Cisco was a $500 million
company running a UNIX-based S/W.
                       UNIX-
• Solvik’s initial inclination was to avoid an
ERP solution      planned to let each functional
area make their own.
• Keeping with Cisco’s strong tradition of
standardization       functional areas use
common architecture and databases.
• Solvik’s objection to ERP solutions was also
born out of concerns about the types of
“megaprojects” that ERP implementations
often became.

7/20/2009         DASMR-Biztel: Cisco-ERP          5
Problems:

• Just run over the legacy systems had in
place     Constantly band-aid existing
                     band-
systems.
• The systems replacement perpetuated
the deterioration of Cisco’s legacy
environment.
• January of 1994, Cisco’s legacy
environment failed so dramatically     the
company’s systems were on the brink of
total failure.


7/20/2009      DASMR-Biztel: Cisco-ERP   6
Recommendation:
Selecting an ERP Product
•    Cisco’s realized that implementing ERP would require
     heavy involvement        This could not be an IT-only
                                                    IT-
     initiative.
•    Consistent with the need for a strong Cisco team, the
     company would also need strong partners          KPMG
•    With KPMG on board, the team turned to the software
     market with a multi-pronged approach for identifying
                      multi-
     the best software packages.
•    The team spent 10 days writing a request for proposals
     (RFPs) to send to the vendors       Oracle win.
•    Selection of Oracle was based on three of the major
     decision points:
     –    First, this project was being driven pretty strongly
          by manufacturing and Oracle had a better
          manufacturing capability than the other vendor.
     –    Second, they made a number of promises regarding
          the long-term development of functionality in the
              long-
          package.
     –    The other part of it was the flexibility offered by
          Oracle’s being close by.
7/20/2009              DASMR-Biztel: Cisco-ERP              7
Strategic Questions:

  • How much would it cost?
  • How long would it take?
  • How long should it take to do a
    project to replace all of our core
    systems?
  • As requested by systems
    production, can do it in five
    months?




7/20/2009      DASMR-Biztel: Cisco-ERP   8

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Case Study: Cisco Systems, Inc Erp

  • 1. Cisco Systems, Inc.: Implementing ERP Case Study Analysis by: Djadja Achmad Sardjana STMB -Biztel 7/20/2009 DASMR-Biztel: Cisco-ERP 1
  • 2. Case Facts: Introduction • Pete Solvik, Cisco Systems ClO, considered the last remaining line item of his ERP implementation budget. • Cisco had a history of rewarding performance with cash bonuses. • The amount allocated for rewarding the ERP team, over $200,000, was unprecedented. • To be sure, they had delivered a lot in a time frame that no one had believed possible It had not been easy either. 7/20/2009 DASMR-Biztel: Cisco-ERP 2
  • 3. Case Facts: Cisco History • Cisco Systems, Inc.: – Founded by two Stanford computer scientists in 1984 – Became publicly traded in 1990. • By 1997, its first year on the Fortune 500, Cisco ranked among the top five companies in return on revenues and return on assets. • On July 17, 1998, Cisco’s market capitalization passed the S100 billion mark (15 times, 1997 sales). • In 1988, Valentine (One of major shareholder) hired John Morgridge as CEO. • Morgridge believed that many Silicon Valley firms decentralized too quickly Loosing Control 7/20/2009 DASMR-Biztel: Cisco-ERP 3
  • 4. Case Facts: Cisco History 7/20/2009 DASMR-Biztel: Cisco-ERP 4
  • 5. Case Facts: Cisco IT History • Pete Solvik joined Cisco in January 1993 as the company’s new CIO. • At the time, Cisco was a $500 million company running a UNIX-based S/W. UNIX- • Solvik’s initial inclination was to avoid an ERP solution planned to let each functional area make their own. • Keeping with Cisco’s strong tradition of standardization functional areas use common architecture and databases. • Solvik’s objection to ERP solutions was also born out of concerns about the types of “megaprojects” that ERP implementations often became. 7/20/2009 DASMR-Biztel: Cisco-ERP 5
  • 6. Problems: • Just run over the legacy systems had in place Constantly band-aid existing band- systems. • The systems replacement perpetuated the deterioration of Cisco’s legacy environment. • January of 1994, Cisco’s legacy environment failed so dramatically the company’s systems were on the brink of total failure. 7/20/2009 DASMR-Biztel: Cisco-ERP 6
  • 7. Recommendation: Selecting an ERP Product • Cisco’s realized that implementing ERP would require heavy involvement This could not be an IT-only IT- initiative. • Consistent with the need for a strong Cisco team, the company would also need strong partners KPMG • With KPMG on board, the team turned to the software market with a multi-pronged approach for identifying multi- the best software packages. • The team spent 10 days writing a request for proposals (RFPs) to send to the vendors Oracle win. • Selection of Oracle was based on three of the major decision points: – First, this project was being driven pretty strongly by manufacturing and Oracle had a better manufacturing capability than the other vendor. – Second, they made a number of promises regarding the long-term development of functionality in the long- package. – The other part of it was the flexibility offered by Oracle’s being close by. 7/20/2009 DASMR-Biztel: Cisco-ERP 7
  • 8. Strategic Questions: • How much would it cost? • How long would it take? • How long should it take to do a project to replace all of our core systems? • As requested by systems production, can do it in five months? 7/20/2009 DASMR-Biztel: Cisco-ERP 8