Ciso ERP Implementation at CISCO (699022-PDF-ENG) From Strategic Role of IT Perspective

11/28/2020 Information Technology & Project Management Blog: Harvard Business Review: Case Analysis - ERP Implementation at CISCO
on at CISCO (69902…
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Wednesday, May 15, 2013
Harvard Business Review: Case Analysis - ERP

Implementation at CISCO (699022-PDF-ENG) from
Strategic Role of IT perspective
Presenting an analysis of the HBR case ERP Implementation at CISCO (699022-PDF-
ENG) from Strategic Role of IT perspective. Link to the
case http://hbr.org/product/cisco-systems-inc-implementing-erp/an/699022-
PDF-ENG
Case Background: Reviews Cisco System's approach to implementing Oracle's Enterprise Resource
Planning (ERP) software product. This case chronologically reviews the diverse, critical success factors
and obstacles facing Cisco during its implementation. Cisco faced the need for information systems
replacement based on its significant growth potential and its reliance on failing legacy systems. The
discussion focuses on where management was particularly savvy in contrast to where it was the
beneficiary of good fortune.
Introduction
I. Overview of the Business
A. Company Background
B. Market segment, Products & Channels
C. Business strategy
D. Financial Position
II. Porter’s Model of Five Competitive Forces:
III. Role of IT and Strategic Grid
IV. Description and Brief Discussion of the Issue
V. ERP Implementation at Cisco Blog Archive
A. Strong impetus for change

► 2014 (7)
►
B. Strong sponsorship & business involvement
▼ 2013 (35)
▼
C. ERP vendor selection
D. Lack of data encryption during transmission ► December (3)
►
E. Violation of PCI standards ► November (1)

►
F. Lack of regular audits ► October (7)
►
G. Lack of processing logs
► September (3)
►
VI. MOT Triangle
VII. Recommendations ► August (1)
►
► June (2)
►
▼ May (15)
▼
Introduction Psychographics - Interesting fact
of the day
Cisco Systems Inc. is the world’s largest maker of computer networking gear. Cisco Chinese "Six Pocket Syndrome" -
Interesting fact o...
provides a broad line of products for transporting data, voice and video around the
world, which transforms how people connect, communicate and collaborate. Since the Waltzing with Bears : Managing
Risk on Software Pr...
project-management-sj.blogspot.com/2013/05/harvard-business-review-case-analysis_15.html 1/20
11/28/2020 Information Technology & Project Management Blog: Harvard Business Review: Case Analysis - ERP Implementation at CISCO (69902…
networking industry is rapidly evolving, Cisco is focusing on delivering intelligent Waltzing with Bears : Managing
This site uses cookies from Google Risk on Software Pr...
networks and technology andtobusiness
deliver its services and
architectures to analyze
built traffic.products,
on integrated Your IP address and user-agent
are shared with Google along with performance and security metrics to ensure quality of service, generate usage
Waltzing with Bears :LEARN MORE
Managing OK
services, and software platforms to its customers. This case analyzes the ERP rollout
statistics, and to detect and address abuse. Risk on Software Pr...
that took place on the brink of legacy system failures in Cisco in the years 1994-1995;
Waltzing with Bears : Managing
the process and impact, and strategic recommendations. Risk on Software Pr...
I. Overview of the Business Similarities and Differences
between Software and ...
A. Company Background
Mr. Thompkin's Journal from
CISCO was founded by two Stanford computer scientists in California in 1984 to Death March by Tom Dem...
capitalize on the expanding “internetworking” market and brought public in 1990. In Six Sigma Methodology Critique
1997, Cisco featured in the list of Fortune 500 companies and ranked in the top five
Harvard Business Review: Case
companies in Return on Revenues and Return on Assets[1]. In 1998, Cisco’s market Analysis - ERP Imple...
capitalization passed the significant $100 billion mark. In 1999, Cisco had more than Harvard Business Review: Case
75% internet traffic share. Analysis - Security ...
B. Market segment, Products & Channels Google Glass - Potential Social,

Legal and Securit...
