Cisco Systems Architecture: ERP and Web Enabled IT

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Group 3Aadil Katyal - 03 || Ankit Gupta - 29 || Chetan Metkar - 55 || Himadri Singh -

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Agenda

▪ Company’s History & Growth

▪ Strategy

▪ Building IT infrastructure

▪ Selection of ERP Product

▪ Internet and Intranet Applications and Benefits

▪ Supply Chain Management Initiatives

▪ Integrating Acquisitions into the IP-based IT architecture

▪ Conclusion

Mission & Vision

Vision

“Change the way world works, lives, plays and learns.”

Mission

“To shape the future of the Internet by creating unprecedented value and opportunity for its customers, employees, investors and ecosystem partners.”

History ▪ Cisco was founded in 1984 by Leonard

Bosack and Sandra Lerner

▪ Principal product from inception was the internetworking router.

▪ First product shipped in 1986

▪ In 1997,Cisco ranked in the top five companies in return on revenues and return on assets in FORTUNE 500

▪ Don Valentine, first major investor

– Secured investment by demanding a controlling interest in company

– Promptly hired John Morgridge as CEO

Growth

▪ 1990’s companies began installing local area networks (LANs)

▪ Tremendous growth opportunities

▪ John Chambers took over in 1995

▪ Adopted strategy of Systematic Acquisitions and Strategic Alliances

▪ As of April 2008 Cisco had acquired 127 companies – 50% of the company

Growth

▪ The largest acquisition as of April 2008 was Scientific Atlanta

▪ Arguably the most important Acquisition was StrataCom, Inc.

– $4.67 billion acquisition completed in April 1996

– Leading supplier of products capable of handling voice, data and video

Growth

Strategy▪ Guided by Market Transition

1990-1997End-End and IP based networks

1997-2000All-in-one (Voice/Video)

2000-2006Network of Networks

2006-2008Network as Platform

2008-CurrentCollaborationWeb 2.0Borderless networksMobile IP

Business Strategy

▪ Provide Networks and Communication Solutions

Strategic Objectives

▪ Lead Cisco entry into key market

▪ Invest in strategic technologies and partners

▪ Partner with business units – a strategic advisor

▪ Talent Management

Business plan

▪ Assemble a broad product line so Cisco can serve as one-stop shopping for business networks.

▪ Systematize acquisitions standards for networking– it make more than 70 acquisitions and key strategies to fill out its product

line

▪ Set industry wide software standards for networking.– It issued IOS(Internetwork Operating system) licenses to Ericson, Compaq,

HP, Microsoft, Intel and 12 Japanese companies

▪ Pick the right strategic partners– Worked with Microsoft to create industry standard for security over

network

– Worked with MIC to deliver premium Internet services

– Worked with HP to develop and sell Internet-based corporate computing systems

Goal & Culture

Goal

▪ Become lead architect and provider for new Internet-based infrastructure

▪ Change the way companies and industries operate

CultureSustainability Stretch Goals/ Continuous Improvement

Quality team Trust/Integrity/Giving Back

No technology religion

Drive change

Teamwork Fun

Thank You!

Current Application Assessment

▪ Poorly implemented original software platform.

▪ Unix-based software package to support Financial, manufacturing & Order Entry.

– Care System

– Metrix System

– Calico foundation technology

Current Application Assessment

▪ Initial approach to Upgrading

– Functional area responsibility

– Band-Aiding

– January 1994 system crashed

▪ ERP Solution

– Robust

– Reliable

– Efficient

Connectivity Needed?

Connectivity & Mobility

▪ What is needed– Standardization

– Flexibility

– Extensibility

▪ What are the options– Custom Integrated Systems Architecture

– ERP

Connectivity

Integrated Architecture– Separate lines of development - EAI▪ Systems Integration Plan

▪ Low-level Connectivity

▪ IT Infrastructure

– Advantages▪ Custom solution

▪ Potentially highly efficient

– Disadvantages▪ Building a patchwork architecture

▪ Middleware

Connectivity

ERPSystems Integration Plan

– Advantages▪ All-in-one solution

▪ IT infrastructure and connectivity baked in

▪ Less middleware

– Disadvantages▪ Limited customization

▪ Difficult (and expensive) to extend

Connectivity

Keys to Success

▪ Open standards

▪ Proper planning and involvement

▪ Scalability testing

Business Process▪ Integrated systems and real-time environment

Infrastructure Challenges

▪ Traditional IT department did not operate optimally

▪ Inflexible current systems couldn’t support Cisco’s growth

Solution

▪ IT reporting relationship changed from Accounting to Senior VP of Customer Advocacy

▪ Conduct IT budgets at functional level (better funding for all IT projects)

– Disbanded central IT steering committee

– IT investment decisions on application projects pushed to line organizations but executed by central IT

Business ProcessBusiness Process

▪ Convincing Management and many engineers – Change Management

▪ End-to end and big bank approach - a great risk

▪ Need to access the impact of the change and manage user expectations

Solution

Internal Involvement

▪ Heavy involvement from the business community – Not just IT initiative.

▪ Get very best people and who know the business.

