1. Cisco Systems, Inc.:
Implementing ERP
Case Study Analysis by:
Djadja Achmad Sardjana
STMB -Biztel
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2. Case Facts: Introduction
• Pete Solvik, Cisco Systems ClO,
considered the last remaining line item of
his ERP implementation budget.
• Cisco had a history of rewarding
performance with cash bonuses.
• The amount allocated for rewarding the
ERP team, over $200,000, was
unprecedented.
• To be sure, they had delivered a lot in a
time frame that no one had believed
possible It had not been easy either.
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3. Case Facts: Cisco History
• Cisco Systems, Inc.:
– Founded by two Stanford computer
scientists in 1984
– Became publicly traded in 1990.
• By 1997, its first year on the Fortune 500,
Cisco ranked among the top five companies in
return on revenues and return on assets.
• On July 17, 1998, Cisco’s market
capitalization passed the S100 billion mark
(15 times, 1997 sales).
• In 1988, Valentine (One of major
shareholder) hired John Morgridge as CEO.
• Morgridge believed that many Silicon Valley
firms decentralized too quickly Loosing
Control
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5. Case Facts: Cisco IT History
• Pete Solvik joined Cisco in January 1993 as
the company’s new CIO.
• At the time, Cisco was a $500 million
company running a UNIX-based S/W.
UNIX-
• Solvik’s initial inclination was to avoid an
ERP solution planned to let each functional
area make their own.
• Keeping with Cisco’s strong tradition of
standardization functional areas use
common architecture and databases.
• Solvik’s objection to ERP solutions was also
born out of concerns about the types of
“megaprojects” that ERP implementations
often became.
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6. Problems:
• Just run over the legacy systems had in
place Constantly band-aid existing
band-
systems.
• The systems replacement perpetuated
the deterioration of Cisco’s legacy
environment.
• January of 1994, Cisco’s legacy
environment failed so dramatically the
company’s systems were on the brink of
total failure.
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7. Recommendation:
Selecting an ERP Product
• Cisco’s realized that implementing ERP would require
heavy involvement This could not be an IT-only
IT-
initiative.
• Consistent with the need for a strong Cisco team, the
company would also need strong partners KPMG
• With KPMG on board, the team turned to the software
market with a multi-pronged approach for identifying
multi-
the best software packages.
• The team spent 10 days writing a request for proposals
(RFPs) to send to the vendors Oracle win.
• Selection of Oracle was based on three of the major
decision points:
– First, this project was being driven pretty strongly
by manufacturing and Oracle had a better
manufacturing capability than the other vendor.
– Second, they made a number of promises regarding
the long-term development of functionality in the
long-
package.
– The other part of it was the flexibility offered by
Oracle’s being close by.
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8. Strategic Questions:
• How much would it cost?
• How long would it take?
• How long should it take to do a
project to replace all of our core
systems?
• As requested by systems
production, can do it in five
months?
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