Cisco operates in the communications and information technology (IT) segment. At the
Google Glass - Industry and
time of the case, Routers were Cisco’s main product. Digitization had enabled the Business benefits and ...
convergence of three independent proprietary networks – phone networks for voice, the
Google Glass - Everything you
local-area and wide-area networks for data, and the broadcast networks for video, in the need to know
form of the Internet. Following this trend, Cisco was accelerating to grow in the new IP- Reflecting on Nicholas Carr’s
based networks market segment that did not exist earlier. Presently, Cisco designs, controversial articl...
manufactures and sells Internet Protocol (“IP”) based networking and other products ► March (3)
►
related to the communications and IT industry and provide services associated with
these products and their use[2]. Cisco’s product portfolio is categorized into following
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categories – Switching, Routing, Service Provider Video (set-top boxes & cable
modems), Collaboration (IP phones, call center & messaging products, WebEx), Email address... Submit
Security, Wireless, Data Center, Other Products (mainly Linksys home networking
products) & Services (Technical Support). Google Analytics
Digital Marketing
C. Business strategy certificate
Cisco operates in both the Business-to-Business (B2B) and Business-to-Consumer
(B2C) markets in the computer networking segment. In the B2C market, Cisco focuses
on the “low cost” strategy selling products such as wireless routers, switches and
surveillance cameras. Market, Cisco focuses on the “differentiation” strategy with
innovative products and business solutions for collaboration such as Webex, Google Analytics
Telepresence and SocialMiner. In terms of Porter’s potential business strategy types for Digital Marketing
achieving competitive advantage, Cisco lies between differentiation and low cost certificate
leadership quadrants at the bottom since it operates in a niche segment of networking.
This business strategy heavily depends on research and development to ensure product's Subscribe To This Blog
uniqueness, reliability, quality and customer satisfaction. Posts
Comments
D. Financial Position
Reviewing the financial statements of Cisco for the year ending January 1995, Cisco had
a strong financial position with net sales of $1.9 billion and net income of $421
million[3]. Cisco was the leader in its market and had acquired four companies namely
LightStream(R) Corporation, Combinet Inc., Internet Junction, Inc. and Grand Junction
Networks, Inc. and further expanded its portfolio of products and services. Cisco’s net
sales grew 59.2% from $1,243.0 million in 1994 to $1,978.9 million in 1995.
II.
statistics, and toPorter’s Model
detect and address of Five Competitive Forces:
abuse.
1. Existing Competitors
As the case mentioned, the internet and its open standards were creating a new
competitive battleground for the entrenched telecommunications players such as AT&T,
Verizon, British Telecom and Deutsche Telecom. Lucent Technologies was also another
competitor that was transitioning towards digitization. Juniper Networks also competed
with Cisco directly by providing next-generation Internet backbone routers specifically
designed for service providers. There was a high rivalry among existing firms to obtain
market share for different products such as routers, switches as well as network services,
but neither had all the products they needed to ensure a big win. Cisco was also facing
competition from over 5000 Internet Service Providers (ISPs) including UUNet, PSINet
and GTE/BBN to provide fax, messaging and EDI capability at a much lesser price
compared to CISCO.
2. Threat of Substitute Products
Cisco has a brand value and it’s known for its reliable and high-quality products. Cisco’s
investment in R&D provides it a competitive edge over its competitors with innovative
products. Also Cisco offers a suite of networking products and services combined
together that is not offered by any other single company. Customers would have to go to
multiple vendors for different products, so there is a low threat of substitute products.
3. Bargaining Power of Buyers
Since Cisco has a diverse set of products and services, large customer base and is not
dependent on a single bulk buyer for its business, the bargaining power of buyers is low.
As mentioned in the case, Cisco has more than 600,000 registered customers.
4. Bargaining Power of Suppliers
Cisco does not rely on a single source of suppliers, but sources its products various
contract manufacturers and only performs design, final assembly and test. Hence the
bargaining power of suppliers is low.
5. Threat of new entrants
The high growth rate of the three independent proprietary networks: phone networks for
voice, local-area and wide-area networks for data and broadcast networks for video may
seem to attract new entrants, however in order to successfully operate in the network
industry, a company requires a huge capital investment for research and development
and expert domain knowledge to design innovative networking products, or a company
would need to acquire another company that is developing innovative networking
products. The new entrant company would need to differentiate itself and provide
complete business solutions. All these requirements serve as significant barriers to entry
for new entrants. However, for big telecom companies such as AT&T and Verizon that
have an established brand can easily diversify their product base through acquisitions
and enter into the networking market. Hence there is a moderate threat of new entrants.
