Cisco: Implementing Erp

Golden Gate University

Summer 2014 ITM225.SF1

Jasmine Sethi

Assignment #1: Case # 9-699-022 Cisco Systems, Inc.: Implementing ERP

Enterprise Resource Planning Systems Text references: 53, 209, 339, 366.

Date: 02/12/2018

Cisco suffered from inertia when an attempt was made to engage business management in selecting software for their individual areas, and/or agreeing to participate in the ERP implementation project. List and explain reasons why management would hesitate to become engaged in the IT process/project.

Cisco System Inc. was founded by two Stanford computer scientists, they became public fairly quickly and with the boom in internet they entered the fortune 500 company mark in seven years after being public. Soon after, Morgridge was hired as the CEO. As Cisco grew so rapidly with their routers as the main product, engaging in the IT process/ project could be risky. Below are some of the reasons why:

1. Decentralization: The CEO at the time was Morgridge and it was his understanding that many firms in Silicon Valley decentralize too quickly and the upper management start to lose control over the projects. The ERP project was a high stake project and had the full potential to make Cisco a decentralized company or shake its routes. In order to manage the problem of decentralization, Morgridge had centralized functional organizations, but had decentralized product marketing and R&D into three lines of business.

1. Keeping up with the Standardization: As ERP was such a big project, the CIO, Pete Solvik wanted all functional area to use a common architecture and database. The process of standardization at Cisco was consistent with the IT budgetary decisions. With the budget constraints also came the concern that ERP would become a “Mega-project” taking over all the other IT projects.

1. Disruption of Business: ERP being a “mega-project” which would be a part of all the cross- functional teams and would need to implement with all the functionalities are able to adopt the ERP feature and let the business go smoothly. This would need time and would require a long transition period causing disruption of business. Cisco had a desire to grow quickly from $500 M to a $5 company, a long transition period for implementing ERP would de-track Cisco from its growth goal.  

1. Team and Management: ERP needed a strong internal management who would know all the functionalities and the working of Cisco in and out. As Cisco was a new company, it was hard dedicate a strong management team only dedicating to ERP project. ERP also required external partners like KPMG a consulting firm to oversee the implementation and manage the project.

1. Cost: starting a mega- project like ERP was not just time consuming and cumbersome, it also was heavy on cost.

Discuss the pros and cons of implementing “software off the shelf” or implementing software that has been changed to “mimic the current business processes.”  How did Cisco handle this problem?

There are several pros and cons for both” software of the shelf” implementation and “mimic the current business processes”

One of the pros for software of the shelf is that the product is ready to go and has already been customized. There is less time required for implementing as the configuration and customization are set and all one needs to do in implement the software in their system. It saves time for the company and in most cases work well as well. However, one of the biggest con is that as the configuration is set and cannot be changed, all the setting and procedures might not work or are applicable for the company. As the configuration is set in the stone, the employees have to re-learn the system and adjust according to the software rather than software adapting to the company. This process can take time, where the company loses business in the transition process. One of the pros for the “software of the shelf “is that it is developed once and can be used for multiple customers. It like a cookie cutter software like Microsoft office package. It saves development time and cost. There are no problems with validation and providing technical support to the customer as the problem dealt by the customer is a known one and the software company would know how to deal with it.

Whereas “ mimic the current business process” takes a much longer time to develop and create RFP, define the architecture of the system and to go through all the needs and processes of the system, this system works better in the long run. The developing process involves architecture designing, coding the software, testing and validation. The developing a new custom software can take months to years and requires a heavy monetary funding for employment as well as data storage for computing. However, once the custom software is developed, the company has no problems in the implementation, there is no loss of work and time, the business in not disrupted and the software works for the company rather than vice versa. Another con for a custom software is it is so designed to be for just one company it can be a challenge to provide technical support as only the company would know the requirement of the software not the QA/ Tech team of the software development.

In Cisco’s case, they wanted to implement ERP as soon as possible and with the slightest customization required, Cisco chose an off the shelf system and wanted to train people to do things the new system way as the old system was not working well for them. By partnering with KPMG, Cisco was able to implement the project faster and efficiently.

Generate a list of at least five “Best Practices” that Cisco demonstrated in managing their ERP implementation. Describe each, and explain how each best practice contributed to the implementation.

Cisco knew from the very beginning that ERP project required a good management, strong partners, a good healthy budget, the right implementation and had identified the roadblocks for the project at the beginning. Below are the five best practices demonstrated by Cisco:

1. Cisco knew what they wanted. They wanted a non- customization software which is off the shelf and the process takes very less time. The ERP team created a schedule with doable duties that were made priority for Cisco. The ERP project was one of the top ten heavy projects in all of Cisco.

1. The management knew that ERP project is not only an IT project but also affected all the business departments like ordering and finance.The management worked with clear communication knowing the stakeholders for the project and informing the stakeholders with the project updates.

1. Cisco realized early on that needed a strong external partner to implement the project. They chose KPMG as the integration partner. The person overseeing the project had prior experience for software and had a strong team of 20 people to get the task done.

1. The project was not only an IT project - it was more of a project that whole company was involved. The project team was a a cross -functional one with best people on board who were ambitious and saw this opportunity as a ladder for their career growth.

1. Cisco had a strong implementation strategy where they broke the implementation into phases called “conference room pilots” (CRP). This helped to the bext phase on top the older one and created a deeper understanding of the process altogether for the team and for rest of the employees as well.

Discuss the tradeoffs between doing extensive planning /analysis up-front and relying on “speed and action over analysis.”  Cisco chose the latter approach. How did they allow for the “unexpected” in their implementation strategy? Explain.