Cisco implemented an ERP system early in its development to align its IT infrastructure with its integrated business strategy and goal of becoming the leading architect of integrated global networks. By standardizing its business processes on an ERP platform, Cisco aimed to efficiently execute its strategy of assembling a broad product line, systematically acquiring companies, and setting industry standards. Implementing ERP allowed Cisco to design and test its own state-of-the-art integrated network first, proving its capabilities and competitive advantage to become the industry leader in global networking.

1. Olga Alcaraz
MIS 5202 - IT Governance
Why would Cisco bet the company on implementing an ERP system early in their development?
How did it support their business strategy? What were they trying to achieve?
To answer above stated questions let's take a look at Cisco's history. At the early stage of
company's existence Cisco defined itself as "Internet experts: the Global Internet Company"(Page 1).
Cisco's core technology began with routers which " acted as multilingual translators connecting
disparate computer networks around the world" (Page 1) and with digitization of major networks
such as "networks for voice, local-area and wide-area networks for data and broadcast networks for
data"(Page 1) the company was facing "new competitive battleground" (Page 1). The Internet became
"a global network of networks" and opened up brand new business opportunities. The predictions of
Internet's industry super growth were very promising. At that time Cisco found itself to be "better
equipped to address performance and security issues" (Page) than majority of its competitors, however it
did not have the product to become a leader of the industry. According to theories of innovation by
Clayton M. Christensen, if customer group who needs the technology features but do not have them yet
is known, or if people who would use the technology when it gets more affordable exist, than there is a
very high potential for innovation to change the industry. Cisco's management understood that it was
time to make it or break it, in other words to start moving faster to get into the lead or forever forget
about wining. The brand new Internet market was in front of them, however they needed to find
competitive advantage on that market through its business strategy along with innovation to become
leaders.
The very first thing, that Cisco's management decided on, was company's operating model. The
level of integration and standardization of business processes became the foundation for strategy
execution. CEO Morgridge maintained centralized functional organization because he did not want to
sacrifice control during high levels of growth (Page 3). He saw strong stabilizing benefits in consistency
of strategic goals (Page 3). Cisco's goal was to become a lead architect of the integrated global network
and for that it needed to be part of that network. Therefore integrated but not standardized operating
model gave a birth to integrated but not standardized business strategy: "Assemble a broad product
line so Cisco can serve as one-stop shopping for business networks,Systematize acquisitions as an
efficient business process, Set industrywide software standards for networking, Pick the right
strategic partners"(Page 3). On the way to its strategic business goals Cisco found its IT infrastructure
completely failing the strategy execution because IT was not aligned to operating model or business
strategy. Something needed to be done to resolve that problem and it needed to be done fast. Like in
any race, competitors will not wait for anybody to catch up. The integrated ERP solution seemed like
the perfect choice for integrated business strategy. In order to sell the product they needed to execute
and test it before mass production, and redesigning its own IT infrastructure to create the best existing
integrated network became risky but very rewarding choice. Of course, ERP solution did not come to
Cisco's management as the only option, however very smart people made very smart decision at the
right time. Cisco had major advantage facing growth potential of Internet industry and its management
took ERP implementation risk to gain competitive advantage which paid off at the end.
Cisco wanted to become a leading architect of integrated global networks. The company achieved
its goal by designing its own state of the art network with its further successful implementation to
prove the rest of the industry that they have resources and intellectual power to help them to do the
same. Seems like a perfect business strategy to me, not without some luck along the way of course!