External Involvement

▪ Strong partner to help the selection and implementation – KPMG

▪ Get knowledge and experiences from other “Big Six” firms Team training

Business Process

Analysis and Process Design• External Partners – KPMG• Best people who knows the business• Oracle –ERP training

System Integration• Set the parameters for Oracle to be integrated• Focus on getting the application up and running

Pilot & Testing • Conference Room Pilot

Review & enhance• Unable to handle the load• 3 months to enhance and stabilize the system

Milestones for the Project

Process

▪ Oracle ERP – Manufacturing capability

– Long-term development of functionality of package

– Flexibility of Oracle’s being close by (location wise)

▪ 15 million budget and 9 month to implement

Oracle ERP

Analysis & Recommendations

▪ No proper Business case or Cost Analysis

▪ Downtime not considered

▪ ERP Implementation time frame of 9 months?

▪ Big bang approach of critical systems

▪ 1% effort gave 80% accuracy

▪ Impact of pulling key resources from the projects?

▪ Oracle first implementation of the new product?

Thank You!

IT at CISCO

▪ Cisco was a $500 million company using a UNIX-based software package for its core transaction processes.

▪ This software package was suitable for companies with $50 million to $250 million revenue and not $500 million.

▪ Finance, manufacturing and order entry were supported by this software package.

▪ CIO knew the company’s growth prospects were very good. So thought the software package wasn’t enough.

Problems with the legacy systems

▪ Company’s annual growth rate was 80%.

▪ Transaction rate had increased drastically.

▪ The legacy systems did not have the capacity to handle the load.

▪ Any attempt to improve the applications would crash the system.

▪ IT department would spend its time repairing the legacy systems.

▪ One day, it was corrupted and thus shut down for 2 days.

“You know, careers are lost over much less money than this.”

Applications and Benefits

Internet & Extranet

▪ Began development in early ‘90s

▪ Shifted from Mosaic to Netscape browser

▪ 3 year investment

▪ $115 million $100M for web enablement

$15M for ERP

▪ Cisco connection online

▪ Cisco’s global intranet

Intranet Applications

▪ EIS & DSS Executive & decision

support, sales tracking & reporting went through the intranet

▪ Employee self service Cisco Employee

Connection (CEC)

Resources for 40k+ employees

Web browser interface

Contd.

▪ Collaboration & workflow management

▪ Web-enabled legacy systems

▪ Communication and Distance learning Distance Learning

modules

Cisco-tailored version of “My Yahoo”

Live streaming of quaterly meetings

Internet Applications

▪ Customer self service through website 80+% tech support

delivered electronically

Saved $506M annually

Translated into 17 languages

70% employees have a bonus multiplier that are attached to customer satisfaction surveys

▪ Marketing through web

▪ Any place access through the web

▪ Net commerce through web 92% of the revenue base

90% software upgrades via internet

Productivity gains of 60% for Cisco & 20% for customers

Thank You!

Cisco’s Supply chain management initiative

▪ A central part of Cisco’s policy was removal of barriers that would impede the flow of information within the company and its business partners

- Outsourced much of their manufacturing to contract manufacturers while only performing final assembly & testing

- Recently, realised that their core competencies are in design and fulfilment processes rather than physical transformation of product.

- Formed partnerships with suppliers that performed physical transformations as their core competency

5 Initiatives to automate

– Single enterprise – They used networked applications to integrate suppliers into its production system creating – a “single enterprise”

– New product introduction – It automated the process for gathering data information, thereby reducing NPI time and cost by $49 million

– Auto test – They build test cells to perform tests automatically with minimal labor and standardized product test. It allowed quality issues detected at source

– Direct Fulfillment – Originally 2 shipping legs of 3 days each. Now 60 % of orders are filled by its partners

– Dynamic replenishment – Before automation, Cisco and partners lacked real time information sharing resulting in delays and errors. It allowed the market demand signal to flow directly to contract manufacturers.

Results

▪ Cisco turned into one of the most efficient supply chain models.

▪ Improved profitability by $275 million

▪ Network-enabled applications were key to value maximization and that is why it was referred to as “Global Networked Business Model”

Integrating Acquisitions into IP-based IT Architecture

▪ 2/3 technology internally developed

▪ 1/3 from partnerships/ acquisitions

▪ 70% CEOs from acquired companies were retained at Cisco

▪ Acquired companies for their R&D

▪ Acquisitions integrated in 60-100 days

KPMG acquisition

▪ Purchased ~20% KPMG’s global consulting arm

– 1.05 Billion

– KPMG was part of the decision process with Oracle so it was only natural for the acquisition.

Conclusion

- It was clear that Cisco’s ERP implementation and use of web enabled IT architecture was successful

• Business is open 24*7 • Improved Customer

Service • Reach new markets

with global audience • Automation,

Productivity and Profitability

• Customer Feedback • Improved Advertising Advantage

s

“ The opportunity for Cisco to continue growing as a

company is highly linked with the adoption of internet

based infra by other companies. They believe that they

can continue to pioneer in the development and use of

internet, and provide leadership to most traditional

companies. These companies will find the same

benefits that Cisco has enjoyed “

CEO Speaks

Thank You