Introduction

CISCO Systems Inc. is the world’s largest maker of computer networking gear. CISCO provides
a broad line of products for transporting data, voice and video around the world, which
transforms how people connect, communicate and collaborate. Since the networking industry is
rapidly evolving, CISCO is focusing on delivering intelligent networks and technology and
business architectures built on integrated products, services, and software platforms to its
customers. This case analyzes the ERP implementation that took place during the legacy system
failures in CISCO.

Background
CISCO system was founded by two Stanford computer scientists Leonard Bosack and his wife
Sandy Lerner, who pioneered the concept of a local area network (LAN) being used to connect
geographically disparate computers over a multiprotocol router system and became publically
traded in 1990. The company’s primary product was the “router”. With the use of the internet
technologies, demand for CISCO’s product boomed. It was ranked among the top 5 companies in
return on revenues and return on assets. In 1988 when John Morgridge joined Cisco as CEO, he
experienced executive in computer industry and immediately began to build a professional
management team. That team clashed with the founders and CISCO’s initial offering in 1990,
both founders sold all of their stock and left the company. Morgridge maintained a centralized
functional organization. In 1999, Cisco had more than 75% internet traffic share. Through its
numerous acquired subsidiaries, such as OpenDNS, WebEx, Jabber and Jasper, Cisco specializes
into specific tech markets, such as Internet of Things (IoT), domain security and energy
management.
Cisco is the largest networking company in the world. The stock was added to the Dow Jones
Industrial Average on June 8, 2009, and is also included in the S&P 500 Index, the Russell 1000
Index, NASDAQ-100 Index and the Russell 1000 Growth Stock Index.
By the time the company went public in 1990, when it was listed on the NASDAQ, Cisco had a
market capitalization of $224 million. Cisco was the most valuable company in the world by
2000, with a more than $500 billion market capitalization.
Current Issues

 Cisco wanted to grow from a $500 million to $5 billion plus company in the coming
years
 The company’s UNIX- based legacy software was unable to support the core transaction
processing.
 The legacy application didn’t provide the degree of redundancy, reliability and
maintainability needed for the fulfillment of the goal.
 There was a constant band–aid to the existing legacy system.
  There was integration while decision making i.e. different functional areas makes its
own decision regarding the application and timing of its move.

Problem statement
Cisco’s legacy IT department was too traditional and internally oriented and being viewed as a
cost center. The potential contribution of IT to business was also much smaller than it could be.
The legacy system was traditional; financial, manufacturing and order-entry systems, which
could not scale to support Cisco’s growth, nor were they flexible or robust enough to meet
management requirements. Years of customization to the legacy system had resulted in a
complex platform, that was familiar and comfortable for its users, but was out of date and in
danger of imminent failure. In January 2004, Cisco’s legacy environment failed. An
unauthorized method for accessing core application database was used as a workaround, which
malfunctioned and corrupted Cisco’s central database. As a result, the company was virtually
shut down for two days.

Even after the implementation of ERP system the software was unable to handle the transaction
volume. The shipping commitment for customers also decreased from 95% to 75%. Due to bits
exclusive contracts the fixing of the hardware performance fell completely on the hardware
vendors.

Situation analysis
The ERP strategy was employed with a development technique referred to as “Rapid iterative
prototyping”. This approach produces the implementation stages called: Conference room pilots
(CRPs). “The purpose was to build on previous work, to develop a deeper understanding of
software and how it functioned within the business environment” The process was broken into
the following phases:

CRP0: This was the initiation stage that involved: Training and Technical Configuration

CRP1: Ensuring System works for each Specific area

CRP2: Modification (red, yellow, or green), continued training and initial testing

CRP3: Full system testing "Preparation to go live"

After the implementation of ERP, the company is stable and running quiet well although there
were some problems at the start of implementation. The system has been useful to not only one
particular department but the overall company. The end users are also satisfied since they viewed
the system change as a career advancement possibility.
Although skeptical at first, the top level management (board) too ended up approving the project
despite the huge cost of $ 15 million and the implementation time of 9 months. In fact, the
project emerged as one of the company’s top seven goals for the year.

Objectives
With the serious failures and limitations of the legacy system, there was a strong impetus for
replacing the legacy system with the ERP product. Even though the ERP implementation would
have a high cost to the company, management was able to see value in implementing the ERP
product and was not looking at cost avoidance.

The main objective of this case is to deal with the problem that may still arrive with ERP system
is that the system might still be unable to handle large volume of transaction in a prompt
situation, so we suggest the online analytical processing (OLAP). With the help of this system
the company will be able to promptly handle large volume of transaction unlike ERP sequential
method.

Along with OLAP, we would like to recommend expert system as it helps to contain knowledge
about a specific, complex application area even in the absence of the human expert him/herself.
Since most of the experts were from KMPG and not CISCO, it can face a problem in case
KMPG withdraws in future. So in order to protect and minimize expertise cost in future we
recommend expert system as well.

Recommendation of Strategy
 The decision to implement the ERP project was the major decision taken by the managers
at Cisco. The managers were particular of the team members that will work on the
project. The managers also made a particular choice in deciding the partners for them.
They weighed their options very well before finally deciding the name of KPMG as their
integration partners. The Program manager from the side of KPMG that headed the
project was previously the director of IT Company that had put in various parts of the
ERP system. Thus the experience added to the success of the project.
 The team’s strategy was to build as knowledge as possible by leveraging the experiences
of others. They asked large corporations and the “Big Six” accounting firms before
finally narrowing the field to five packages. The choices were narrowed down to two
vendors, and Oracle was selected after a three-day software demonstration. Having
Oracle as the ERP vendor was a good strategic decision by Cisco as it gave Cisco a
strong partner in the ERP project, since Oracle was equally motivated to make the project
a success as it would be the first major implementation for the new release of the Oracle
ERP product. Among which Oracle was selected due to three of the major decision
points:
 Oracle had a better manufacturing capability than the other vendors.
  They made number of promises regarding the long term development of functionality
in the package.
 Flexibility offered by Oracle due to nearness of headquarters offices location.
 In addition to this Oracle ERP system we would like to recommend OLAP and expert
system. For OLAP, we would suggest a off the shelf software, whereas, for the expert
system, inbuilt would be more stable and reliable.
The OLAP system can help enable managers and analysts to interactively examine and
manipulate large amount of detailed and consolidated data from many perspectives. It can
help to decrease the problem of redundancy and data volume processing.
Also finally expert system too can prove to be beneficial for the company since it is faster
and more consistent than an expert. In case of absence of an expert, the knowledge of
human experts are preserved and reproduced for the future reference.
 CISCO already implemented ERP with a big-bang effect so no more reengineering is
needed from our perspective. Instead, business improvement might be required for better
implementing the system.

Tactics
The old ERP system should not be cut directly as it is still very effective, instead, the company
should run this projects parallel for a certain period in a large group for the assurance of
successful completion of the IS project in large volume.

Conclusion
The ERP itself is functioning well but the addition of the OLAP and expert system can help
better functioning of the company from our perspective. Not only will it ensure faster processing
of the large transactions but it will also help to record the expert knowledge used during any
cases for future references.