Cisco Systems, Inc.: Implementing ERP
Cisco Systems Inc. was founded in 1984 by two of Stanford University’s computer scientists. In 1990, a matter of just six years from the start-up date, Cisco became publically traded. With the massive growth of Internet Technologies, demand for Cisco products increased dramatically, resulting in Cisco dominating the marketplace. The contributing factor to Cisco’s dominating presence in the market is due to the company’s primary product, the “router”. This is a combination of hardware and software that acts as a traffic cop on the complex Transmission Control Protocol and Internet Protocol (TCP/IP) networks that make up the internet as ...view middle of the document...
5 million. However, he ensured that with this investment he reserved the right to bring in professional management when he deemed it appropriate.
1n 1993, Pete Solvik joined the company as the Chief Information Officer. With his industry experience and taking into account the company’s massive growth prospects, Solvik believed Cisco needed to change its core transaction-processing package. The following report will focus on the importance of an Enterprise Resource Planning (ERP) system to the overall architecture of an organization such as Cisco, some differentiating factors between the success and failure of an ERP project, areas of being just plain ‘lucky’ and just ‘smart’, and whether or not a repeat of the project is required. In order to effectively present this information, this report is divided into four segments – Introduction, Analysis, Evaluation, and Recommendations.
At the time of Solvik joining the company, Cisco was running a UNIX-based software package to support its core transaction processing. This package supported three functional areas of the company, financial, manufacturing and order entry systems. Most customers who adopted tis UNIX based package had revenue streams of between $50million to $250 million. Cisco was a $500 million company; therefore Cisco was “far and away” the biggest customer of the software vendor that supported the application. The application did not provide the redundancy, reliability, nor the maintainability in which Cisco needed in order to reach their growth target of $5billion-plus. According to Solvik, the vendor did offer an upgrade, but still did not meet Cisco’s requirements.
Initially Solvik did not want to implement an ERP system, as he had concerns about the types of “mega-projects” such implementations often became. He chose to allow each functional area to make its own decisions regarding the application and timing of its move. This approach was consistent with the organizational and budgetary structures that Solvik had installed upon his arrival. However, the following year brought little progress to Cisco. January 1994, proved to be the real eye-opener. Cisco’s legacy environment failed so dramatically, shortcomings of existing systems could no longer be ignored. A method deemed non-applicable was used to access the core application database corrupting the central database. As a result, Cisco was shut down for two days. This environment is too traditional for the increasing growth of Cisco. It focused on internal orientation too great. It could not handle the 80% annual growth rate facing Cisco. Due to the incapability of not being effective enough to adhere to the increasing demand, staff at Cisco spent a lot of their time repairing the system.
The realization that a new application was required came in February 1994, when a team was put together to investigate a replacement for the under performing...