III. Role of IT and Strategic Grid
IT plays an important role as an enabler of business through e-commerce, supply chain
management, customer relationship management and employee self-service applications
in Cisco’s business strategy of providing innovative business solutions, achieving

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cost and competitive.
and staying to analyze traffic. Yourand
IT systems IP address and user-agent
networks
statistics, and toenable
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and transmission of data between contract manufacturers, customers,
address abuse.
employees, and business partners such as acquired companies. The legacy IT systems at
Cisco would fall in the “Factory” quadrant of the strategic grid as it included
applications that are critical to sustaining existing business for daily operations. When
the legacy applications failed, Cisco was virtually shut down for two days.
Cisco’s ERP application was implemented as a turn-around system that would bring
about major process and service transformations. The ERP solution would replace the
legacy system with a “big-bang” instead of a phased implementation approach. At $15
million, the ERP project constituted the single largest capital project ever approved by
Cisco. After the ERP implementation, Cisco was able to reorganize R&D and marketing
from multiple business units to three lines of business in fewer than 60 days for a cost
less than $1 million. ERP application provided significant cost reductions, flexibility and
scalability through standardization. ERP project laid the foundation for incorporating the
internet applications such as E-commerce, employee self-service, executive information
systems and decision support systems which closed a significant cost, service and
process performance gap with competitors. Since the ERP system did not have a high
impact on the core operations, but had a high impact on Cisco’s core strategy, IT would
be in the “Turn-around” quadrant on the Strategic Grid[4].
IV. Description and Brief Discussion of the

Issue
Cisco’s legacy IT department was too traditional and internally oriented and being
viewed as a cost center. The potential contribution of IT to business was also much
smaller than it could be. The legacy systems were traditional financial, manufacturing
and order-entry systems, which could not scale to support Cisco’s growth, nor were they
flexible or robust enough to meet management requirements. Years of customization to
the legacy system had resulted in a complex platform, that was familiar and comfortable
for its users, but was out of date and in danger of imminent failure.[5] In January 2004,
Cisco’s legacy environment failed. An unauthorized method for accessing core
application database was used as a workaround, which malfunctioned and corrupted
Cisco’s central database. As a result, the company was virtually shut down for two days.
Cisco was the biggest customer of their legacy software vendor and the vendor was
being bought by another company. It was unclear who was going to support the legacy
systems. This created a sense of urgency to replace the legacy system. If each
department at Cisco such as manufacturing, marketing and finance implemented its own
software it would take longer time to do the separate projects. Hence, implementing a
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system such to an
analyze traffic. Yourwas
ERP application IP address and user-agent
crucial and time-sensitive.
V. ERP Implementation at Cisco
Cisco successfully implemented Oracle’s ERP application on time. The key steps in the
ERP implementation process and benefits are highlighted below:
A. Strong impetus for change
With the serious failures and limitations of the legacy system, there was a strong impetus
for replacing the legacy system with the ERP product. Even though the ERP
implementation would have a high cost to the company, management was able to see
value in implementing the ERP product and was not looking at cost avoidance.
When I was working at Chemistdirect.co.uk the management wanted to implement an
ERP package, however the high costs of the off-the-shelf ERP packages such as SAP
and Oracle proved to be a major deterrent and the company decided to develop an in-
house ERP package with a team of 6 .Net developers. The scope of the project grew too
large and with the budget limitations, the project had to be abandoned after 6 months. It
is important for the business to see strategic value in the ERP implementation and not
just view it as a good-to-have feature of IT.
B. Strong sponsorship & business involvement
As the case suggests, the ERP project had strong sponsors in Peter Solvik, CIO and Carl
Redfield, SVP of manufacturing who wanted to make the ERP implementation a priority
for a company instead of a second-tier effort. The sponsor’s level of commitment and
support can have the greatest impact on the delivery of an ERP system[6]. Cisco’s
management team also realized that the ERP implementation could not be an IT-only
initiative and would require heavy involvement from the business community, and
assigned critically important people from business to the ERP implementation project.
CEO Morgridge made the ERP project a priority for the business and one of the
company’s top seven goals for the year.
C. ERP vendor selection
Cisco leveraged KPMG’s experience in conducting a detailed vendor package evaluation
and proof of concept, and identifying the best ERP software packages to meet Cisco’s
business needs. With thorough evaluation criteria defined up front, the project team was
able to objectively evaluate and score five vendors of relevant application packages[7].
