Building Cisco’s IT Infrastructure
I. Reason for implementing the ERP Information System
Cisco ran a legacy data entry system with a core database that was not flexible or scalable to support the company’s long term growth. A subsequent legacy system failure in 1994 resulted in the overall corruption of the central database and the company nearly ceased operation for two days. The business loss and potential for total system failure due to the incident prompted Cisco’s management to focus on installing a system that would meet Cisco’s System’s operating and growth requirements. Additionally, the centralized functional organizations that controlled the legacy systems did not have the incentives to address the core database failure. The lack of ownership of the core database and the patchwork of system workarounds prompted a more centralized system approach. The hiring of Peter Solvic as CIO in 1993 laid the foundation for IT infrastructure changes within Cisco. His realignment of IT’s role allowed for the ERP changes to be readily incorporated throughout Cisco. Peter already convinced the board and management staff that for Cisco to grow successfully an IT infrastructure that could support decision making from every level was required.
II. Key Factors in Implementing ERP in Nine Months
With the mission of having a new IT system in place quickly, Cisco decided that it was necessary to implement the changes all at once instead of having a phased transition. Furthermore, management did not allow for a lot of system customization to avoid any biases put forth by people wanting to mirror existing processes.
In developing the IT changes to meet its business needs, Cisco created a team consisting of its best people and enlisted KPMG as its integration partner to assist in the selection and implementation of the solution that the company eventually chose. The selection of KPMG was driven by the firm’s expertise and depth of knowledge in the IT industry which was demonstrated in the caliber of the consultants assigned to the project. One example was program manager Mark Lee who had been director of IT for a Texas company and who had experience with developing an ERP system.
The key factors involved in implementing the ERP system in nine months are:
- 1. The 1993 change in the IT reporting relationship allowed for greater awareness of IT’s strategic role in the long-term growth of Cisco.
- Along with the above change, a structure was created where IT investment decisions on application projects were still executed by central IT. This allowed Cisco to respond to the needed changes with greater efficiency and speed.
- Given Cisco’s nine-year business history, they had relatively few roadblocks with respect to the costs of switching.
- Non- phased implementation, the system was to be implemented all at once. This is a high risk but faster implementation strategy.
- Developed a strong cross-functional management team with top talent within the company to oversee quoting and implementation.
- Hired experienced KPMG consultants to advise on the integration of the system
- External quoting of vendors for ERP packages by responding to Requests for Proposals (vendors who wanted the business had 2 weeks to respond).
- Strategy was to only use vendors which had substantial financial backing to support a company as large as Cisco.
- Board made the project one of its top seven goals for the year and communicating the importance of its successful completion.
- Identified timeline for project to be completed, cost, and then obtained board approval as it related to their strategic vision.
The project team eventually chose the company Oracle, based on their proximity, size, and ambition to undertake the project. Perhaps of equal importance, the Cisco project would be the first major implementation of Oracle’s new ERP product. Because of this possibility, it was believed that Oracle would continue to invest significant effort into achieving the Cisco business. In addition, Oracle felt this opportunity could be a springboard into their future success.