IS-560 Enterprise Systems DePaul University Robert W.

Starinsky, Instructor Winter Quarter, 2004

ERP Implementation
Report of Findings and Recommendations
CISCO Systems, Inc.
Prepared By: Thomas A. Pinkowski Business Analyst Blue Demons Consulting

Febraury 6, 2004

-Confidential and Proprietary -

Cisco Systems, Inc. ERP Implementation

Report of Findings and Recommendations

Table of Contents
Table of Contents................................................................................................................1 Background and Scope.......................................................................................................2 ERP Implementation scenario..............................................................................................2 Situation Analysis................................................................................................................3 Conclusion and Recommendations......................................................................................4

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Cisco Systems, Inc. ERP Implementation

. . . . . . . . Background.and Scope

Report of Findings and Recommendations

Cisco System, Inc is a Computer Technologies company that was founded in 1984. The companys primary product is the router. The router is hardware and software that control Intranet and Internet traffic. With the growth of the Internet, Cisco products became in high demand. In 1997 Cisco was ranked among the top five companies in return on revenues and on assets. Cisco has been classified in the same category of successful companies as Microsoft and Intel. With the growth of Cisco, their computer systems were unable to handle the increase volume. The Cisco legacy system was a Unix-Based software package that supported its operations of: Financial; Manufacturing; and Order Entry. The system lacked reliability and the ability to expand. Eventually in January 1994, Ciscos legacy computer system malfunctioned corrupting Ciscos central database. The company was practically shutdown for two days. As Cisco struggle to recovered from the major shutdown, the company realized that they needed to act quickly and elected to implement an ERP system. Little over a year later, Cisco successfully implemented an ERP system from Oracle. This report has been requested by and prepared for Mr. Peter Solvik, chief information officer CIO) at Cisco System, Inc. Mr. Solvik has retained Blue Demons Consulting (BDC) to analyze Ciscos ERP Implementation and provide a recommendation on items that still need to be accomplished for the ERP system. BDC composes this review report by conducting an analysis on the activities surrounding the ERP Implementation project at Cisco System, Inc.

ERP Implementation scenario

BDC found out that in early 1994, Mr. Solvik put together an investigation team to select an ERP product. Mr. Solvik did not want the project to be just an IT-only initiative. The team would include internal and external resources. The internal resources were of people from all areas of the business community. To compliment the internal resources, Cisco needed a strong partner to help them with the selection and implementation. Cisco selected KPMG as their partner because KPMGs people were very experienced with the industry. The investigation team was about 20 people including KPMG. They conducted an information search built on the experiences of others. The team contacted large corporations and the Big Six accounting firm to obtain information on ERP systems. Also, the team reviewed documents from research companies such as the Gartner Group.1 A Request for Proposal (RFP) was constructed and sent to vendors. The vendors were given two weeks to reply. After Cisco reviewed the RFPs, vendors were invited for a three-day demonstration of their software. From the process, Oracle ERP product was selected based on Oracles: Emphasis on manufacturing. Promises of a long-term development of functionality of the package. Flexibility since Oracle was close to them. Mr. Solvik took the investigation teams findings to Ciscos board of directors for approval. The team concluded that one ERP system from Oracle be installed which the entire company would use. The project would cost $15 million and take 9 months. The 9 months was based on working into Ciscos financial calendar rather than diligence planning. The board approved the project and the core ERP setup a structure for implementation. The implementation team consists of 100 members that were a cross-section of Ciscos business community. The implementation strategy was rapid iterative prototyping, which was broken into four Conference Room Pilots (CRP). Each CRP was built on previous work to develop a deeper understanding of the software and its function. The following are the four CRPs and their key activities: CRP0 2 teams were developed:
1

The Gartner Group is a leading research organization which provides information on ERP and other information systems research.

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CRP1 CRP2 CRP3

Team One focused on getting itself trained in Oracle using intense immersion (2 day sessions for 2 weeks) Team Two , tiger team ,focused on getting the applications up and running A team of 40 people defined every parameter for Oracle confirguration over a period of 48 hours During this phase, it was realized that Cisco could not used a vanilla ERP implementation This phases goal was for each track to make the system work within their area. Detailed business process tracking sheets were developed. Issued discovered were documented on the tracking sheets. The issues were discussed in weekly 3-hour meetings held by the program management office. The track leaders from each area worked on them to get the issues resolved and project to move forward. Modifications to the system were classified as being red, yellow, or green. Red modifications were sent to the steering committee for approval. The implementation team discovered the need to change Oracle would lead to some unplanned changes to the project plan and budget It was determined that Cisco needed a service support package for sales, which would be implemented together with ERP system on the same day. A decision was made to use a data warehouse for all data communications. A decision was made not to convert the history as part of this implementation. The hardware and software was stress tested to see it if could handle the daily load. Final testing was done that included a full transaction load by capturing a full days list of transactions and re-running them on a Saturday Team members watched the execution of each track throughout the Saturdays testing. Each team leader presented their component with a yes or no answer on whether or not their component was ready to go. Each team leader said yes, which indicated their area was ready to go live.

