Presentation Report

Information Strategic Management

Enterprise IT at CISCO

Submitted by:

Pavan Kumar (215118013)

Krishna Teja (215118023)
Sai Srinivas (215118024)
Mohan Kumar (215118028)
Sanjay Sankar (215118036)
Pavan Raj (215118056)

Submitted to:

Dr. P. Sridevi
Head of Department (HOD)
Department of Management Studies
National Institute of Technology, Trichy
 Enterprise IT at Cisco
Cisco History and Overview

• Founded in 1984 by two Stanford computer scientists.

• CEO : John Chambers

• Location : The San Jose, California

• World’s largest developer of networking and communication products.

• 35,000 full-time and 18,000 contractors throughout the world.

• 1993 : Peter Slovik, CIO, reorganized IT

Revenue doubled - $12.2B (FY99) to $22.3B (FY01)

Redundant processes; too much autonomy

• 2001 : Brad Boston, new CIO, centralizes IT management

3 measures

New financial structure

BPOC

Product Offerings

Routers and Switches - 67% of Cisco's Revenue (2003)

Services - 18% in Revenue (2003)

SIX Advanced Technology :

1. Optical

2. Network Security

3. Internet Protocol (IP) communications

4. Wireless LAN

5. Storage Networking

6. Networked Home
PROCESS

• 40% of the sales were to customers outside of the America (Europe, Africa etc)

• Cisco directly sold to Larger customers

• Indirectly through Distributors and Value-added resellers(VARs)

• Cisco also worked closely with strategic alliance partners with IBM, AT&T in order to reach more
customers and provide broader solutions.

• Although Cisco designed and developed its products, it did not manufacture them.

• Instead, Cisco worked with network of manufacturing partners that assembled the products
based on the specifications provided by cisco.

• Cisco relied on its information technoogy (IT) network to transit orders.

VISION AND GOALS

Three Priority Enterprise Projects :

• Upgrading the Oracle ERP system.

• Establishing an enterprise-wide reporting and business intelligence unit.

• Developing a single customer database.

IT At CISCO
(1993-2001)

Boston’s predecessor, Peter solvik, joined cisco in 1993 as its CIO.

Several changes have taken place

Fundamentally changed the role of IT at CISCO.

First – Reporting relationship of the Department.

Moving the IT organisation out of the Finance group and into the Customer Advocacy group.

Second - Reallocated majority of IT budget.

Third – Disbanded a central IT steering committee.

In 1994 cisco’s rudimentry IT systems were on the brink of failure.

 Company needed more infrastructure.

CISCO decided to implement ERP system and selected oracle as the vendor.

Primary goal of the ERP system was to help manage cisco inventory and manufacturing
processes.

With help of Oracle and Kpmg CISCO installed ERP System.

Replaced all other existing technology at the company over the course of 2 years.

Infrastructure investments provided a strong foundation for cisco to build out its internet
capabilities.

For its own employees cisco created an extensive intranet.

• For its customers cisco developed a comprehensive web based online resource at cisco.com…

• By the end of 2000 cisco website was accessed 3.8 million times each month by registered
users, make it the primary vehicle for delivering technical support.

• By 2000 cisco had over 200 projects in process and had a difficult time find enough engineers in
san jose region to work on them.

• In late 2000 cisco opened a facility in research triangle park in north carolina inorder to hire
more engineers.

• By early 2001, employees in the IT organisation were working around the clock to help cisco
scale its operations.

• Cisco also acquired over 40 companies 1999 to 2001, and its IT department helped integrate the
new businesses in an efficient manner.

• In 2001 over 90% of customers orders originated online, and customers used the wed to
download software upgrades.
 • Chambers supported the IT efforts based on his belief that cisco should spend whatever was
need on IT if it was helping the business grow and become more productive.

• As Mike Bender, ITs director of finance, explained, “john [chambers] as said that IT can have an
unlimited budget, as long as one of the functions of business teams is willing to allocate the
money.

IT after 2001

• Cisco's sales growth slowed dramatically.

• Internet bubble burst and 09/11 terrorist attacks.

• Solvik(CIO) left CISCO and Boston joined as new CIO.

Boston's IT Assessment

• Business leaders getting frustrated with latest technology investments.

• Spent more money on customized tools(providing 9 different order-status tools from different
departments)but not providing desired result.

• Multiple databases and fuzzy definitions resulted in conflicting order reports.(eg:shippement

definition is not clear).

• Problem with data sources and core architecture.

• No centralized group for IT decisions to check conflicts and redundancies.

• They found they are using 50 different survey tool which are not necessary from
different functions.

• Lack of centralized IT made delay of ERP upgradation which is important that disconnects
interfaces of department tools.

Boston's Actions

• First area of focus was,to keep hold of any new tools,applications,customized projects.

• Founded new customized software will make upgradation of ERP harder.

• Few teams gone for underground IT projects,which made IT to take up that projects from them.

• Amnesty program was introduced to uncover shadow projects.

• Second area of focus was deciding broad IT platform projects that have priority to company.

Three Enterprise Projects

• Upgrading Oracle ERP system.

• Establishing enterprise reporting and Business Intelligence solution.

• 'Single source of Truth' customer base(e-customer).

Boston's Actions

• It was estimated that three projects would take atleast 3 years.

• Hundreds of employees needed throughout the company.

• They need to clear customized interfaces of each department as original ERP was focused to
support Financial, Manufacturing and Inventory.

• Some of the functional groups developed customized

solutions lile Sales,Marketing,Human resources.

• It was estimated that three projects would take atleast 3 years.

• Hundreds of employees needed throughout the company.

