Cisco Systems, Inc.: Implementing Erp

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1. 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. Below are reasons Cisco hesitated to take on an ERP project: a)Fear of decentralization

b)Fear of “mega-projects” that ERP implementation often becomes c)Disruption to the business
d)Need for strong internal team and strong partners
e)Balancing standardization versus proprietary functionality f)Cost
Fear of decentralization
Cisco’s CEO believed that Silicon Valley firms had a tendency to decentralize too rapidly while not appreciating the functional organization’s ability to grow. In this case, Cisco had many decentralized divisions, whereas the ERP solution would drive centralization. Mega-projects

As the name implies, a “mega” project is a large project which draws a large amount of resources in order to complete. Such projects also usually entail long and complex implementation schedules. In this case, a prospective ERP solution was tasked with conjoining vast and different functional business teams in a fast moving technology-based company — a complex endeavor.

Disruption to the business
Cisco was a rapidly growing company utilizing a Unix-based software legacy package to support its core transaction processing. Given their desire to grow from a $500M to a $5B company, each functional area was tasked with deciding which applications were appropriate based on their individual need. Implementing an ERP system impacts all functional teams, and in this particular case, did result in daily outages which impaired Cisco’s ability to conduct business. Need for strong internal team and business partners

In integrating an ERP solution, which impacts all functional areas, Cisco was concerned that whether they would be able to successfully secure the “best and brightest” amongst their employees to participate, given the myriad of other functional business priorities. The Cisco management was also concerned with identifying and securing the right external business partners, in this case KPMG and Oracle, to drive a successful implementation of ERP. Balancing standardization versus proprietary functionality

Management also hesitated prior to the decision to implement ERP solution due to the varied analysis of what the ERP system may immediately offer Cisco existing business needs versus what future modifications may be necessary in order to support the sales group in the future. Proprietary modifications complicate the ability of Oracle to issue future ERP upgrades. Cost

Given the expansive nature of any ERP implantation, cost is material. In the case of the Cisco, the proposed ERP solution was estimated at $15M, becoming the largest ever IT project to date. Management can become hesitant prior to the expenditure of such a significant level of resources. 2) 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? Below are pros and cons of implementing “Software off the shelf” vs. customized software: a)Time to implementation

b)Cost
c)Support/enhancement needs down the line
d)Reliability
e)Business Involvement
Time to Implementation
It is faster to implement the “software off the shelf,” even though the customization and configuration of the software to current business process might take little time but much faster than developing the software. Developing software is a long process and in involve significant amount of designing, coding and testing processes depending upon the complexity of the software. Cost

The cost associated with developing new software is very high considering the cost associated with procuring the additional hardware required for...
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