Cisco Implementation of ERP

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1. The ERP implementation process provides several examples as to why Cisco is Information Age company as opposed to an Industrial Age company. Although Cisco's ERP vendor selection was driven by the manufacturing groups needs, this does not qualify them as an Industrial Age company proving that even a manufacturing focused company can still categorize itself as an information age company because of factors such as structure, resource allocation, and communication across functional groups.

One key difference in the two types of companies is structure. In Industrial Age companies, a hierarchy was the dominant business model with power very centralized among top management. While John Morgridge, CEO, 'maintained a centralized functional organization,' at Cisco, the structure of the ERP task force team was nearly the opposite of a hierarchy and in fact drew key people out of many business units. The leaders of the project, Peter Solvik and Randy Pond collaborated with all levels of management from Board Members, to Vice Presidents to Directors of business units to team managers to create a team that would evaluate, select, refine and implement the project. So although the overall company structure was reflective of an Industrial Age company (according to the CEO's observations) The ERP project team and the way it was comprised was more representative of an Information Age company, which was decentralized with authority and power distributed across many different units and down several lines of command as a result increased communication capabilities.

Second, the way in which the Cisco solves its ERP problem is indicative of an Information Age company. Industry Age companies characteristically stood very much alone and relied on internal support for technology and improvements. They were limited in growth and scope by their own competencies and capabilities. But, in the Information age, economies of scale are achieved by networking, sharing, and looking at other firms' core competencies to achieve more value. Outsourcing in the Information Age allows a firm, like Cisco, to have access to better, faster, cheaper in this case being an ERP solution. So, by outsourcing first the firm that evaluates their needs (KPMG) and then determining that Oracle would provide a new ERP system, Cisco shows that they are not an Industrial Age company. An Industrial Age company would have been limited by their own capabilities but now, companies like Cisco realize what their competencies are and look elsewhere for solutions to problems that fall outside this realm.

Finally, the testing stages that Cisco went through to implement its new ERP system show that it is an Information Age company because of the process of evaluating information to make changes rather than being constricted to the original implementation which would seem more apparent in an Industrial Age company. The ability to document, use, and make changes from the communications from the testing teams would not have been done in an Industrial Age company because of the lack of communication across functional teams. The ERP implementation went through several stages, with changes made and inputs given by many people from many departments.

. The source of IT solution, the amount of money and the resources allocated to make the IT decisions, and the placement of IT implementation on the list of company goals all are proof points as to how important IT is to Cisco's strategy.

IT proves to be so important to Cisco's strategy that they turn to Oracle for solutions. Rather than fixing their current UNIX-based software, Cisco's 'significant growth prospects convinced' the CIO that they needed a change and they look to outsource to another company that specializes in IT solutions. Although no company had ever solved a problem the size of Cisco's, IT solution provided by the outside vendor needed to be in line with the growth (80% annually at that point) that Cisco was experiencing and projecting.

The amount of money spent on the Oracle package selected also proves the importance of IT to Cisco's growth strategy. Not only did Cisco 'pull people out of business that they absolutely did not want to give up' for the first round of developing an ERP project team, they went back a second time and 'again the team sought out the best for inclusion in the project.' This shows that Cisco dedicated its best employees and took them away from their 'real jobs' to be part of the IT department for a while therefore reallocating is most valuable resources. The amount of money ($15 million) that the team asked for was almost frightening to ask for. It would not have been requested if IT were not critical.

Third piece of evidence that IT is one of the most, if not the most, important contributions to Cisco's Strategy is the placement of the ERP Implementation on the Company Goal List. The first year, it was in the top 7 company wide goals. By year two, it was the number one priority, as 'ERP project status became the number one agenda item for weekly executive staff meetings.'

. Pete Solvik's role as CIO was actually more similar to a CEO as he had to manage all areas of the company as they pertained to IT. Rather than just look after the Information department of Cisco, Solvik was responsible for the finance, marketing, manufacturing, etc areas response to the new ERP system. Solvik approached the problem of the ERP implementation with caution, but as soon as the failures in the current system were apparent, the approach became much more aggressive. Managing this project involved managing consultants, outsourced vendors, and internal teams of managers and superiors. He took a very decentralized approach to the role as evident in his choice of team members.

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