CISCO SYSTEMS, INC.Implementing ERP

Hector OceguedaThe Contemporary FirmDr. Minder ChenMBA – November 2010

CORPORATE HISTORY• Founded in 1984 by Len Bosack & Sandy Lerner, Stanford computer scientists.• Creators of the Router.• By 1997 Cisco was ranked among the top 5 in Return on Revenues and ROA by Fortune 500.• By 1998 its market capitalization reached the 100 billion mark just behind Microsoft and Intel.• Don Valentine, venture capitalist hires John Morgridge as CEO.• Cisco becomes public in 1990, original founders depart from company.

HISTORY OF IT @ CISCO• Peter Solvik joined Cisco in 1993 as the

company’s new CIO

• Cisco was a 500 million Co. running a UNIX based software package to support Manufacturing, Finance and Order Entry systems.

• Solvik’s experience and company’s significant growth prospects convinced him that Cisco needed a change.

DEFINING MOMENTS• Richard Pond, Director of Manufacturing was concerned in regards to the current legacy systems, system outages became routine.

• Legacy Environment fails dramatically.

• Solvik, Pond and other managers concluded that another approach was needed.

SELECTING THE ERP PRODUCT

- Consistent with the need of a strong Cisco team, the company would need strong partners and vendors.

- Mark Lee, PM for KPMG helped select the ERP product.- The team’s strategy was to build as much knowledge as possible.

ORACLE’S ADVANTAGE VS. OTHERS

1.Better manufacturing capability.

2. Deep commitment for long-term development of functionality of the product.

3. Flexibility offered by Oracle’s being close by.

GOING TO THE BOARD

- Cisco had little choice but to move.- We replace our current systems with one ERP solution.- Commit in a time frame between 5 to 12 months.- At 15 mil. the single largest capital project ever for Cisco.- The board ended up approving the project.

Software16%

System Integra-

tion 38%

Hardware32%

Headcount14%

$15 MILLION BREAKDOWN

PROCEDURE DATE

Project Kickoff June 2, 1994

Prototype Setup Complete July 22, 1994

Implementation Team Training

July 31, 1994

Process, Key Data, Modification

August 31, 1994

Functional Process Approval September 30, 1994

Hardware Benchmark & Cap. Planning Validated

October 15, 1994

Critical Interfaces, Modifications & Reports

December 1, 1994

Procedure & End User Documentation Complete

December 16, 1994

Conference Room Pilot Complete

December 22, 1994

End-User Training Begins January 3, 1995

Data Conversion Complete January 27, 1995

Go Live!! January 30, 1995

IMPLEMENTATION DATES

BUILDING THE TEAM- Increase from 20 to 100 team members.- Team divided in tracks, and supervised by personnel from KPMG & Oracle.

Executive Steering Committee

Program Management Office

Order Entry Track

Manufacturing Track

Finance TrackSales/

Reporting Track

Technology Track

Business Lead Business Lead Business Lead IT Lead IT Lead

IT Lead IT Lead IT LeadBusiness

ConsultantsBusiness

Consultants

Business Consultants

Business Consultants

Business Consultants

IT Consultants

IT Consultants IT Consultants IT Consultants

Users Users Users

IMPLEMENTING ORACLE- STRATEGY: Conference Room Pilots (CRP)

CRP0OBJECTIVE: Training the implementation team on the Oracle application and setting up the technical environment.

CONCLUSION: Cisco would not avoid modification of the ERP software, some changes would be require to fit its business.

CRP1OBJECTIVE: Making each track made the system work within their specific area.

CONCLUSION: There were huge number of business processes that the software could not support which led to unplanned changes in the project plan and budget.

CRP2OBJECTIVE: Expanding project scope to include major modifications, and a new aftersales support package.Utilizing data warehouse would allow all of Cisco applications to access a single course for their information needs.

CONCLUSION: Deepening its understanding of the Oracle and service packaging.

CRP3OBJECTIVE: Testing the full system with a full transaction load and all users involved and assessing the company’s readiness to GO LIVE.

CONCLUSION: Ready for Cut-over!

CUTTING OVER TO THE ORACLE

- Performance plummeted as users dealt with a new system.

- The Hardware architecture and sizing.

-The ability of software itself to handle the transaction volume required in the Cisco environment.

AFTER STABILIZATION-Problems proved to be short lived.

- 3 months to stabilize system w/addition of capacity.

- New information system would fulfill and support the rapid growth of the company.- Big Celebration party and a bonus of over 200K for the team!

ANALYSIS AND CONCLUSIONRISKS- Very complex project.- Limited time for implementation vs size of ERP system.- Invest heavily in a new ERP system.- Insufficient testing due to very few data.SUCCE

SS- Efficient decision making.- CRP phase procedure helped revise and improve their decisions.- Selection of effective professional partners like KPMG.- Effective team management contributing on meeting deadlines on such a tight schedule.- Efficient modifications and re-engineering to fit the system for better performance.

QUESTIONS- Which functions did Cisco’s previous application package supported mainly?a) Project Marketing, R&Db) Supply Chain Managementc) Manufacturing, Finance, Order Entryd) Purchasing, Inventory Control

- Which was NOT an advantage from Oracle to implement Cisco’s ERP system?e) Better manufacturing capabilityf) Development and functionality of the productg) Proximity to the company’s headquartersh) Largest vendor interviewed

- Mention which Conference Room Pilot (CRP) had to include major modifications to the overall ERP project?

i) CRP2j) CRP1k) CRP3l) None of the above