Cisco and The virtual close<br />Opening Vignette<br />http://ebook.achmatim.net<br />
Outline<br />About Cisco<br />The Problems<br />The Solutions<br />Questions and Answers<br />Conclusions<br />References<...
About Cisco<br />Section 1<br />
History<br />
The Problems<br />Section 2<br />
Before Dot-com Bust (2001)<br />Dot-com 1st boom, Cisco’s revenuesgrew at an annual compound rate greater than 60%<br />La...
After Dot-com Bust<br />2001, many telecommunication companies started to fail, demand for Cisco’s products declined drama...
What’s wrong with Virtual Close?<br />John Chambers (CEO) : it allowed the company to track financials and others on daily...
The Solutions<br />Section 3<br />
The Strategies<br />No need to switch product or change business model<br />Lower revenue level strategies:<br />Reducing ...
The Results<br />In 2005, <br />Cisco’s revenues were over $25 billion, net income close to $6 billion.<br />12 percent in...
Questions and Answers<br />Section 4<br />
Question #1. What is the virtual close system?<br />Virtual close is a process which would provide the capability <br />to...
More about Virtual Close…<br />Another term: fast close, one day close.<br />John Chamber (CEO): it enables manager to spo...
How to Achieve Virtual Close?<br />Management & Cultural Changes:<br />Reduction in the number of legal entities to consol...
How to Achieve Virtual Close?<br />Financial System Changes:<br />Adopting a fully integrated financial application system...
Business Benefit of Virtual Close<br />Better decision-making due to timely access to information, decoupled from the fina...
Virtual Close Solution Network Overview<br />
Question #2. What explanation did John Chambers, Cisco CEO, give for the company’s downturn in 2001?<br />It allowed the c...
Question #3. What was Cisco’s strategic response to its financial downturn in 2001?<br />Lower revenue level strategies:<b...
Conclusions<br />Section 5<br />
Conclusions<br />Cisco’s virtual close enabled the company to monitor key indicators of operational or tactical importance...
Reference<br />C CristianWulf, 2006, CFO Insights: Enabling High Performance Through Leading Practices for Financial ERP, ...
Thank you<br />We are AchmadSolichin, Anita Muliawati, AtiZaidiah and SafrinaAmini say…<br />
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Opening Vignete Cisco And Virtual Close (Achmatim.Net)

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Slide about opening vignete of cisco virtual close. This slide is presented by Achmad Solichin (http://achmatim.net, http://ebook.achmatim.net) and friends

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Opening Vignete Cisco And Virtual Close (Achmatim.Net)

