Strategy AnalysisError! Bookmark not defined.
Firm-Based Value Chain Model6
Model Application at Cisco8
Implementation Opportunity Analysis9
Tangible and intangible cost estimation.13
Tangible and intangible benefit estimation.14
Cisco Systems made the decision to implement a new company wide ERP system. Cisco initially was running a UNIX-based software package to support its core transaction processing. However, the legacy system in place constantly needed maintenance and the available upgrade was much too small for Cisco, which was growing at a rate of 80% per year. Our analysis details Cisco’s choices during the implementation process, and the circumstances involving decisions associated with the success of the project. Also, discussed is the degree of success the implementation had in terms of cost and performance. And finally, our analysis contains summaries of the major success drivers and flaws in place, which contributed to the successful rollout of Cisco’s 15 million dollar ERP project in only nine months.
Cisco Systems, Inc. perhaps the biggest name in the data communication business had only one keystone product its router. Founded by two Stanford computer scientist in 1984, by 1997 Cisco became a fortune 500 company. The following year Cisco’s market capitalization was over $100 billion dollars (Cisco Case, 2002). Around 1993 Cisco was a $500 million company and running a UNIX-based software package to support its core transaction processing. The functional areas supported by the UNIX package included financial, manufacturing, and order entry systems. CIO Solvik said “We want to grow to $5 billion-plus company”. He analyzed the current UNIX-based software package, and found that it did not provide the degree of redundancy, reliability, and maintainability that Cisco needed to keep up with their current business trends. Solvik’s initial inclination was to avoid an ERP solution. Cisco’s strategy up to this point was centered on a strong tradition of standardization; however, all functional areas would be required to use common architecture and databases. Solvik’s plan was to let each functional area make its own decision regarding the application and timing of its move. The following year saw little change in the software support system at Cisco. None of the department made changes instead they continued to operate by fixing the existing systems and somehow managed to carry on business as usual (Cisco Case, 2002). In late 1993, Randy Pond, Senior VP operations at Cisco confirmed that fixing the existing system was pointless as it would not serve the growing needs of the firm. In January 1994, Cisco’s legacy environment failed entirely, resulting in a shortcoming that could not be ignored. The company was shut-down for almost two days. This was a defining moment for Cisco’s management team to see that the company’s systems were on the brink of total failure. Strategy Analysis
Cisco Systems operates under a manufacturing and service model where it manufactures networking equipment and offers services to support the functionality of their products in the communications and IT industry. Cisco adopts a networking equipment product and service provider model. Cisco’s networking technology provides the stage that allows users to collaborate quickly, safely, and effectively with two or more people. Goals
Cisco’s goal is to meet customer expectations and grow fast in revenues. The organizational goal is to shape the future of the Internet by creating value. They want to be innovative by offering new products and services to the consumers. Strategy
The ERP team’s strategy employed a development technique referred to as “rapid iterative prototyping.” When the team uses this...