• They need to clear customized interfaces of each department as original ERP was focused to
support Financial, Manufacturing and Inventory.

• Some of the functional groups developed customized

solutions lile Sales,Marketing,Human resources.

Further Actions

• Departments are accustomed of controlling their own IT projects funding.

• They need to contribute to pool resources forming cross functional strategy.

• Individual functions IT and corporate IT needed to work together.

• Cisco invested 5% of revenue on IT as

• 50% for Infrastructure(data centes,corporate networks) funded by corporate IT.

• 35% for application development for client groups(remaining client funded portion)

• Portion of application funding was needed for ERP upgradation,customer database.

 • 15% for direct-charge items like PC,phone,VPN's funded by client-groups managed by corporate
IT.

• Each group need to contribute a portion of its spending to companywide initiative

• The amount of contribution will be decided by the senior level of each functional groups

• All the groups were expected to work together to divide the cost and allocate people
accordingly

Higher degree of centralized IT planning

Set & drive the corporate priorities for the company

Focused on enterprise- wide productivity

It defines the business process framework

It acts as a high level advisory committee

BPOC was like a virtual COO

In order to implement the actions boston aligned his team with major business functions

Bender – IT needs of finance dept

Aungle – Sales

Jacoby – Manufacturing

Other 3 members were responsible for providing infrastructure, equipment & support

Boston assigned owner to each of the three major initiatives

Take time to come up with a robust solution

As they don’t have a strong data- governance model large volume of data scrubbing is need to be done

To avoid the need of large scale clean-ups in the future

More centralized vision for IT with retaining the core part of IT strategy
 • Cisco’s own IT department should be cisco’s first & best customer

• Boston encouraged his IT team to use its own product wherever possible in its system

• By using they can make it more reliable & easy for customer implementation

• IT department spent a great deal of time meeting with the customers

IT in 2003-2004

 By mid-2003, Cisco had made great strides towards completing the three large enterprise
projects that Boston and BPOC had prioritized.

 Boston reorganized his team into business process groups – reflected major activities of the
company.

 Market – Sell
Lead – Order
Quote – Cash
Issue – Resolution
Forecast -Build
Idea – Product
Hire – Retire

 Market – sell:

 Identifying the needs of the product/service and adding value, finally increasing profit

 Lead – order:

 Set of business processes involved with acquiring the lead, converting to an opportunity,
creating and securing the quote, receiving and fulfilling customer requests for goods and
services.

 Quote – Cash:

 The integration and automated management of end-to-end business processes on the sell side:

 Product Configuration – Pricing - Quote creation - Contract – Invoicing - Payment receipt

 Issue – Resolution:
  Problem identification - Develop solution - Return to Replace - Closed loop feedback

 Forecast – Build:
Estimate the cost and creating the product/service

 Idea – Product:
Idea – Validation – Prototype - Effectiveness and Efficiency – Product

 Hire -Retire:
Support the Business, encompasses functions such as finance and HR from the employees they
recruit to the employees those retire.

 The new organization allowed to link multiple functions together and forced everyone to think
about our business in an interdisciplinary way – Hall

 Boston’s reorganization impacted the regional orientation of the company – Earlier each part of
the IT group was further subdivided by region and funding was fragment as well.

 But now Boston removed the regional subdivisions, forcing his team to think in a more global
context.

 This created challenges because business was often conducted differently based on geography
and approximately 65% of professionals were based in Silicon Valley.

Challenges

 IT teams focus (vs) Organisational Functioning.

 Communicating with the middle Managers (The bigger picture Perspective).

 Complex and matrix(ed) Organisastion. Being accountable to multiple teams.

 IT funding & benefits of Enterprise projects.

 Ability to make quick decisions & seize new market oppurtunities.

New IT Spending Model:

Balance between

ROI & Risk Management.

Sales and marketing projects – David Aungle:

Many of the enterprise engineers are based in San Jose and IT team has no visibility into the business
problems in rest of the world.
  They tried to solve this by hiring more engineers who will be based in Europe and Asia – giving
them real responsibility.

 They thought acting globally meant informing the rest of the world as to what they do in San
Jose but they realized that it means actually distributing work to employees in other places
globally.

 They were careful to isolate the localized projects from the global projects

 Effectiveness of BPOC

 New decision making process

 Submission of proposals

 Risks and returns

 Monetary value to new and unknown inventions

 No room to experiment

 Hectic process and not enough funding

 Contractors reliability

 Contractor – Employee ratio too high

 Freedom to develop new programs

 Conflict with centralization goal

 Global centralized perspective

SWOT Analysis

Strengths

Innovation

Culture fuels entrepreneurial drive

Talent acquisition

Market leader

Weaknesses
Communication – Saying no

Enterprise engineers mainly in San Jose

Reorganized structure – Who reports to whom?

Opportunities

Global expansion – Europe & Asia

Balance between using contractors and hiring engineers in India

Threats

China capitalising on IT markets

Double as many contractors as employees

Conclusion
• As Boston reviewed CISCO’s IT landscape in 2004 he was aware that they still have some major
challenges ahead.

• He was confident that the new process organization was best for the company but he was
sensitive to the concerns that had been raised by employees.

• He wanted each function to feel invested in the company’s IT strategy, and he wanted to
preserve elements of the client funded model.

• Boston was aware that the issues surrounding the proposed customer interaction network
might steer up some debate. In the late 90’s the customer advocacy group would have already
started working on the project, pulling the money from its budget for client – funded application
development.

• The team felt the need to make a formal request to BPOC because the project involved the
other functions. There was a possibility that the request for support would be denied in the
favor of other proposed intiatives, which would frustrate the members of the team.