1 Copyright © 2009 Cisco Systems, Inc. All rights reserved. Cisco Public Internet Business...

1Copyright © 2009 Cisco Systems, Inc. All rights reserved.Cisco Public Internet Business Solutions Group

Economics of Collaboration and Green Case Studies and Tools from Cisco

Discussion with FEI Technical Committee

Brian SuckowInternet Business Solutions GroupInnovations TeamDecember 8, 2009

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Today’s Agenda

1. Economics of Collaboration at Cisco

2. Green Shareholder Value Framework

3. Green Business Value Calculators


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Executive Summary

Quantified savings from Cisco’s use of web solutions:– $3.7 B/yr via Web 1.0

– $0.7 B/yr via Web 2.0

Web 2.0 productivity, responsiveness, and flexibility Collaboration also enabling a new business model Green can be green (increasing shareholder value) Collaboration yields many green benefits Cisco tools enable quick assessment of green economics


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Economics of Collaboration at Cisco1


DRAFTCisco Internet Business Solutions (Web 1.0): FY2008 Benefits

$3.7B

SERVICE & SUPPORT

$1,176M

MANUFACTURING

$533M

SALES & MARKETING

$493M

HR & FINANCE

$1,228M

E-LEARNING

$232M

Source: Cisco IBSG, 2009


DRAFTCisco Collaboration Solutions (Web 2.0): FY2008 Benefits

$691M

TELECOMMUTING

$277M

SALES & MARKETING

$25M

REMOTE COLLABORATION

$303M

CONNECTED WORKPLACE

$11M

VIRTUAL EXPERT

$75M



Cisco’s Productivity Journey

Web 2.0Web 1.0

Web 2.0 Collaboration

Solutions:

Ben

efit

s ($

B/Y

r)

5

4

3

2

1

0

FY95 FY00


Transactions CollaborationInformation Sharing Interactions

FY05

$3.7B

FY08

$691M

Web 1.0 Internet

Solutions:

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DRAFTCisco Web 2.0 Collaboration Initiatives:FY08 Benefits and Costs

Initiative FY08 Benefits, $ Million

FY08 Costs, $ Million

Remote Collaboration (TP/WebEx/UC) $378 $75

Telecommuting $277 Included in Remote Collaboration

Specialist Optimization (SOAR) $62 $1

Sales Productivity (NEW) $26 $3

Connected Workplace $13 $2

Deal/Order Acceleration via UC $2 <$0.1

Mac Wiki $4 <$0.1

C-Vision and Video Blogs $10 $0.5

Total $772 $82

In FY08, Cisco Achieved $691M in Net Benefits from Web 2.0 Collaboration Solutions


Net Benefit = $772M - $82M = $691M


DRAFTCisco Web 2.0 Collaboration InitiativesDrive Value: FY08 Benefits

Reduce Costs

Save Time

Speed Process

Transform Business

$239M

$380M

$92M$61M $772M $82M

$691M

Total Benefits

Costs Net Impact


Cisco FY08 Impact($ Million/Year)


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Situation /Challenge

Globalization and outsourcing driving need for greater collaboration

Customers and partners expect improved responsiveness

Travel budgets increasingly constrained

Solution Deployed 300+ TelePresence rooms

Provided employees with web confer-encing (WebEx), desktop video (UC)

Result Reduced travel per employee by 31% in FY08 vs. FY06 baseline (before TelePresence)

Faster sales cycle and improved win rate increased contribution margin by $91M in FY08

Remote Collaboration

Increased interactions with customers

Higher quality of life Reduced greenhouse

gas emissions

Benefits

Travel expense savings of $226M/yr

Time savings of $61M/yr

Result

Sources: Corporate Affairs, TelePresence IT, Finance; Cisco IBSG, 2009


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Many employees don’t live near Cisco office

Globalization driving need for greater collaboration across distances

Increasing concern with sustainability & minimizing impact of unneeded travel

Solution Cisco policies enable some employees to telecommute full-time. Others permitted to telecommute occasionally.

All employees have Unified Communications, web conferencing (WebEx), VPN

Result Average Cisco employee now telecommutes 1.7 days/week (2.3 in U.S.)

