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In July 1998 the company's market capitalization was over $100 billion and revenues reached $12.15 billion by fiscal 1999, six times the $1.98 billion result of fiscal 1995. Cisco's market value surpassed $450 billion by 2000, making it the third most valuable company in the world, behind Microsoft and General Electric Company. By the second quarter of the 2000 fiscal year, earnings had reached $906 million.
Cisco systems architecture
Cisco Systems Architecture: ERP and Web Enabled IT ____________________________Christopher Moss * Dhanesh Gandhi *Gouthami Gurram * John Hicks * Rohan Kumbhar
Agenda Company‟s History & Growth Strategy Current Application assessment Connectivity & Mobility Business Process Web presence Customer Relationship Management Conclusion
History Cisco was founded in 1984 by Leonard Bosack and Sandra Lerner Principal product from inception was the internetworking router. First product shipped in 1986 Don Valentine, first major investor ◦ Secured investment by demanding a controlling interest in company ◦ Promptly hired John Morgridge as CEO
Growth 1990‟s companies began installing local area networks (LANs) Tremendous growth opportunities John Chambers took over in 1995 Adopted strategy of Systematic Acquisitions and Strategic Alliances As of April 2008 Cisco had acquired 127 companies – 50% of the company
Growth The largest acquisition as of April 2008 was Scientific Atlanta Arguably the most important Acquisition was StrataCom, Inc. ◦ $4.67 billion acquisition completed in April 1996 ◦ Leading supplier of products capable of handling voice, data and video
Strategy Guided by Market Transition 2008-Current Collaboration 2006-2008 2000-2006 Web 2.0 Network as Network of Platform Borderless Networks networks 1997-2000 Mobile IP All-in-one (Voice/Video)1990-1997End-End and IP basednetworks
Business Strategy Provide Networks and Communication SolutionsStrategic Objectives Lead Cisco entry into key market Invest in strategic technologies and partners Partner with business units – a strategic advisor Talent Management
Business Strategy Business plan Assemble a broad product line so Cisco can serve as one-stop shopping for business networks. Systematize acquisitions standards for networking. Set industry wide software standards for networking. Pick the right strategic partners.
Mission & VisionVision “change the way world works, lives, plays and learns.”Mission “to shape the future of the Internet by creating unprecedented value and opportunity for its customers, employees, investors and ecosystem partners.”
Goal & CultureGoal Become lead architect and provider for new Internet-based infrastructure Change the way companies and industries operateCulture Sustainability Quality team No technology religion Stretch Goals/ Continuous Improvement Teamwork Fun Trust/Integrity/Giving Back Drive change
Acquisition StrategySource: Scheinman, D (2004), „Corporate Development at Cisco‟ Senior Vice President, DanScheinman Viewed at 14/07/06
Industry Structure Bargain Power of Buyer Potential Entrants • Buyer power in the low end and •Capital intensive business residential products •Barrier to entry is high • Other sectors – customer are •Cisco – proprietary less potential to switch to other standard in the market brands •Need to strongly differentiate the Industry Competitors product and service •Nortel – VOIP • Juniper – Internet Routing • HP – Ethernet switching • Avaya – Unified Communications •Huawei Technology – Routers 7 switches Substitutes • Highly unlikely because ofBargain Power of Supplier Brand & Market position• In-house supply chain •Already an innovator with• Dependent on Intel for IC customer services, total customer solutions
SWOT Analysis Strengths Weakness• Innovation • Unsustainable High gross margin• Robust financial performance • Weak presence in contact center• Diverse customer base and product technologies and declining storage offerings networking market share• Market position • Relatively weak presence in China• Extensive geographic reach CISCO Opportunities Threats• Acquisitions • Intense competition• Strategic alliances • Consolidation in the US• Growing demand for unified telecommunication industry communication solutions • Dependence on suppliers• Growing enterprise security market • Uncertain Global Economy • No constant innovation currently
Current Application Assessment Poorly implemented original software platform. Unix-based software package to support Financial, manufacturing & Order Entry. ◦ Care System ◦ Metrix System ◦ Calico foundation technology
Current Application Assessment Initial approach to ERP Solution Upgrading ◦ Robust ◦ Functional area responsibility ◦ Reliable ◦ Band-Aiding ◦ Efficient ◦ January 1994 system crashed Connectivity Needed?
