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network for voices The local and wide area network for data Broadcast network for videos
Digitization enabled the convergence of three networks Made it possible to transmit voice, data and video over the same network
TOP MANAGEMENT
Don Valentine, initial VC for Cisco Reserved right to bring in professional management After 1990 IPO both founders sold their stock and left Cisco John Chambers became CEO in1995 after coming from Wang Laboratories in 1991
BUSINESS STRATEGY
Assemble a broad product line so that Cisco can serve as one stop shopping for business network Systematic Acquisitions 2/3 of product line was in house and 1/3 by acquisitions Set industry wide standards for networking Issued networking licenses to major telecom majors Pick the right strategic partner : Partnered with Microsoft for security over network , MCI for premium internet services, HP to sell corporate systems Goals
Become lead architect and provider for new Internet-based infrastructure Change the way companies and industries operate
CISCO STRUCTURE
Emphasis
growth Three lines of business (decentralized) Product marketing Research and Development Centralized organizations Enterprise, Small/Medium Business, Service Provider Manufacturing Customer support Finance Human resources Information technology Sales organizations
DIGITAL TRANSFORMATION
Entry of Peter Solvik in 1993 from Apple Discovered two challenges for Cisco
Cisco IT system was too traditional viewed as cost center reporting to accounting. Current system could not scale to support Ciscos growth nor robust enough to manage managements expectations.
The
PROPOSALS
IT reporting went to Senior VP of customer advocacy IT budget was returned to functions with a very small portion going to General and Administration Expenses. Central IT steering committee was disbanded, the IT implementation/investing decisions to be taken by LOB.
CRISIS
Ciscos legacy system failed in 1994 Unauthorized method for accessing core application database. Corrupted central database. Shutdown for 2 days. Exposed need for alternative approach (autonomous approach to systems replacement deemed insufficient)
DECISION ANALYSIS
Manufacturing
perspective Have order entry and financial groups perform a single integrated replacement of all applications Monolithic IT projects could take lives of their own Cisco wanted to act quickly (no phased implementation/little customization) Create a doable schedule that was a company priority Dont mirror existing inefficient practices (instead, retrain people to do things according to new system) Decision to implement ERP was Technology Driven Implementation would not be done phased Big Bang Approach
2 weeks to respond
sample data
QUESTION PROPOSED
BOARDS REACTION
How much would it cost and how long would it take? Original proposal was 15 months, then 5, but started in Q3 and wanted to be stable by Q4 Officially committed 9 months and $15 million for the project
Negative initial reactions Board eventually approved the project. Next step was to incorporate the internet
Project completed successfully on time Formed centerpiece of the 2-yr $100 million series of initiatives to replace all IT applications and platforms worldwide In two year replaced legacy architecture/ Systems. High value/low cost architecture. IT platform architecture Standardized throughout Cisco
100% UNIX at service level 100% Windows NT at LAN level 100% Windows Toshiba and HP PCs at the client level 100% Oracle at DB level 100% TCP/IP for worldwide network
promoted flexibility
and marketing reorganized from multiple business units to 3 lines of business Changes completed in less than 60 days for less than $1M Completion of IP-based open standards architecture initiative provided centerpiece of Cisco IT architecture Foundation for next phase of strategy -> incorporating the Internet
Internet
Extranet Supply Chain (information Transparency Customer self-service through website Net commerce through the web Marketing through the web Any place access through the web
Intranet of Cisco
Links to Vendors and Customers allowed Cisco to collaborate more efficiently with those outside the company. The intranet also provided a proving ground for New Cisco technologies and products
Majority of Ciscos internal applications were webenabled. i.e EIS, DSS, training, self-service HR Cisco Systems corporate intranet, Cisco Employee Connection provided centralized access to the information, tools and resources needed to streamline processes, facilitate knowledge exchange etc. Ciscos intranet was a key enabler of its workforce optimization . Because the web integrated data and tools from a variety of sources under a unified user interface. By 2001, virtually every application in the company used a web browser as the only user interface.
Activated with relative ease (at employees desktop) Easily tracked to determine extent of usage
590.425 active registered users visits approximately 3.8 million times answer customers question diagnose network problems provide solutions expert assistance worldwide
Network related applications improved profitability by $275 million. Network enabled applications were key to value maximization in Ciscos supply chain. This model of managin SC was referred as Global Networked Business Model.
Cisco uses a documented and repeatable process for every acquisition for integration. The R&D and product organizations of each acquired company were integrated to Ciscos product side. The Manufacturing, Sales and distribution parts of acquired organizations were integrated to Ciscos functional organization. Cisco has a Group of IT professional who handled integration of acquired organizations. Most acquisitions could be fully integrated To Ciscos IT architecture within 60 to 100 days.
In 1999, Cisco announces that it will purchase 19.9% of KPMGs global consulting arm for $1.05 billion. KPMG planned to use the capital from the deal to build six technology centers( Of the $1.05 billion ,$450 million would be invested in the new unit. ) Cisco would provide the hardware and software for customers who want to transfer business fuctions to the web, And KPMG would install and maintain its systems Cisco alliance with KPMG filled a gap to help its customers install and maintain its system.