  1. 1. Cisco and The virtual close<br />Opening Vignette<br />http://ebook.achmatim.net<br />
  2. 2. Outline<br />About Cisco<br />The Problems<br />The Solutions<br />Questions and Answers<br />Conclusions<br />References<br />
  3. 3. About Cisco<br />Section 1<br />
  4. 4. History<br />
  5. 5.
  6. 6.
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  8. 8.
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  19. 19. The Problems<br />Section 2<br />
  20. 20. Before Dot-com Bust (2001)<br />Dot-com 1st boom, Cisco’s revenuesgrew at an annual compound rate greater than 60%<br />Larry Carter, CFO, worried about financial reporting system could not keep pace with the rapid growth<br />The solution is “Virtual Close”<br />It was taking Cisco 2 weeks to close its financial books.<br />
  21. 21. After Dot-com Bust<br />2001, many telecommunication companies started to fail, demand for Cisco’s products declined dramatically.<br />Overstocked with inventory and lost almost $3 billion, from $80 per share to $8 per share.<br />So, what’s wrong with the virtual close?<br />
  22. 22. What’s wrong with Virtual Close?<br />John Chambers (CEO) : it allowed the company to track financials and others on daily basis, but it didn’t allow to predict the future, especially macroeconomic trends.<br />Cisco was unable to avoid the dramatic economic downturns at beginning of 2001.<br />But, some analyst suggested that the damage to Cisco would have been greater if the VC hadn’t been in place<br />
  23. 23. The Solutions<br />Section 3<br />
  24. 24. The Strategies<br />No need to switch product or change business model<br />Lower revenue level strategies:<br />Reducing operating cost<br />Improving productivity<br />Reducing inventory (up to $2,5 billion)<br />Reducing headcount (20,000 emps)<br />Reducing number of product’s model.<br />Using internal product development, rather than relying product acquisition<br />
  25. 25. The Results<br />In 2005, <br />Cisco’s revenues were over $25 billion, net income close to $6 billion.<br />12 percent increase in sales per year<br />Acquisitions (Linksys) and new products (network security and IP telephony)<br />Cisco is leading the transition to intelligent network environments<br />
  26. 26. Questions and Answers<br />Section 4<br />
  27. 27. Question #1. What is the virtual close system?<br />Virtual close is a process which would provide the capability <br />to determine the financial state of the company with an hour’s notice and <br />to disseminate the information instantly through the company’s intranet<br />
  28. 28. More about Virtual Close…<br />Another term: fast close, one day close.<br />John Chamber (CEO): it enables manager to spot the problems and opportunities at any time. <br />It enables to close books faster.<br />
  29. 29. How to Achieve Virtual Close?<br />Management & Cultural Changes:<br />Reduction in the number of legal entities to consolidate<br />Clearly defined of KPIs<br />Focus on top level results rather than unnecessary details<br />Eliminating interim closes<br />
  30. 30. How to Achieve Virtual Close?<br />Financial System Changes:<br />Adopting a fully integrated financial application systems<br />Deploying an automated financial consolidation system<br />Using an automated, intercompany accounting system, which allows transactions to occur between different legal entities owned by the same company.<br />Leveraging a Web portal for delivery of standard reports<br />Linking a Web portal to an online analytical processing database that allows companies to conduct ad hoc queries and analyses<br />
  31. 31. Business Benefit of Virtual Close<br />Better decision-making due to timely access to information, decoupled from the financial reporting cycle.<br />Managers working from the same set of facts as a result of consistently defining and measuring results<br />Reduced costs from the elimination of manual input and reconciliation <br />Increased top-line potential derived from reducing the time spent closing by 40 to 60 percent, allowing more time for analysis of market opportunities<br />
  32. 32. Virtual Close Solution Network Overview<br />
  33. 33. Question #2. What explanation did John Chambers, Cisco CEO, give for the company’s downturn in 2001?<br />It allowed the company to track financials and others on daily basis, but it didn’t allow to predict the future, especially macroeconomic trends.<br />
  34. 34. Question #3. What was Cisco’s strategic response to its financial downturn in 2001?<br />Lower revenue level strategies:<br />Reducing operating cost<br />Improving productivity<br />Reducing inventory (up to $2,5 billion)<br />Reducing headcount (20,000 emps)<br />Reducing number of product’s model.<br />Using internal product development, rather than relying product acquisition<br />
  35. 35. Conclusions<br />Section 5<br />
  36. 36. Conclusions<br />Cisco’s virtual close enabled the company to monitor key indicators of operational or tactical importance.<br />Effective business performance requires an organization to model and monitor not only its tactics but also its strategies and the assumptions on which those strategies are built.<br />
  37. 37. Reference<br />C CristianWulf, 2006, CFO Insights: Enabling High Performance Through Leading Practices for Financial ERP, John Wiley & Sons, Inc.<br />Zachary Coffin, 2001, The Top Ten Effects of XBRL: The Future of Internet Reporting.<br />An Oracle White Paper, 2008, The Fast Close: Are We There Yet?, updated July 2008<br />Cisco, 2009, Cisco Corporate Overview, http://www.cisco.com<br />KPMG Consulting, 2001, Virtual Close – A Financial Management Solutions.<br />Ghislaine Royer and William R. Horbatt, 2005, The Challenge of Financial Reporting during the 21st Century, Society of Actuaries, April 2005<br />John S. McClenahen, 2002, The Book On The One Day Close, IndustryWeek.Com<br />
  38. 38. Thank you<br />We are AchmadSolichin, Anita Muliawati, AtiZaidiah and SafrinaAmini say…<br />

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