Business Intelligence Software at Cisco

1. Introduction

Implementing an Enterprise Resource Planning System in time and budget seems to be a formidable task to many experts. The size and complex nature of this popular type of information systems brings along the difficult decision whether providing the necessary resources is worth the effort. To fully achieve the benefits suggested by researchers and consultants alike, a carefully planned implementation phase is of crucial importance. How this process can become a success story will be highlighted in the following case study.

With the rise of the internet in the mid 1990s, Cisco Systems Inc. established a strong position in the market for network and communication devices such as routers and switches. Today the company is the clear market leader for network equipment with a net income of $5.6 billion in 2006 (see exhibit 1 and annual report of Cisco Systems, 2006). After it became publicly traded in 1990, Cisco faced enormous growth options which become obvious by looking at a number of key indicators in the financial statistics of the firm (see exhibit 2). For instance, net sales almost quadrupled in the period between 1995 and 1998. While many firms put quite some effort in assessing the need for an ERP system, decision makers at Cisco did not have to bother with that question for too long: The persistent growth could not be handled with the only loosely-interlinked legacy systems of the various departments. Management decided to implement an Enterprise Resource Planning System with the manufacturing department as point of departure right after the firm was largely unable to conduct business for two days in late 1994 due to Cisco’s corrupted central database caused by workarounds used for the legacy systems.

In contrast to many other companies Cisco achieved to implement their chosen ERP solution within less than nine months from project kickoff in June 1994 to going live in January 1995 (see exhibit 3). Also, the investment of $15 million can be considered a rather small one compared to the company’s size and use of the system.

But the critical question remains: How has Cisco managed to turn this project into such as successful one? Could the firm repeat the process anytime they wanted? In the following section we will describe how the implementation was planned and carried out. We continue the discussion by highlighting critical success factors that are relevant not only to Cisco but any firm that considers the acquisition of an ERP system (since in practice most ERP systems are developed by software vendors, we will exclude the few cases that cover in-house development of ERP systems from the discussion). Finally, we identify areas for improvement and formulate practical implications which will help making the implementation process a repeatable one for any company.

2. The Implementation of an ERP system at Cisco Inc.

As aforementioned, the continuous annual growth rate of 80% at that time led to the immediate need for systems replacement. To avoid further shutdowns of their operations, the decision to implement an integrated information system was imperative for decision makers at Cisco. In prior years the firm’s CEO had established a functional organization is believed to be able to grow without sacrificing control. This structure also shapes the IT architecture - all functional areas are required to use a common architecture and databases. This led a sound foundation for the ERP project to come, keeping costs due to infrastructure updates or modifications comparatively low.

Caused by the urgency of the project, management initially decided to minimize implementation time by minimizing software customization and using a big-bang approach for the roll-out of the system. After this decision being made, the next step for the company was to select the ERP vendor in the market that could satisfy their needs best. Additionally, CISCO management knew that the magnitude of this project would have