The choices were narrowed down to two vendors, and Oracle was selected after a three-
day software demonstration. Having Oracle as the ERP vendor was a good strategic
decision by Cisco as it gave Cisco a strong partner in the ERP project, since Oracle was
equally motivated to make the project a success as it would be the first major
implementation for the new release of the Oracle ERP product.
D. ERP project management
Cisco’s IT team did due diligence in proposing the cost and timeline for the ERP project
and took a pragmatic approach to estimating project requirements. ERP projects can
quickly scale up to become overdue and over-budget if the project scope is not correctly
outlined and if the requirements are not accurately defined. The decision to completely
replace the legacy system instead of a phased implementation was also a good decision
as it would create less confusion for the IT team for having to support the legacy system
and they could focus on the ERP implementation. The fact that the ERP project was
completed on time and within budget suggests that the project team did a good job of
preparing initial estimates and project management was able to avoid scope creeps and
keep the project on track.
E. Internet applications and benefits
The success of the ERP implementation provided the groundwork for the next phase of
Cisco IT architecture – web-enablement and incorporating internet and intranet
applications. Cisco developed several intranet and internet applications such as
Employee self-service, supply chain management, customer self-service, e-commerce,
communication and distance learning, EIS and DSS. Through its internal applications
for employees, people deployed around the world were able to interact and address
business issues and customer needs. Customers were able to place orders globally
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and address abuse.productivity gains of 60% through e-commerce.
Customer’s were also able to obtain online technical support through the self-service
application which improved customer satisfaction. From my experience working in the
e-commerce industry, being responsive to customers greatly improves customer
satisfaction. It is not so much a problem with the orders or late delivery, but a lack of
response that affects a returning customer.
Cisco was also able to maintain an efficient supply chain between itself and its suppliers
by creating a “single enterprise” of networked applications to integrate suppliers into its
production systems. Cisco automated and standardized the product test routines and
deployed these at the suppliers, allowing quality issues to be detected at source. Cisco
also implemented “direct fulfillment” where suppliers were directly able to ship orders
to the customers, instead of shipping it to Cisco. I think it was good move by Cisco to
automate and outsource the testing, however it will need to be careful that the suppliers
are not able to reverse engineer the autotest routines, otherwise Cisco can face the risk of
its outsourced manufacturers becoming independent retailers and competitors for Cisco.
The web-based EIS and DSS systems provided a convenient access for sales managers
and executives worldwide. While working with Philips marketing team, I was part of the
IT team that created a dashboard for the Philips global marketing executives, that
enabled them to view the sales for any Philips product or category in any region in the
world for any time period, which would help them in creating targeted marketing
campaigns. In such applications, it is important to restrict access based on authority.
Cisco will also need to take measures to secure the web pages and restrict access to
eligible employees.
The IP based architecture also enabled Cisco to quickly and effectively integrate the
acquired company through a documented and repeatable process for integration. Cisco
was able to eliminate the non-standard technology within the acquired company and
fully integrate it into Cisco’s infrastructure and core applications within 60 to 100 days.
VI. MOT Triangle
Cisco’s business strategy (mission) is to be a global, off-price value company
by building their businesses gradually and providing a secure foundation and strong
infrastructure[8]. In terms of information strategy, TJX had the necessary IT systems in
place to enable the business through networks that enable vendor relationship
management and CRM systems that helped target profitable customers. TJX also
effectively implemented barcode scanners and kiosks to speed up business operations.
However, its organizational strategy is not in-line with its business strategy of providing
a secure foundation. There is a clear lack of ownership and authority in terms of IT
network and systems security. There are no business processes defined for monitoring
and regular internal audits. There are no incentives or rewards for identifying or
reporting security issues internally. The company’s culture is working towards growing
their business through focus on low-cost but not necessarily a secure infrastructure.
Hence, the MOT triangle depicted below is uneven.
VII. Recommendations
To align the organizational strategy with the business strategy and information strategy,
the management at TJX will need to seriously focus on establishing an IT governance,
risk mitigation and management strategy. The action plan for the immediate future must
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the security breachtoand
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foremost, TJX must upgrade its network security protocol to WPA at all of its store
locations. TJX must also secure its physical assets to ensure that they cannot be
tampered. They must be located near security cameras or store registers to ensure
constant vigilance. TJX should implement firewalls to control access of kiosks to the
system. TJX should look at implementing a three-tier architecture where the database
layer is completely separated from the application layer to which the kiosks have access.
