February 26th 2015.

Trung Hoang

Wirin Sintanavevong

Gautham Ubale

Cisco ERP and Web-Enabled IT

Q1. What is the legacy system problem at Cisco, and how big was it?

Cisco had two key challenges: First, their IT department was too traditional and they didn’t have the budget to upgrade the system and invest in it. Secondly, the Cisco current IT infrastructure system couldn’t support other departments within the company as the Cisco was growing at faster pace. Finally, January 1994,the legacy system surpassed its standard modification requirements and forced to crash, which virtually shut down their centrally located database for couple days. Cisco struggled to recover from this crash, as their legacy system led to a complex platform, which was out dated, and couldn’t support large volume of transaction and known for potential failure. Solvik (director of manufacturing) along with other managers came to a conclusion that they needed to replace the current system with another robust and flexible system.

Q2. What factors had made the difference between success and failure of the Cisco ERP project?

Success / Downside
Cost & Time for IT ERP investment /
  • Under 9 months and $15 million investment
/
  • Largest Capital investment Cisco ever planned
  • Project timeline was too tight to start at end of fourth quarter forcing the project to be shorter or longer than optimal time period

Vendor as Oracle /
  1. Best manufacturing capabilities
  2. Long term customer support
  3. Flexibility of the software
  4. Both the company valued similar in the market
  5. Both company’s location were in close proximity
/ Project rushed:
  1. One week to evaluate the project and choose vendor
  2. Two weeks for vendor to respond
  3. Cisco’s ERP module selection within 75 days.

Partners as KPMG /
  • Strong business partner
  • Selection of appropriate ERP product for the business

Q3. How important is ERP to the overall architecture? Do you see ERP as something that will be implemented by some, and not others?

  1. The overall importance of ERP architecture as follows:
  • Technology Standardization: Cisco’s IT platform was standardized after implementing the ERP architecture,e.g. 100% for UNIX at server level, Windows NT at LAN level, etc.
  • Integration of the ERP result in using common real-time database for all functional departments, e.g. Accounting, Manufacturing, and Inventory, etc.
  • Multi-functional: After Cisco made final selection on the team. Oracle catered customized modules to meet Cisco’s requirements.
  • Cisco’s supply-chain Management initiative:
  • Single enterprise allowed Cisco to respond with their customer in real-time
  • Direct fulfillment using ERP database provided Cisco the ability to ship product directly to customer accounting 60% of sales.
  • Dynamic replenishment via ERP allows contract manufacturers to track Cisco’s inventory level in real-time which leads to lower inventory.
  1. The decision to implement ERP depend on number of factors:
  2. Type of industry: For example: ERP is useful for manufacturing oriented businesses which help control inventory, project cost, and manufacturing processes. While Service based companies like law services, customer support, etc. might not need to use ERP system because it would not realize the full potential of installed functionality.
  3. Size of the company: Micro and small businesses may consider other alternative solutions that might not need ERP as an enterprise solution due to high cost and long term installation.However, ERP could be necessity for growing companies