70% of time saved is spent working, and 30% goes to personal time

Telecommuting

Increased ability to hire and retain expertise

Higher employee satisfaction

Benefits

Time savings of $277M/yr for Cisco

Commute cost savings of $43M/yr for employees

Result

Sources: Cisco IBSG, 2009; Workplace Resources, IT


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Specialists are critical to sales process

Account coverage constrained by limits on specialist resources, ability to scale

Delayed access lengthens sales cycle

Solution Offload routine support tasks with rapid response (Tech Support Network) and self-help tools (reference database, WebEx Connect community)

Shorten cycle time with regularly scheduled virtual product demos

Increase high-value interactions using expertise locator and remote collaboration capabilities

Result 45% increase in specialist interactions with customers in Canada, Commercial

9 - 14% specialist productivity increase

Specialist Optimization (SOAR)

Improved market coverage

Scaled expertise Increased customer

face time

Benefits

Specialist time savings of $12M/yr

Increased margin of $50M from reducing sales cycle

Result

Source: Cisco AT Sales, VTG CBT; Cisco IBSG, 2009


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Traditional offices usually don’t foster effective collaboration

Individually assigned workspaces are typically inefficient, with low utilization

Solution Connected Workplace provides flexible environment that improves employee collaboration and productivity

Open environment requires less space per employee, reducing real estate and energy consumption

Result Already implemented for 3,360 employees in several buildings on Cisco’s San Jose campus

FY08 savings were $12M/yr in real estate plus $0.7M/year in energy, on initial investment of $15M

Connected Workplace

Sources: Cisco IBSG, 2009; Workplace Resources

Reduced real estate Improved collaboration Reduced energy and

greenhouse gas emissions

Benefits

Real estate savings of $12M/yr

Energy savings of $0.7M/yr

Result


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Cisco: 5,000 Apple Macintosh users

No dedicated Cisco IT support

Productivity impact for users needing support

Solution Common wiki portal for Mac users, with distributed editing

Provides community-based instructions, resources, tips

Approx. 10,000 unique visitors/month

Result Improved productivity for Mac users

Avoids approximately $1.6M in annual help desk costs

Improves productivity with increased uptime—$2.6M annual value for Cisco

Mac Wiki

Sources: Cisco CCOE; Cisco IBSG, 2009

Distributed user-generated content

Community-based updates and maintenance

Benefits

$1.6M/yr savings in help desk costs

$2.6M/yr in user time savings

Result


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Project and knowledge worker teams increasingly distributed globally

Face-to-face meeting time limited by travel-cost restrictions, productivity imperatives

Use of Cisco’s video production studios is expensive

Solution Show and Share social video system provides capability to create and publish informal, engaging messages via video and audio / photography

Scales solution from John Chambers’ video blog to all Cisco managers

Result $1M/yr savings from self-service video production (versus Cisco studio)

$9M/yr training/recruiting savings from reduced involuntary employee attrition

Cisco Show and Share

Sources: Cisco CCOE; Cisco IBSG, 2009

Improved executive communications

Accelerated information sharing

Benefits

$10M/yr in cost savings Increased employee

satisfaction, alignment with corporate strategy

Result


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Best Initiatives Combine Multiple CapabilitiesFocus Enhance existing collaboration

activitiesEstablish new ways of collaborating

Transform the organization

Description Personal Productivity

Remote Collaboration

Process Acceleration

Expert Access

KnowledgeSharing Communities Boards

Remote Collaboration (TP, WebEx, and UC)

****

Telecommuting **** ****Specialist Optimization (SOAR)

**** **** **** **** ****

Sales Productivity (NEW) **** *Connected Workplace **** ** **Deal/Order Acceleration via UC

**** *

Mac Wiki ** **** ****C-Vision and Video Blogs

**** ****

Collaborative Mgmt. (30 initiatives)

**** **** ****



DRAFTCollaboration in Action: 1 → 30 Priorities

“Speed / Scale / Sustainable Differentiation”

2001–2005Command / Control

2006Councils / Boards

2008+Enterprise-Wide

Collaboration

1 Priority Per Year 2 Priorities Per Year 30 Priorities FY09Enterprise Service ProviderCommercial BPOC

Emerging Markets Services Model

10 people10 people 500-2500 people500-2500 people40 people40 people


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Green Shareholder Value Framework2


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Key Green Trends Impacting Businesses

Energy prices are driving need for improved efficiency

Regulations are compelling businesses to change practices

Shareholders are increasing pressure for accountability

Competitors are establishing leadership positions

Customer attitudes, behaviors, and preferences are shifting



DRAFTIncreasing Consumer Concerns About Global Warming…

Major Concerns of Worldwide Public

Sources: Nielsen, “Climate Change and Influential Spokespeople,” 2007; Cisco IBSG, 2008

October 2006 April 2007

12% Terrorism13% Crime

8% War

16% Global Warming

6% Immigration

15%14%13%11%7%6%

39%

34%32%

41% The Economy

37% Health

30% Job Security

14% Political Stability

Global Warming Concern

More than Doubled in Only 6 Months


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…And Willingness to Change Behavior

