Cisco Systems: Systems,
Products, Forecasting Models,
and Costs of Errors
By:
Ann Mesavage
Richard McManus
Background

Largest manufacturer of switches and
routers
 Briefly was the most valuable company in
2000- ($555 billion company worth, stock
price $80/share)
 Is thought to have 85 percent of the switch
market for the internet
Cisco’s success

Large outsourcer
 Many acquisitions- between $20 billion to
$30 billion between 1993 and 2000
 Sell many items over internet
 Website- Cisco Connection Online (CCO)
“Cisco uses the Web more effectively than any
other big company in the world. Period.” Fortune Magazine
Cisco’s Success (cont’d)

Internet: supply chain extranetManufacturing Connection Online (MCO)
 Cisco Employee Connection - four fifths of
technical training online
 Online quotas
 Customer service
 Job applications
 Accounting- closing accounts, “virtual
close”
Problems

2000-2001 recession
 Fall in technology related stock
 Dotcom companies- sales down, affect on
Cisco
 Sales fell: $22.3 billion (2001) to $18.9
billion (2003)
Effects on Cisco

Oversupply in inventory (unsold)
 Competitors/suppliers cut back on money
 Share price down by 80%, stock closed at
$14
 Competition with smaller companies
 Slow down in Asia and Europe
Affects on Cisco (cont’d)

Large layoff (6,000-8,000 employees)
CIO Peter Solvik
CFO Larry Carter
CEO John Chambers
Errors in Forecasting

Did not factor growth into models
 Too much inventory
 Over reliance on technology
 Wrong economic factors
- focused more on orders, than big picture
“Do our systems do a great job of telling us
where we are today? Yes, but they don’t tell
the future.” – CEO John Chambers
Cisco Restructured

Centralized engineering and marketing
organization
 Track products and profitability
 Improving “virtual close” system
 Improve brand recognition
“Cisco is not as familiar to people as some of the
other large IT players… there is definitely the
opportunity to increase awareness.” - Sue
Bostrom, Cisco’s chief marketing officer
Poll
Website

Very User Friendly
 Gives Up to Date
News
 Broken Into Many
Categories like
“Products &
Services”, “Ordering”,
and “Support”
http://cisco.com/
Website

Allows the User To Create An Account
– Accounts:
 Purchases Made Online
 Tracks Products that the User Purchases

Also Provides Training And Events
– Allows users to learn about the business value of
networking solutions and get best practices for
deploying and managing the latest technologies
– Provide live Webcasts or on-demand sessions in
video or audio-only formats for “students”
Website

Provides Users with Product Literature
– Brochures
– Bulletins
– Case Studies (How Products Have Helped Out
–
–
–
–
–
Businesses With IT)
Customer Success Stories
Data Sheets
Presentations
Press Coverage
Q & A Forum
Products

Specialize In Many Products And Services
 List of Products from A-Z
– Examples:
 Switches
 Network Routers
 Optical Networking
 Interfaces And Modules
 Universal Gateways And Access Servers

Provides Information On All Products
Switches
Cisco switches help
maximize network
value by providing
optimal support for
business requirements
while delivering
superior investment
protection.
Switches

Many Different Varieties For Different
Applications
– Examples:
 ATM Switches
 Blade Switches
 LAN Switches
 WAN Switches
Network Routers

Provide Routers for
Small, Midsized, and
Large Businesses
 Each Have Different
Features To Meet the
Requirements of
Different Types of
Businesses
Network Routers

Provides Routers for Network Providers
Optical Networking

Service providers can
optimize networks by
integrating intelligent
optical transport,
flexible bandwidth
management and
converged
voice/video/data
services
 Fiber Optics
Interfaces And Modules

Deploy data and voice
capabilities in an
integrated routing
platform to help
increase productivity,
decrease costs, and
lower the cost of
ownership
Interfaces And Modules

Variety of Interfaces And Modules
– Transceiver Modules
– Ethernet Switching Network Modules
– Line Cards
– Network Modules
– Optical Services Modules
– Voice Modules And Interface Cards
Universal Gateways And
Access Servers

Current market
conditions enable
service providers to
increase revenue by
offering wholesale
Voice over Internet
Protocol (VOIP)
services
Universal Gateways And
Access Servers

Voice Over IP Solutions (VoIP)
– ASP Termination Services
– Dial Access Solution For Service Providers
– National And International Transport Services
– Prepaid And Postpaid Calling Card Services
– Voicemail/Unified Messaging
Questions

What is the “virtual close” system?
Questions
Short Answer:
Why is Cisco.com so successful on the
international market?
Questions

Cisco was briefly the mot valuable
company on Wall Street
Questions
Who uses Cisco.com?
A) International Businesses
B) Small Local Businesses
C) Network Providers
D) All Of The Above
Questions
What does VoIP stand for?
A) Voice Internet Packaging
B) Voice Over Internet Protocol
C) Voice Interpreting Packages
D) None Of The Above
Questions

Another name for Cisco’s website is:
References
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Case Study- “Cisco Systems: Poster Child for the Digital Firm?” Managing the Digital
Firm.
(2001, Mar 21). Behind the Tech Slump. The Economist Newspaper Ltd., 1. Retrieved
October 11, 2006, from ProQuest database.
(2001, Mar 10). An Old-Fashioned Price War. The Economist Newspaper Ltd.,1.
Retrieved October 11, 2006, from ProQuest database.
Morrissey, P., Boardmen B., Franklin, C., MacVittie, D., Molta, D. (2004, Oct 28). The
State of Cisco. Network Computing, Vol. 15, pg. 68. Retrieved October 11, 2006, from
ProQuest database.
Boyle, D. (2006). Cisco Systems, Inc. Better Investing, Vol. 55, 43. Retrieved October
15, 2006, from ProQuest database.
Tribble, S. (2006, Oct 5). Cisco Introducing Itself to Consumers: Campaign Aims to
Improve Brand Recognition. Knight Ridder Tribune Business News, 1. Retrieved
October 19, 2006, from ProQuest database.
Berinato, Scott. What Went Wrong at Cisco. 1 Aug. 2001
http://www.cio.com/archive/080101/cisco.html.