Case Study 2: Cisco Systems, Inc- Implementing ERP

MSIT3410‐01

Case Study 2 – Cisco Systems, Inc: Implementing ERP

Questions：

1.At the start of the case, Cisco’s information systems are failing, yet no one steps forward to lead the effort to replace them. Why is this? Why were no managers eager to take on this project?

A: If Cisco wanted to replace the existing legacy systems, the systems in each functional area must change accordingly. Because implementation a new system would cost a lot of money and take long time to be realized, no one was individually going to take on this project. Therefore, none of managers would like to throw out the legacies and do something big.

Cisco was highly successful with its enterprise resource planning (ERP) effort. What accounts for success? What were the most important things that Cisco did correctly?

A: Cisco had a clear understanding of its strategic goal. Cisco clearly defined their goal and made strategy at the beginning. It started with how they went through the decision process and ended up with Oracle as their vendor. The first step in the right direction was partnering with KPMG. The project also got strong support from top management commitment. After bringing in KPMG and making Oracle the choice vendor, Cisco started by choosing their implementation team. This was a key factor on how Cisco was going to work with the software itself. After assembling the teams fully Cisco conduct these Conference Room Pilots or CRPs for different phases of the project.

Did Cisco do anything wrong on the project? If so, what?

A: Yes. There are some problems. Overall business performance plummeted as users attempted to deal with a new system that proved to be disturbingly unstable. On average, the system went down nearly once a day. The primary problem were the hardware architecture and sizing.

We often hear that senior management commitment is important for projects like Cisco’s ERP implementation, but senior management commitment to do what? What can top managers to do to maximize chances for success here?

A: Firstly, Cisco received top management support from the very beginning of the project. Top management support reduces stakeholder problems. Secondly, the teams from Cisco, KPMG and Oracle blended as one part. The success of Cisco in this project is also attributed to the decisions from top managers regarding timing and access to resources.

Top managers also did a great job in leadership, planning, and contract negotiation. Formation of a cohesive team that was fast in its acting led to the success of the project.Besides, the team got indispensable support from the Top Management. The initial planning and analysis of project scope, partners, and vendors was the reason that the project was successful. Cisco found the best people for the job and what they received in return was the unsurpassed service from each of their partners.

Cisco went live with ERP in a big bang fashion, which is inherently risky. How did Cisco mitigate this risk?

A: The big bang fashion Cisco used to go live with ERP was risky, but Cisco had complete control and lowered the risk. They may have taken a shorter amount of months to go live with the system, but the hours that the entire company put into the successful implementation of the system made up for the lack of days in the schedule. They also mitigated the risk by keeping the Steering Committee, Oracle, and KPMG involved with every phase. Cisco also made the implementation of this system a top priority throughout the company. Therefore, the company revolved around implementing this strategy, which allowed for it to be executed so quickly.

6.Was Cisco smart or lucky with its ERP implementation?

A: Cisco was very smart with their ERP implementation, and it was also very lucky to achieve that. It was smart because the decision to implement the ERP project was the major decision taken by the managers at Cisco. The managers were particular of the team members that will work on the project. The managers also made a particular choice in deciding the partners for them. They weighed their options very well before finally deciding the team of KPMG as their integration partners. In the implementation stage, proper planning was done and the implementation was done in phases. This enabled a better control and timely completion of the project.

The plain lucky for Cisco is that Cisco didn’t suffer from accident. Second, it is very important to unit among Cisco’s staffs and the leaders so that Cisco can complete this project without internal cost They are lucky enough to get hard and smart working team including steering committee so all project activities can be performed well and get the best result.

Case Analysis :

1.Identify the most important facts surrounding the case.

Running a UNIX-based software package to support its core transaction processing.

All functional areas would be required to use common architecture and databases.

The systems replacement difficulties of functional areas perpetuated the deterioration of Cisco’s legacy environment.

Systems outages became routine.

Product shortcomings exacerbated the difficulties of recovering from outages.

Cisco’s legacy environment failed so dramatically that the shortcomings of the existing systems could no longer be ignored.

Cisco’s central database was damaged.

2.Identify the key issue or issues.

It was critically important to get the very best people they could find.

Great technical skills and business knowledge were a prerequisite.

The team took a pragmatic approach to estimating project requirements.

The ERP project was a priority.

Building the best implementation team.

Organizations take projects very seriously.

The team’s implementation strategy employed a development technique referred to as “rapid iterative prototyping.”

3.Specify alternative courses of action.

Alternative 1: Cisco continues its legacy of standardization.

Alternative 2: Cisco implements ERP.

4.Evaluate each course of action.

Alternative 1: The Cisco’s legacy of standardization is outdated for companies. This management system is not good to the company’s future development, and there are potential problems caused by system upgrades. But traditional systems are linked to core functional areas. And for now, this is the most familiar system in Cisco.

Alternative 2: If Cisco implements ERP, this is a very large project for the company. It will cost a lot of time and money. In the implementation of ERP, the company’s core functions will have potential risks. However, if the ERP plan can be completed on time, the company will gain advantages and gain more benefits in future market competition.

5.Recommend the best course of action.

A: I believe that Cisco Systems made a great decision to implement their Enterprise Resource Planning (ERP) system when they did. The ERP system would help Cisco forecast sales, create manufacturing plans, and schedules to meet those forecasts. In addition, it would help with the flow of communication among the various cross-functional teams in the organization. The information would become more timely and relevant and consequently lead to an improvement in resource control, organizational planning,operations and decision making for organization.

Although the cost of implementing the system was one of the largest in Cisco’s history,the benefits outweighed the cost. Without the implementation, Cisco may not have been able to grow at such an outstanding rate. Without the growth,they wouldn’t have become the worldwide leader in Information Technology.