Cisco: It Fiasco
The main purpose of an ERP system is to facilitate the flow of information between all business functions within an organization. ERP systems also aim to simplify the sales process by automating the entry requirements and making it easier for different business functions to access the information. The systems can run on a number of hardware or network configurations; however, they usually use a database as a warehouse for information. 2. At the start of the case, Cisco’s information systems are failing, yet no one steps forward to lead the effort to replace them.
Why is this? Why were no managers eager to take on this project? At the beginning of the case, Cisco’s information systems were failing because they were experiencing exponential growth and the IT systems that were in place could not provide the reliability and maintenance for this magnitude of growth. Companies that experience this kind of growth usually make decisions based off the status quo and assume that what has worked in the past will continue to work going forward.
In addition, with such sizable growth, implementing changes to the company’s information systems can have substantial effects on the continued success of the company, making any recommendation for change extremely daunting. Coupled with the fact that most people are change averse, no one wanted to run over the legacy systems Cisco already had in place so they just tried to continue to Band-Aid the issues with system replacements. Managers were not eager to take on this project because if its importance and its stature.
As stated in the case by Pete Solvick, “you know, careers are lost over much less money than this. ” (Course Reader p. 126) These types of projects when approved and implemented usually go one of two ways; people are either praised for their success or blamed for their failure, therefore not only was the project extremely expensive, but it carried the additional burden of job security for those in charge. In addition, a project of this magnitude also requires a significant amount of ime and resources by every department within the organization, thus managers would be weary to take the lead on a project like this because it would impede on the resources they have for their other responsibilities and job functions. 3. What would you change in the Cisco organization to enable enterprise-wide IT systems (as opposed to the situation pointed out in question 2 above)? In order to enable enterprise wide IT systems it is crucial to create a culture that fosters innovation and rewards recommendations for continuous improvement on business processes.
Focusing on long-term growth objectives and encouraging managers to become active in participating in improvement projects will increase their buy in and alleviate any stress of the negative consequences that most associate with projects of this stature. Initiating monthly progress meetings to determine how the companies’ processes are facilitating their growth and overall corporate strategy will help elevate any issues that need to be promptly addressed. It would also be beneficial for executives to appoint task forces for continuous improvement projects and present these positions as opportunities for future career growth. . Cisco was highly successful with its ERP effort. What accounts for this success? What were the most important things that Cisco did correctly? What could they have done better? Cisco began the successful implementation of the ERP system right off the bat by establishing a strong partnership with KPMG and choosing the right people for the Cisco team. It is crucial with projects of this magnitude to get the right people in place before you decide what direction you are going and Cisco made it a point to build the strongest team possible.
Furthermore, the team reached out to industry professionals to gain as much knowledge as possible by leveraging the experience of others, which assisted them in picking the right vendor. After choosing the vendor, contracting based on capability instead of configuration proved to be extremely helpful after cutting over. This alleviated a lot of additional costs that could have come from modifications that were made once they realized the systems flaws and constraints. Internally, the support from top management in making the project a top riority company wide, reiterated the importance of the transition, which in turn fostered support from everyone in the organization. In terms of the development and implementation, the use of cross-functional teams proved to be very effective in giving the project team an all-encompassing view of each business functions requirements for the new system. The steering committee also broadened the view of the project while simultaneously indicating the importance placed on the project’s success.
Lastly, the approach Cisco used, rapid iterative prototyping, proved successful because it allowed them to build off of a series of phases, which enabled them to uncover issues along the way and address concerns or modification requirements during the design process and take a proactive approach to risk management. However, Cisco could have allocated more time in the planning process to predict some of the modifications required such as the “data warehouse” and the support package.
Additionally, Cisco could have improved on CRP3, the testing phase. Spending more time on testing the system and using varying sizes of data would have allowed them to realize that the hardware architecture and the sizing needed to be adjusted to support their business. 5. List and describe the pros and cons of standardizing IT components. The pros for standardizing IT components are that it simplifies business processes and eliminates each business function from making decisions based solely on what is most optimal for that specific unit.
It allows you to dictate how you want to process to flow and ensure that each business function is speaking the same language. It also enables the company to eliminate customization within each business function with the desired results of creating a seamless work flow. Additionally, once implemented, a standardized IT system it is less costly and requires less resources if you have standard products. On the other hand, business processes are different among the different business functions.
Therefore by eliminating customization, each business function is forced to change the way processes are handled, and in an extreme situation, this could lead to ineffective processes or the system proving unable to support your processes without customization. 6. List some take-aways from this case that would be helpful to a manager who finds himself in a prominent role for an enterprise-wide IT project (need not be ERP)? There are many important take-aways from the case; however, one of the main advantages to a uccessful IT project is ensuring you have a strong team in place and that you establish a strong partnership with any third party companies used as well as vendors. Companies will not always have every expertise needed for specific projects, so taping into the knowledge and leveraging the experience of industry experts will always give you a better understand of what you are getting in to. Gaining support from top management as well as the enterprise as a whole is also crucial to a successful implementation.
Projects of this stature require significant time and multiple resources therefore having everyone on board to assist when necessary can smooth out workflows and ensure that issues are taken care of promptly. From a system standpoint, the most important take-away is the necessity for balance between a customized and standardized system. While it is beneficial for the enterprise as a whole to have a standardized IT system for simplicity purposes, it is required to have some level of customization to ensure each business unit is being supported by the system.
Over standardizing the system can make individual business processes burdensome to a point where the overall system no longer supports the business as a whole. On the other hand, over customizing the system alleviates the burden from each individual business unit; however, each unit is now operating differently creating unnecessary tasks and non-value added work for the organization. Therefore, it is crucial to have a balanced system that will support each individual business unit as well as the enterprise as a whole.