DRAFT
Economics of Collaboration and Green
Case Studies and Tools from Cisco
Discussion with FEI Technical Committee
Brian Suckow
Internet Business Solutions Group
Innovations Team
December 8, 2009
Cisco Public
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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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1
Cisco Public
Economics of Collaboration
at Cisco
Copyright © 2009 Cisco Systems, Inc. All rights reserved.
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DRAFT
Cisco Internet Business Solutions (Web 1.0):
FY2008 Benefits
SALES & MARKETING
SERVICE & SUPPORT
$493M
MANUFACTURING
$3.7B
$1,176M
$533M
HR & FINANCE
E-LEARNING
$1,228M
$232M
Source: Cisco IBSG, 2009
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Cisco Collaboration Solutions (Web 2.0):
FY2008 Benefits
REMOTE COLLABORATION
TELECOMMUTING
SALES & MARKETING
$303M
$691M
$25M
$277M
CONNECTED WORKPLACE
$11M
VIRTUAL EXPERT
$75M
Source: Cisco IBSG, 2009
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DRAFT
Cisco’s Productivity Journey
Benefits ($B/Yr)
Web 1.0
Web 2.0
5
Web 2.0
Collaboration
Solutions:
4
$691M
3
Web 1.0
Internet
Solutions:
2
$3.7B
1
0
Information Sharing
FY95
Transactions
FY00
Interactions
Collaboration
FY05
FY08
Source: Cisco IBSG, 2009
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Cisco Web 2.0 Collaboration Initiatives:
FY08 Benefits and Costs
In FY08, Cisco Achieved $691M in Net Benefits
from Web 2.0 Collaboration Solutions
Initiative
FY08 Benefits,
$ Million
FY08 Costs,
$ Million
Remote Collaboration (TP/WebEx/UC)
Telecommuting
$378
$277
$75
Included in Remote
Collaboration
Specialist Optimization (SOAR)
Sales Productivity (NEW)
Connected Workplace
Deal/Order Acceleration via UC
Mac Wiki
C-Vision and Video Blogs
Total
$62
$26
$13
$2
$4
$10
$772
$1
$3
$2
<$0.1
<$0.1
$0.5
$82
Net Benefit = $772M - $82M = $691M
Source: Cisco IBSG, 2009
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Cisco Web 2.0 Collaboration Initiatives
Drive Value: FY08 Benefits
Cisco FY08 Impact
($ Million/Year)
$61M
$772M
$82M
$92M
$691M
$380M
$239M
Reduce
Costs
Save
Time
Speed
Process
Total
Transform
Business Benefits
Costs
Net
Impact
Source: Cisco IBSG, 2009
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Remote Collaboration
Situation /  Globalization and outsourcing driving
need for greater collaboration
Challenge
 Customers and partners expect
improved responsiveness
 Travel budgets increasingly constrained
Benefits
Solution
 Deployed 300+ TelePresence rooms
 Provided employees with web conferencing (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
Sources: Corporate Affairs, TelePresence IT, Finance; Cisco IBSG, 2009
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 Increased interactions
with customers
 Higher quality of life
 Reduced greenhouse
gas emissions
Result
 Travel expense savings
of $226M/yr
 Time savings of
$61M/yr
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Telecommuting
Situation /  Many employees don’t live near Cisco
office
Challenge
 Globalization driving need for greater
collaboration across distances
 Increasing concern with sustainability &
minimizing impact of unneeded travel
Solution
Result
 Cisco policies enable some employees
to telecommute full-time. Others
permitted to telecommute occasionally.
 All employees have Unified
Communications, web conferencing
(WebEx), VPN
 Increased ability to hire
and retain expertise
 Higher employee
satisfaction
 Average Cisco employee now
telecommutes 1.7 days/week (2.3 in
U.S.)
Result
 70% of time saved is spent working,
and 30% goes to personal time
Sources: Cisco IBSG, 2009; Workplace Resources, IT
Cisco Public
Benefits
Copyright © 2009 Cisco Systems, Inc. All rights reserved.
 Time savings of
$277M/yr for Cisco
 Commute cost savings of
$43M/yr for employees
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Specialist Optimization (SOAR)
Situation /  Specialists are critical to sales process
Challenge  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
Source: Cisco AT Sales, VTG CBT; Cisco IBSG, 2009
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Benefits
 Improved market
coverage
 Scaled expertise
 Increased customer
face time
Result
 Specialist time savings
of $12M/yr
 Increased margin of
$50M from reducing
sales cycle
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DRAFT
Connected Workplace
Situation /  Traditional offices usually don’t foster
effective collaboration
Challenge
 Individually assigned workspaces are
typically inefficient, with low utilization
Solution
 Connected Workplace provides
flexible environment that improves
employee collaboration and
productivity
Benefits
 Reduced real estate
 Improved collaboration
 Reduced energy and
greenhouse gas
emissions
 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
Result
 FY08 savings were $12M/yr in real
estate plus $0.7M/year in energy, on
initial investment of $15M
Sources: Cisco IBSG, 2009; Workplace Resources
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 Real estate savings of
$12M/yr
 Energy savings of
$0.7M/yr
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DRAFT
Mac Wiki
Situation /  Cisco: 5,000 Apple Macintosh users
Challenge  No dedicated Cisco IT support
 Productivity impact for users needing
support
Solution
 Common wiki portal for Mac users,
with distributed editing
Benefits
 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
 Distributed user-generated
content
 Community-based updates
and maintenance
Result
 $1.6M/yr savings in help
desk costs
 $2.6M/yr in user time
savings
Sources: Cisco CCOE; Cisco IBSG, 2009
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DRAFT
Cisco Show and Share
Situation /  Project and knowledge worker teams
increasingly distributed globally
Challenge
 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
Sources: Cisco CCOE; Cisco IBSG, 2009
Cisco Public
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Benefits
 Improved executive
communications
 Accelerated
information sharing
Result
 $10M/yr in cost savings
 Increased employee
satisfaction, alignment
with corporate strategy
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DRAFT
Best Initiatives Combine Multiple Capabilities
Enhance existing collaboration
activities
Focus
Personal
Productivity
Description
Remote Collaboration
(TP, WebEx, and UC)
Telecommuting
Specialist Optimization
(SOAR)
Sales Productivity (NEW)
Connected Workplace
Remote
Collaboration
Establish new ways of
collaborating
Process
Acceleration
Expert
Access
Knowledge
Sharing
Communities
****
****
****
****
**
**
Transform the
organization
Boards
****
****
****
****
****
****
*
Deal/Order Acceleration
via UC
Mac Wiki
C-Vision and
Video Blogs
Collaborative Mgmt.