TJX should also use a strong encryption algorithm such as MD5 (Message Digest 5) or
AES (Advanced Encryption Standard) to store and transmit any information. It should
also not store any customer data that is not required or against PCI standards. TJX must
ensure that process and access logs are maintained at each and every system.
At an organizational level, TJX should create formal procedures for risk management
and use a RACI (Responsible, Accountable, Consulted and Informed) matrix to assign
key responsibilities such as network security scans and upgrades, internal PCI audits,
firewall scans and ensure that these activities are carried out as planned. TJX should also
look at having independent IT security audits on a quarterly basis. An effective risk
management process will provide reduced cost of operations, predictability, transparency
and confidence, avoidance of security breaches, and enhanced capabilities[9]. There
should be training conducted throughout the organization to increase awareness about
the importance of basic IT security measures such as not sharing passwords or leaving
computer systems unlocked, to prevent internal security breaches. Management should
promote employee rewards for exposing IT systems or network vulnerabilities. At
Accenture where I worked, each project team has a “security monitor” who is in charge
of reporting non-compliance to policies such as internal password exchanges or leaving
work computers or laptops unlocked. TJX management must drive the organizational
strategy for a secured IT framework to meet its strategic goals.
[1] Nolan, R. L., Porter, K., & Akers, C. (2001, March 24). Cisco Systems
Architecture: ERP and Web-enabled IT. HBS Premier Case Collec on, (301099), 1.
Retrieved from http://hbr.org/product/cisco-systems-architecture-erp-and-web-
enabled-it/an/301099-PDF-ENG
[2] Cisco Systems Inc. (2012, July 28). Cisco Systems, Inc 2012 Annual Report. Cisco
Systems, Inc Annual Reports. Retrieved March 11, 2013, from
http://www.cisco.com/assets/cdc_content_elements/docs/annualreports/ar2012.
pdf
[3] Cisco Systems (1995, October 26). Cisco Systems - Annual Report 1995. Retrieved
from http://investor.cisco.com/secfiling.cfm?filingID=950149-95-673
[4] Browne, J. (2009, January 25). Planning the Plan: McFarlan Matrix in ac on.
Retrieved from http://www.julianbrowne.com/article/viewer/planning-the-plan
[5] Cisco IT (n.d.). Business Applica ons Case Study: How Cisco IT Migrated to an ERP
Technical Support Module - Cisco on Cisco - Cisco Systems. Retrieved from
http://www.cisco.com/web/about/ciscoitatwork/business_of_it/ERP_technical_s
upport_web.html
[6] Guest Contributor (2006, September 19). 10 things you should know about
implemen ng an ERP system | TechRepublic. Retrieved from
http://www.techrepublic.com/article/10-things-you-should-know-about-
implementing-an-erp-system/6117288
[7] Cisco IT (n.d.). Business Applica ons Case Study: How Cisco IT Migrated to an ERP
Technical Support Module - Cisco on Cisco - Cisco Systems. Retrieved from
http://www.cisco.com/web/about/ciscoitatwork/business_of_it/ERP_technical_s
upport_web.html
[8] Our Businesses. (n.d.). Welcome to The TJX Companies, Inc. Retrieved February 2,
2013, from http://www.tjx.com/businesses.asp
[9] Building confidence in IT Programs. (2011, September). Ernst & Young - Global.
Retrieved February 4, 2013, from
http://www.ey.com/Publication/vwLUAssets/Building_confidence_in_IT_progra
mmes_through_programme_risk_management/$FILE/Insights_IT_Building_co
nfidence_in_IT_programs.pdf
Posted by sjawhad at 7:16 AM
Labels: 699022-PDF-ENG, cisco case analysis, Cisco ERP case, ERP Implementation at CISCO
73 comments:
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‫اﻷﺳﻌﺎر ﻣﻦ ﺧﻼل اﻗﻮى ﻋﺮوض ذھﺐ ﺑﺎﻟﺴﻌﻮدﯾﺔ ﻛﻞ ھﺬا واﻛﺜﺮ ﻣﺘﻮﻓﺮ ﻟﺪﯾﻨﺎ ﻋﻠﻰ ﻣﻮﻗﻊ ﺟﻮاھﺮ ﻓﻘﻂ زوروﻧﺎ ﺗﺠﺪو ﻛﻞ‬
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11/28/2020 Information Technology & Project Management Blog: Harvard Business Review: Case Analysis - ERP Implementation at CISCO

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