Feb 2023 Cisco Case Study Assignment 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? - - - - Management did not give the go for someone to take on a company-wide project: One of the reasons, no single manager volunteered to take on the task at first, is that Cisco’s CIO (Pete Solvik) was originally set on avoiding an ERP solution. He felt that budget and IT expenditures should be made by every functional area individually while IT organization would report directly to him. None of the leaders involved in the “by-function-approach” turned out to be successful: Pete Solvic decided to let each function decide on their own what application they would opt for and when they would implement it. They did however need to decide on a common architecture and database. The execution was fragmented and unsuccessful. Instead of coming up with viable and strategic solutions that would solve the issues in the long-run, functions opted for short-term “band-aid” fixes. Everyone came up with separate decisions and no one actually went out to buy a package. Before Cisco’s legacy environment failure, the urgency for someone to take on the project, was not as obvious. It was only after, the major technical shortcoming that Cisco’s management team realized how desperately a unified strategic change was needed. Everyone in the company continuously voiced their concerns about the size and difficulties, related to the project. They knew that they would not one to opt for a phased adaption and were well aware of the financial and personnel cost necessary for implementation. Executives were worried that a project of this size would spin off and deliver unsatisfying results. 2. Cisco was highly successful with its enterprise resource planning (ERP) effort. What accounts for this success? What were the most important things that Cisco did correctly? - - They got management on board. The board and Morridge did not only give the project a “go” but were fully engaged through the different stages of implementation. The project had a steering board of high-ranking executives overseeing the project. They ensured the project’s continual visibility, sponsorship, and team motivation. Even after implementation, solving initial difficulties was the number one agenda on executive staff meetings. They made the ERP adaption priority. Morridge made sure that the entire company knew the project was priority and was informed about what was happening. As a matter of fact, the project was one of the company’s top 7 goals of the year. 1 Feb 2023 - - - - - - They realized that an ERP which effectively fills their business needs would need heavy involvement from a broad range of people in the business community. Successful implementation of an ERP system cannot be attributed to the IT department alone. Instead, for an ERP system to effectively execute business processes and store data, many minds in an organization must come together to clearly define what the system ought to and ought not to do. In Cisco’s case, five tracks from different branches in the business ensured that all the relevant business know-how would influence the final ERP structure. They got the best people on board. Team members were handpicked and only the best and the brightest became part of the project. Cisco made team-based decisions and got the employees lean-in on the project. The choice, of which ERP system they were going to use, for one, was team based. Every team member saw this project as THE opportunity to advance their career. As a result, people were highly motivated, gave the project their utmost attention and worked over-time. Cisco was also successful because they integrated strategic partners early in the project. From the get-go, their strategy was to leverage the knowledge and experience of others. KPMG came on early in the project to facilitate Cisco’s move to an ERP system. They put together a team of seasoned experts that had already accumulated actual professional experience working with ERP systems. As Cisco’s integration partner, they helped not only to select but also to implement the ERP system they finally opted for. Moreover, KPMG supported Cisco with initial difficulties that arose immediately after implementation. Cisco made sure to question other companies about their experiences using various ERP systems and worked closely with Oracle’s consultants throughout the entire process. KPMG and Oracle executives were also part of the project’s steering board. Cisco planned the project out and allocated the necessary time, budget, and personnel to execute it. While there may have been some miscalculation and (as with any other project of this scope) things did turn out to be more complicated, longer, and more expensive than anticipated, they planned out the process out from the get-go and were aware of the resources that would need to be allocated and opportunity cost that would be incurred because of the project. While they put in due diligence to plan the steps ahead, they also made sure to not overanalyze their needs and stick to the timeline. Cisco understood the urgency of ERP implementation and focused on the potential the system would have in the future, instead of the difficulties it posed in the present. Hitting their $5 billion target would exclusively be possible if they built a data-base and process-system able to facilitate the growth. Cisco quickly adapted to changes during the project and didn’t let setbacks get the best of them. While they did not plan for customization at first, they quickly adapted their project plan, when they realized that they could not go without. While the “going live” of the ERP caused a wormhole 2 Feb 2023 - of difficulties in the first week, the project team put all hands-on deck to solve them in a timely manner. Cisco took the chance to sort and re-arrange their data. Throughout the process, Cisco created the capability to report historical and future in an integrated data conversion in a single data warehouse. 3. Did Cisco do anything wrong on this project? If so, what? While Cisco did an exemplary job in ERP implementation, there are a few things that can be learnt for the future. - - - - They underestimated the need for implementation. Cisco had complex systems, processes, and data structures impossible to be addressed in a standardized ERP. Planning for customization from the start, would have saved them resources and trouble. At the end the project included major customization and a sale support package. They only realized that they would need a single “data warehouse” for effective communication, after the project had already been rolled out. As a result, the entire IT department had to put all other things aside and commit to the ERP project only. The hardware architecture and size were deficient. What they had done well here, however, is to purchase equipment based on capability. The additional cost, thus, was incurred by the vendor and not Cisco. They did not test the system with big enough databases. As a result, the new ERP, crashed at least once a day in the beginning. 4. 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 do to maximize chances for success here? Senior management involvement is essential for ERP adaption for several reasons. ERP is a strategic and structural change that affects the entire company. This Cisco case study depicts how single functions (prior to Cisco’s companywide ERP decision) can only solve fragmented problems with short-term solutions. The necessary resources and personnel to realize the move, can only be set aside for the project by the management and board itself. Moreover, an ERP adaptation can only be successful if it is continuously backed and supervised by high-ranking executives. They must at all times, ensure the visibility of the project, realignment with corporate strategy and team’s motivation. 5. Cisco went live with ERP in a big-bang fashion, which is inherently risky. How did Cisco mitigate this risk? Cisco mitigated the risk, by doing their due diligence prior to going live. They made sure to make an informed decision on which ERP product to choose, set aside time and the relevant people to design the process and data systems, cleaned up their data 3 Feb 2023 and tested the system. They also prepared the necessary resources to solve the many problems that did in fact arise, such as IT personnel and external consultants. The bigbang change was not only supported by the staff, but also the management itself, making the ERP adaptation a first priority agenda in every one of their meetings. Lastly, they moved some of the financial risk on other vendors, by holding them accountable to the functionality and capacity of the products sold, rather the quantity. 4