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Report of Findings and Recommendations

When the Cisco cut over to Oracle, the system was very unstable, going down almost every day. In earlier test that were performed, Cisco tested transactions serially, not concurrently. The system could not handle the actual load when processed concurrently. Therefore, modifications to the hardware and software had to be done. Because of an unusual contract with the hardware vendor, the problem with the hardware architecture and sizing was the vendors responsibility. The software problems were resolved by the combined efforts of resource from Cisco, KPMG, and Oracle. After three months, Cisco and its vendors working together stabilized and added capacity to the system.

Situation Analysis
As part of the review process, BDC conducted both formal and informal interviews with both executives and senior level management personnel and other appropriate personnel, who were involved in ERP implementation. BDC gathered and reviewed various business documents, including policy and procedure documents, transactions documents, management reports, training material, requirement documents, and project documentation relating to the Ciscos ERP implementation. Visual inspections and observations were made to better understand core business processes and current information processing systems at Cisco Systems, Inc. Although the Ciscos ERP implementation was successful, BDC has made the following discoveries: KPMG was extremely important with implementing the ERP system, developing customized software for the ERP system, and resolving software issues. Cisco should consider them in future projects.
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. . Report of Findings and Recommendations . . . . . . The weekly meetings were extremely important in resolving major obstacles on the projects and . kept the project going. Similar meeting in future projects should be performed with analyzing the
progress and issues of a project. The current hardware vendors contract is a great contract for Cisco, but eventually it will expire. Sometime in the future, Cisco could incur higher than expected hardware costs. The current software is handling the current volume. With Cisco growth record, 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 system integration could be lacking and could cause deficiencies with timeliness of data between areas. The Net Income per Employee has declined over the past four years 19.5% ($111,720 to $90,005). This could be caused by expected growth leading to over abundant of employees or deficiencies in the computer system. Cisco needs to monitor these metrics.

Conclusion and Recommendations

BDCs conclusion is that Ciscos ERP Implementation was successful. The success was accumulation of Ciscos: Business implementation practices; meticulously reviewing of each of the systems processes to be installed, making sure that each worked properly. Business fortitude. always keeping the project going even at times it could have possibility failed Vendor partnerships relationships; worked together with resolving issues and problems, instead of squabbling between themselves who is to blame. Luck being able to construct the unusual contract with the hardware vendor. Otherwise, the project would have cost more. Also with Cisco growth, several of the projects problems were overly criticized because of the need of the system. Through ERP Implementation discoveries, BDC offers the following recommendation: 1) Cisco should formalize their partnership with KPMG. The knowledge gain on the project can be sold to other companies, which could bring in additional revenue. A meeting should be arranged between Cisco and KPMG to consider the benefits forging a formal partnership. 2) Cisco should have monthly issues review of the system in each area and quarterly issues reviews of how the system is working between the different areas. 3) Cisco should begin working on renewing their existing contract with the hardware vendor. If possible, Cisco should try to extend the current contract. At the same time, a small team should be form to research possible alternatives 4) Cisco should form a small team to monitor Cisco growth and how it relates to the current system. The team should work closely with the hardware team to determine immediate and future needs. 5) Cisco should work with Oracle to determine a better integration method of sharing data from one area to another. The need to have a more concurrent and integrated data among areas is necessary in the future to stay competitive and profitable. 6) Cisco should work on converting and porting legacy data into the new ERP system. The data could be vital for analysis purposes.

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7)

. . Report of Findings and Recommendations . . . . . . Cisco should look into Internet Supply Chain Management system. Cisco suppliers and customers . could access information and perform processes that are done today by Cisco personnel. By
allowing suppliers and customers this ability, Cisco could improve their efficiency and improving their Net Income per Employee amount.

BDC is available to review these findings with Cisco Systems, Inc. and answer questions regarding our analysis and recommendations. BDC is also prepared to assist Cisco Systems, Inc. on BDCs recommendations, which have been considered appropriate for future success or the ERP system at Cisco Systems, Inc. BDC extends it gratitude to Cisco Systems, Inc. for using BDC in performing this review - End of Report .

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