PGP 2014, AY 14-15

InformationSystemsforManagers

Session 3

Professor Madhukar Dayal, IIM Indore

Cisco Systems, Inc.: Implementing ERP

How did 'Cisco' get its name?

Who founded and started Cisco ?(two Stanford scientists)

What / who is a venture capitalist / angel investor ?

When the company went public, what happened to those scientists?

Who do you think looks like an angel ?

What measures did Don Valentine (VC & VC) take to protect his ($2.5m) investment in

Cisco ?

What happened to both the founders after the company went public in 1990 ?

* VC: Vice-chairman, VC: Venture capitalist

What is a centralised / de-centralised organisation ?

And, a functional organisation ?

...are all others non-functional ?

Organisational structure charts

Cisco:

1993: USD 500 mIn Fortune 500, in top 5 on RoR and RoI.

Growth: is it organic / inorganic ?

Organic growth

In-organic growth

Acquisition

Merger

Cisco under Morgridge hybrid (part centralised, part decentralised).

What convinced Solvik that Cisco needed a change ?

(see next slide)

System outages became a routine (pg 3, para 2).

A workaround to access the core database (because earlier the system was not performing) malfunctioned.

Company shutdown for TWO days (revenue loss = USD 12, 233, 709 or $ 12+ m, see Exh-1).

Pete Solvik (CIO), Randy Pond (Dir-Mfg), Carl Redfield (SVP-Mfg).

...not going to do a phased implementation, we would do it all at once. - Redfield (pg 3, para 7)

Class to read on from: There is ... ... intended them.

Explain: why BPR is an embedded essential exercise in ERP.

What type of professionals do you expect to be working in an IT Company like Cisco ?

Is such 'management' of systems expected from professionals ?

What would happen to Cisco's reputation if this information leaks out ?

An IT company's IT system crashed !

Situation in 1994:Struggling HW and SW companies.Very few IT success stories.People consider it a fad.Y2K problem in media.

Did Cisco choose a 'Big Bang' or a 'phased' implementation approach ?

(refer to pg 3, last para)Is it an incremental / radical or turbulent

change?

Did they decide to make it an 'IT only' initiative ?

What happens when it is implemented as an 'IT only' initiative ?

(refer to pg 4, para 1)

How did they select whom do they want from a particular department ?

They chose to even cripple every department so that the ERP project is a

success !( )

They hand picked the best and the brightest for this team.(pg 7, para 2)

Can you identify salient features of choosing KPMG as a partner ?

Note: The set up of 'teams' for ERP implementation (see Exh 4).

A team member from every discipline business (domain) lead, IT member,

consultant, external IT consultant, and user.

What was the 'due diligence' approach followed for selecting the right ERP vendor ?

Consulted the best: Gartner, Big Six.a) Arthur Andersen (no longer in existence)b) Coopers & Lybrand (merged with PW in 1998)c) Deloitte & Touched) Ernst & Younge) KPMG Peat Marwickf) Price Waterhouse

Within 2 days: they narrowed their search to 5 best packages ! And, in 1 week: shortlisted 2 prime candidates.

RFP: completed in 10 days.

3-day demo by each vendor, using sample data.

Selection of 'Oracle', for whom it is a big opportunity to establish market reputation !

(pg 5, para 2)Proximity of offices 20 miles away!

Do or die situation for Oracle too!

Was Cisco's ERP implementation an incremental / radical / turbulent change ?

Is this project from 'top down' or from 'bottom up' ? (all to read in class pg 6, para

5-8)

What were the challenges in 'project timing' ?

What did they finally choose, if not 12, then 15 or 9 months ? !!(see Exh 2, pg 13)

What was the problem with current system's vendor ?

(pg 6, para 2, line 2)

( ) + likely to be bought by another company, a rival of Cisco !

What is the largest element of an ERP project's cost ?(pg 14, Exh 3)

What detail in analysis is needed for ERP ?

(see Exh 5: example of one process's analysis, step by step, in detail)

(see Exh 6: Tracking of progress of ERP)

(see Exh 7: Red urgent modifications)

Same is needed for 000s of processes !!

Why did they have CRPs (Conference room pilots) ?

Handling large projects...

...need interim celebration of achievements!

To celebrate achievements so far, communicate to all others, refresh the

importance of the project, keep the spirits high.

How has Cisco negotiated the contract with hardware vendor and Oracle ?

'Performance based contract negotiation'The vendors lost 'big time' !

How much reward is Pete Solvik recommending (at beginning and end of

case) ? $ 200,000 (in 1995)!

A huge sum even today! Even when performance has dipped from

96% to 75% timely order compliance?

(to realise a much higher performance in future: see Exh 1, from a $ 2+ bn company

to a $ ~8.5 bn company)

Was it possible without the ERP?

What else has Pete Solvik achieved ?

(Many of the senior managers washed their hands off the project, having heard the

'failure' stories of ERP projects!)

A new organisational capability to embrace new technology!

Now, whenever a new technology comes (SCM, CRM, DW/DM and BI), Cisco is ready

for it !!

What is leadership ?Do IT projects need leaders or only hi-tech

persons ?Can it work without either ?

What is: rapid iterative prototyping (pg 7, last para).

Fast + 'return / looping' + 'small test'.

SDLC: Waterfall model

SDLC: Spiral model

Many other models:

Rapid prototyping by Cisco. Cowboy coding (development of games) !

Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35Slide 36Slide 37Slide 38Slide 39Slide 40