(30 initiatives)
****
*
**
****
****
****
****
****
****
****
Source: Cisco IBSG, 2009
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Collaboration in Action: 1 → 30 Priorities
DRAFT
2001–2005
2006
2008+
Command / Control
Councils / Boards
Enterprise-Wide
Collaboration
10 people
1 Priority Per Year
Enterprise
Service Provider
Commercial
BPOC
40 people
500-2500 people
2 Priorities Per Year
30 Priorities FY09
Emerging Markets
Services Model
“Speed / Scale / Sustainable Differentiation”
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DRAFT
2
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Green Shareholder Value
Framework
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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
Source: Cisco IBSG, 2008
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DRAFT
Increasing Consumer Concerns About
Global Warming…
Major Concerns of Worldwide Public
41% The Economy
39%
37% Health
34%
32%
30% Job Security
16%
14%
13%
12%
8%
6%
15%
14%
13%
11%
7%
6%
October 2006
Global
Warming
Concern
More than
Doubled
in Only
6 Months
Global Warming
Political Stability
Crime
Terrorism
War
Immigration
April 2007
Sources: Nielsen, “Climate Change and Influential Spokespeople,” 2007; Cisco IBSG, 2008
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…And Willingness to Change Behavior
“I am willing to make significant changes to the way I live to
help prevent global warming”
North
America
86%
Canada
76%
United States
2%
3%
69%
Germany
3%
43%
16%
12%
16%
28%
41%
95%
Philippines
Asia
1% 6%
81%
Great Britain
12%
22%
86%
Spain
Russia
2%
93%
Italy
Europe
2%
1% 4%
China
83%
3%
14%
Indonesia
82%
5%
13%
S. Korea
India
56%
55%
14%
30%
28%
Agree
Don’t Know
17%
Disagree
Source: BBC World Service Climate Change Poll, 2007
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DRAFT
Four Green Strategies Maximize
Business Opportunities
Increase
Profitability and
Shareholder Value
Mitigate
Risks




Regulatory
Competitive
Physical
Reputation
Reduce
Operating
Costs
 Energy
efficiency
 Asset
utilization
 Efficient
communications
 Networked
solutions
Differentiate
Existing
Business
Enter New
Businesses
 Expanded
green
offerings
 Initiatives to
help
customers
become green
 Green brand
building
 Vertical
integration
 Renewable
energy
 Carbon credits
 Technologyenabled
business
models
Source: Cisco IBSG, 2008
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DRAFT
Range of Enterprise Green Strategies
Retail Industry
Increase
Profitability and
Shareholder Value
Mitigate
Risks
Reduce
Operating
Costs
Differentiate
Existing
Business
Enter New
Businesses
Wal-Mart
Tesco
M&S
Home
Depot
Main focus
Substantial focus
Starting to focus
Source: Cisco IBSG, 2008
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Cost Reduction Example:
Tesco Reduces Energy Use by 45%
DRAFT
Energy-reduction Initiatives
Energy Usage (kWh/ft2/year)
160
 Higher-efficiency lighting
151
 Low-energy fans
146.5
 Cold air retrieval systems
-45%
133.8
120
122.4
117.3
 Timers and motion
detectors on lights
111.5
 High-efficiency refrigeration
95
80
 Accountability for energy
consumption given to
store managers
83
40
 Employee awareness
raised through
green campaigns
0
19902000
20002001
20012002
20022003
20032004
20042005
20052006
20062007
Sources: Tesco Corporate Responsibility Review, 2007; Tesco CDP5, 2007
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DRAFT
Differentiate 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 Earth
Source: Cisco IBSG, 2008
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DRAFT
Disrupt 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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DRAFT
3
Cisco Public
Green Business Value
Calculators
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DRAFT
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.
Source: Cisco IBSG, 2009
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DRAFT
Potential Impact on 10,000 Employee Organization
GHG Emissions, 1,000
metric tons CO2e/year
Before
Solution
After
Costs
Benefits
Reduction
Initial
$M
Ongoing
$ M/yr
One-time
$M
Ongoing
$ M/yr
(Medium)
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
$0
$10.2
$187.1M
$46.3M/yr
Telecommuting
• Commuting
25.4
17.2
8.2
Total
104.9
76.5
28.4
Included in Remote
Collaboration
$90.2M
$6.6M/yr
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
*Note this value is after implementing Connected Building, but before implementing Connected Workplace, and is not part of the total.
Source: Cisco IBSG, 2009
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