Source: BBC World Service Climate Change Poll, 2007

NorthAmerica

Europe

Asia

55%

56%

82%

83%

95%

43%

69%

81%

86%

93%

76%

86%

28%

14%

16%

17%

30%

13%

14%

41%

28%

16%

12%

6%

22%

12%

5%

3%

1%

3%

3%

2%

1%

2%

2%

4%

India

S. Korea

Indonesia

China

Philippines

Russia

Germany

Great Britain

Spain

Italy

United States

Canada

“I am willing to make significant changes to the way I live to help prevent global warming”

Agree DisagreeDon’t Know


DRAFTFour Green Strategies Maximize Business Opportunities

Regulatory Competitive Physical Reputation

Vertical integration

Renewable energy

Carbon credits Technology-

enabled business models

Expanded green offerings

Initiatives to help customers become green

Green brand building

Energy efficiency

Asset utilization

Efficient communica-tions

Networked solutions

Increase Profitability and

Shareholder Value

Enter New Businesses

Mitigate Risks

Differentiate Existing Business

Reduce Operating

Costs



DRAFTRange of Enterprise Green Strategies Retail Industry

Wal-Mart

M&S

Tesco

HomeDepot

Increase Profitability and

Shareholder Value

Enter New Businesses

Mitigate Risks

Differentiate Existing Business

Reduce Operating

Costs

Starting to focusMain focus Substantial focusSource: Cisco IBSG, 2008


DRAFTCost Reduction Example: Tesco Reduces Energy Use by 45%

Higher-efficiency lighting

Low-energy fans

Cold air retrieval systems

Timers and motion detectors on lights

High-efficiency refrigeration

Accountability for energy consumption given to store managers

Employee awareness raised through green campaigns

Energy Usage (kWh/ft2/year) Energy-reduction Initiatives

Sources: Tesco Corporate Responsibility Review, 2007; Tesco CDP5, 2007

151146.5

133.8

122.4117.3

111.5

95

83

0

40

80

120

160

1990-2000

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

-45%


DRAFTDifferentiate Example: Give Customers a Green Experience

Situation Shoppers want proof of green claims

Innovation Use scanning and mashup technologies to deliver green information

Examples Japanese CPG firm Kewpie puts QR codes on baby food containers Dole uses codes on organic fruit so customers can enter numbers

into a Website and see the farm of origin using Google EarthSource: Cisco IBSG, 2008


DRAFTDisrupt Example: New Store Formats and Video Interactions

Situation Public resisting big-box stores Higher carbon footprints / longer trips Widespread adoption of broadband and

desktop video

Innovation: New store formats Make best-selling products available via

small stores, kiosks, or home delivery Use video to offer remote sales expertise

Examples Staples: Video access to remote experts

help customers with specialty services Monabanq: Clients use desktop video to

meet with dedicated financial advisers

Sources: Chain Store Age, 2008; Bank Technology News, 2008


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Green Business Value Calculators3


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Green Can Be Green

Many organizations are concerned that going green is going to increase their costs and that it is difficult to assess green projects.

Cisco has found that many of our existing solutions have a significant impact on reducing greenhouse gas emissions, while at the same time reducing costs.

Cisco has developed Green Business Value Calculators that help customers quickly quantify economic and green benefits.


The investment payback period for most customers is very rapid (many are less than two years), making these solutions highly attractive even where green considerations are not paramount.


DRAFTPotential Impact on 10,000 Employee Organization

GHG Emissions, 1,000 metric tons CO2e/year

Costs Benefits

Solution Before After (Medium)

Reduction Initial$ M

Ongoing$ M/yr

One-time$ M

Ongoing$ M/yr

Connected Building• Offices 27.8 23.6* 4.2 $7.8 $0 $0

$1.9

Connected Workplace• Offices 23.6* 17.8

5.8 $74.1 $0 $187.1 $10.8

Remote Collaboration• Business Travel 51.7 41.5 10.2 $8.3 $6.6 $0 $23.4

Telecommuting• Commuting 25.4 17.2 8.2

Included in Remote Collaboration $0 $10.2

Total 104.9 76.5 28.4 $90.2M $6.6M/yr $187.1M $46.3M/yr

*Note this value is after implementing Connected Building, but before implementing Connected Workplace, and is not part of the total.

Summary - Combined Potential Impact of These Four Solutions:• 27% greenhouse gas emission reduction• Ongoing net benefits of $40M/yr on an initial investment of $90M• One-time return of $187M in real estate



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