Connectivity & Mobility What is needed ◦ Standardization ◦ Flexibility ◦ Extensibility What are the options ◦ Custom Integrated Systems Architecture ◦ ERP
ConnectivityIntegrated Architecture ◦ Separate lines of development - EAI Systems Integration Plan Low-level Connectivity IT Infrastructure ◦ Advantages Custom solution Potentially highly efficient ◦ Disadvantages Building a patchwork architecture Middleware
ConnectivityIntegrated Architecture ◦ Separate lines of development - SOA Systems Integration Plan Low-level Connectivity IT Infrastructure ◦ Advantages Custom solution Potentially highly efficient Less middleware ◦ Disadvantages Building a patchwork architecture
ConnectivityERP ◦ Systems Integration Plan ◦ Advantages All-in-one solution IT infrastructure and connectivity baked in Less middleware ◦ Disadvantages Limited customization Difficult (and expensive) to extend
ConnectivityKeys to Success Open standards Proper planning and involvement Scalability testing
Business Process Integrated systems and real-time environmentInfrastructure Challenges Traditional IT department did not operate optimally Inflexible current systems couldn‟t support Cisco‟s growth Solution IT reporting relationship changed from Accounting to Senior VP of Customer Advocacy Conduct IT budgets at functional level (better funding for all IT projects) ◦ Disbanded central IT steering committee ◦ IT investment decisions on application projects pushed to line organizations but executed by central IT
Business ProcessBusiness Process Convincing Management and many engineers – Change Management End-to end and big bank approach - a great risk Need to access the impact of the change and manage user expectationsSolutionInternal Involvement Heavy involvement from the business community – Not just IT initiative. Get very best people and who know the business.External Involvement Strong partner to help the selection and implementation – KPMG Get knowledge and experiences from other “Big Six” firms. Team training
Business Process Analysis and Process Design • External Partners – KPMG • Best people who knows the business • Oracle –ERP training System IntegrationReview & enhance • Set the parameters for• Unable to handle the load Oracle to be integrated• 3 months to enhance and • Focus on getting thestabilize the system application up and running Pilot & Testing • Conference Room Pilot
Process Oracle ERP ◦ Manufacturing capability ◦ Long-term development of functionality of package ◦ Flexibility of Oracle‟s being close by (location wise) 15 million budget and 9 month to implement
Analysis & Recommendations No proper Business case or Cost Analysis Downtime not considered ERP Implementation time frame of 9 months? Big bang approach of critical systems 1% effort gave 80% accuracy Impact of pulling key resources from the projects? Oracle first implementation of the new
Analysis Standardization promoted flexibility ◦ R&D 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 ◦ Next phase of strategy - incorporating the “Internet”
Web Presence Internet Strategy ◦ To create a business ecology ◦ To coordinate a virtual organization Concentrate on product innovation Outsource other functions ◦ To showcase its own use of the internet as a marketing tool
Web Presence Benefits ◦ 24*7 ◦ Improved customer service ◦ Reach new markets ◦ Automation, Productivity and Profitability ◦ Customer feedback ◦ Improved advertising
Web Presence Conceptual frameworkStrategic focus Competitive Competitive success Structure and environment factors managementProduct Innovation First mover advantage Innovation, new Focus resources on product introduction, R&D and acquisition Strong brandOperational Decreasing or Execution is the key Increase scale andExcellence constant returns geographic scopeCustomer High customer Keys are to attract and Focus resources onrelationships acquisition cost. retain customers. marketing, sales and Possible increasing customer service. returns from loyal customers.
Web Presence Cisco‟s web-based applicationsIntranet Extranet InternetEmployee self-service for Supply chain integration, marketplace for net commercetravel, benefits, product sharing of forecast, order and by customers, resellers,information inventory information partnersCommunication and distance New product development Technical Assistance, softwarelearning sharing of design, test ramp- Library and Open Forum for up, quality specification customers, resellers, partners informationCollaboration and workflow Customer service for non-management technical issuesExecutive information Internetworking Productsystems and decision support Center online ordering bysystems authorized customers and resellers
Collapse of 2001 Reasons ◦ Collapse of many internet companies. ◦ Decline in demand for IT equipment Analysis ◦ IS took time to pick up the market changes. ◦ Inability of sales forecasting system to offer any advanced warnings.
Customer RelationshipManagement CRM is a business strategy directed to understand, anticipate and respond to the needs of an enterprises current and potential customers in order to grow the relationship value