Cisco Erp Implementation

...

To avoid too much time in integrated separate projects in different areas, Carl Redfield, the senior vice-president of manufacturing took the lead in getting a single integrated replacement system of all the applications at Cisco. A team was formed to investigate the best possible replacement for the existing software support system. The factors that would oversee the implementation of the new system were decided to be less time, low customization, and a high priority. The company had two options to consider:

Option 1: Purchase a single ERP system, would be expensive to acquire, time consuming to implement and would replace each department’s independent structure.

Option 2: Upgrade the existing legacy system.

Cisco chose option 1, to purchase a single ERP because of the need for a much larger system to support the company’s growing needs.

Perspective

From the initial conception of the project, the Company’s leaders knew what they wanted, a large system in a short amount of time that contained the ability to adapt and grow concurrently with their business, and a provider that was going to be around to support their product well into the future. The certainty of the leaders on what they wanted pushed the selection process forward in a short amount of time.

Cisco was looking for a partner who would provide consulting services and help Cisco choose the correct ERP vendor. From all the consulting companies that Cisco looked at, KPMG was the only one that had agreed to provide support they were looking for. Due to this KPMG consulting joined Cisco with their great technical expertise, and business knowledge. KPMG provided expert resources that Cisco required to complete such a large project in as short a time as possible. Over one month, Cisco and KPMG went through a laborious procedure of choosing the right vendor – Oracle. Oracle was chosen due to their better manufacturing capability in the order management space compared to other vendors. Also, Oracle assured Cisco they will help with functionality development for long term along with their geographical closeness to Cisco.

With senior management fully backing the project and being kept informed on every step from the beginning, leading to a strong schedule and the backing of the entire corporation.

Cisco’s team along with KPMG and Oracle was able to have its ERP system functioning in 9 months and within budget. Although there was no cost benefit analysis done to determine Cisco’s ROI in this project, Cisco has been able to make billions of dollars from the successful implementation of the ERP implementation.

From a technical perspective, the factors that contributed to Cisco’s success were:

ERP Pick – Oracle: The purpose of ERP is to “facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders,” (Wikipedia, n.d.) When you conduct an ERP implementation, it usually involves a significant change to business processes.

If the changes are not implemented correctly, you can tank an organization, causing them to downsize to the point of bankruptcy. It is because of this, that Cisco chose Oracle as its ERP vendor because at the time, Oracle’s product evidently had great improvements in order to support manufacturing processes. Of all the business processes Cisco had to consider in the ERP, manufacturing was identifies as their primary area.

Restricted Customization - In the case of Cisco, the approach they had nailed down was that modifications were not to be made to the software; this was based on Cisco manger Redfield’s perspective. Redfield believed that modifications would take a lot longer to implement and not necessarily producing the intended result. I agree with his perspective here, if there is already a complete, logical architecture for how to do something-and you change it-it may not work. In the Cisco case, some modifications were needed and when too many had to be made for the customer support area, the team decided to purchase a supporting software package instead. Researchers have identified that organizations need to determine if pre-customized ERP systems are of intrinsic value to them during the planning stage because any further customization after delivery usually results in cost overrun, schedule slips and project scope creep.

The initial success of the ERP system was something less than expected. Cisco went through many issues during the implementation of ERP through the three phases of CRP (Conference room pilots), which is not unusual when a Company goes through the testing phase. At the onset, it was the hardware architecture and sizing which the hardware vendor handled as the equipment purchased by Cisco was as suggested by the vendor. During testing, Cisco had run individual processes sequentially but never altogether as a whole. After the cutover, when the processes were running in conjunction the system could not handle the volume of the transactions. Cisco along with its vendors worked together to stabilize the system by adding more capacity. Thus, the problems associated with the implementation of ERP was short-lived making it a big success.

Analysis:

- KPMG was immensely significant with implementing the ERP system, developing custom-built software for the ERP system, and resolving software issues. Cisco should consider them for future projects.

- The weekly meetings were extremely beneficial in resolving major obstacles on the projects and kept the project going. Similar meetings in future projects should be performed with analyzing the progress and issues of a project.

- The existing hardware contract Cisco has with its vendor is good but it will ultimately expire. So sometime in the future, Cisco might incur higher than estimated hardware costs.

- The current software is handling the current volume. If Cisco continues to grow at the current pace it is possible for Cisco to have another shutdown in the future if it does not prepare for growth.

- A Data Warehouse is used to dispense information from one area of the company to another. Eventually, more timely information will be needed between the areas. The integration between systems could be poor and could cause deficiencies with timeliness of data between areas.

- The Net Income per Employee dropped over the previous four years 19.5% ($111,720 to $90,005). This could be caused by expected growth leading to overabundance of employees or deficiencies in the computer system. Cisco needs

...