III. Cisco’s Internet Business Solution and the Key Benefits Provided
Cisco’s web development began in the early 1990s with the discovery of Mosaic, a public domain web browser developed at the University of Illinois. Within six month of the discovery, Cisco was able to enhance the technology by web enabling all production and transaction applications for itself and its customers. This technological advancement led to what we now know as the intranet and internet.
Cisco’s internet business solutions were developed at an investment cost of $115 million. The outcome of Cisco’s innovation resulted in efficient business transactions between Cisco and others through direct web interaction. In order to reduce transaction time for their business to business (B2B) applications, Cisco had to integrate an online connection with its customers which provided around the clock service.
Using the internet, Cisco implemented an extranet supply chain system that allowed Cisco and its contract manufacturers to exchange information and interact through labor-intensive processes. Other initiatives include customer self service, net commerce and marketing all through the web with any place access. Cisco also built its business process globally and dispersed internal employees worldwide to strengthen customer ties and solve their needs. The online system integrated suppliers and customers to one system allowing a cohesive integration of supply chain and customer requirements.
The benefits of the B2B initiatives are significant in value. The use of Cisco.com, for instance, in answering questions, diagnosing network problems and providing solutions and worldwide expert assistance resulted in savings to Cisco of nearly $506 million annually. Moreover, Cisco’s Internet Commerce based revenue as of January 2001 amounted to over $25 billion annually. Additional benefits included:
- Customer service can be accessed 24 hours a day, seven days a week on an electronic basis.
- Support 40,000 employees and 600,000 customers worldwide through the network.
- Productivity gains of 60% for Cisco and 50% for customers through the internet product center. Shipping products and upgrades through the internet does not require manual labor to process orders.
90 % of Cisco’s software upgrades are now delivered via the internet at a lower cost and shorter time period in contrast to the significant shipping and processing costs of sending software upgrades by mail. For a client like Sprint, using Cisco’s online system, has enabled this client to cut its ordering staff from 21 to six employees thereby allowing the other 15 employees to work on installing networks. The use of networked applications in new product introductions (NPI) reduced time to volume by three months and total cost of NPI by $49 million in 1999.