Cisco ERP Implementation

Template for Case Discussion

1. Lead: Present case background (Cisco context, IT environment - IT infrastructure and governance, IT problems, decision to address situation through ERP). o About Cisco and what it does, market value, revenues and its growth pattern o IT infrastructure and governance structure before ERP o Outline the players and firms in the game (Cisco, Oracle, KPMG and H/w Vendor, etc) o Existing S/w packages and IT challenges 2. Class: Analyze timeliness of Cisco's decision to go in for a major IT overhaul (ERP decision). Early? Late? Why? o Role play make class the players divide them into different business groups o Sales, operations, Finance, marketing, IT and C-level Execs o Ask each BG Why do they need an s/w package to do what they do? What are their expectations from the package? What benefit do they see in it? What are the integration points between various business functions? o Jan 1993 - $500M company UNIX based package by a small vendor target growth $5B why is the current vendor not suitable anymore? o Why cant individual functional areas implement their own packages? o "What type of company needs an ERP system?" Does a $30M or $500M or $5B company need a ERP? o Turning point what happened in Jan 1994? o Key factors that compelled Cisco to implement ERP? 3. Lead: Describe Cisco's decisions and process for key ERP project parameters (degree of customization, cost, timeframe, vendor selection, etc.). o How was the vendor selection done? Was it a wise decision? What were the key elements in the vendor evaluation? o Timing and time lines of the ERP implementation? Was the timing right? How is business impacted by these timelines? o Customization why and why not? What is the cost of doing it? Pros and Cons?

4. Class: Analyze the process and quality of Cisco's ERP project decisions. How did the timing of initial decision impact the process/choices for ERP project parameters? o Rapid implementation is the key but why? 5. Class: Why (or why not) would a company want to change well-established business practices to fit some generic off-the-shelf software? If you had to advise someone on how to evaluate this question, what 2-3 criteria would you suggest them to focus on? o Again why cant I develop a package that aligns exactly to my way of business? 6. Class: Having decided to implement ERP and made the initial configuration decisions, what are the likely big obstacles to successful implementation? How would you propose overcoming them? 7. Lead: Describe Cisco's "implementation management" choices (structure of project team, implementation partner, incentives, prototyping). o Implementation team formation (Mission control), roles and responsibilities talk about the key factors around this team model. o Why do they need a Big 6 as implementation partner? o Why did they divide the tracks? Was PMO too crowded? o Why did C-level get involved? Was it too much or too low, and why? o Why did they pick the best from business and put them on tracks? How did the functional areas react? Was it justified? What is the risk? o Why were the incentives so high? Is it justified? o Implementation approach conference room pilots, Vanilla system, tiger team, locking the core team, Realization phase, Testing, Go-live, Stabilization and support discuss these phases 8. Class: Discuss to what extent these choices affected success/failure of ERP implementation. What factors made the difference between success and failure? o managing change, business process reengineering, establishing critical success factors and indicators 9. Lead: Describe Cisco's approach towards the testing and "Go Live" phases. 10. Class: Once the software is "ready", what are the risks involved in "going live" with such a large IT implementation? How well did Cisco manage these risks? 11. Class: Should the ERP implementation be considered a success or failure (in terms of, say, timeliness, software scope, etc.)? What "best practice" lessons can you draw from the Cisco experience - practices that can be employed and generalized to other large IT implementation projects? 12. Lead: Wrap-up, conclusions.

Lessons learned Leadership - The formation of a team that was quick acting and concise was one of the largest success drivers for the project. The team got corporate backing and support from the entire company to drive the point that this was going to be the new way of business. Planning- Planning carried the project a long way. The initial planning and analysis of project scope, partners, and vendors was the single reason that the project was a success. Cisco found the best people for the job and what they received in return was the unsurpassed service from each of their partners. Contract negotiation- Contract negotiation is always an underlying factor in any projects success. In the Cisco case a great contract born of great opportunity saved the company thousands of dollars and perhaps months of system configuration during the late stages of the implementation. Be persistent- During the choosing of parameters and system configuration the company decided to go 80-20 on parameter settings and cram months of research and choices into two days. The project had been going extremely well up to this point and if Cisco would not have rushed this as much they would not have encountered the same amount of problems with scope and capacity if they simply would have taken more time and been persistent with their planning.

Helpful hints for preparation

1. Collect information about ERP implementation failure at a major firm. What went wrong and why? What are the generalizable lessons from this failure? 2. What is the "big deal" with having legacy systems and making them work with each other?

3. In terms of Cisco's non-decision about fixing IT: Why did different functions do nothing for a year? What can a firm do to overcome the kind of inertia that Cisco experienced? 4. Where had the ERP team been "smart"? Where were they plain lucky?