Cisco ERP Implementation
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The document discusses Cisco's implementation of an ERP system to replace its legacy applications that could no longer support the company's rapid growth. Cisco selected Oracle's ERP software and implemented it over 9 months on budget and on schedule. Key factors for the success included high-level support, cross-functional team involvement, limited customization, and addressing issues promptly during testing. The new ERP system provided centralized and scalable systems to support Cisco's continued expansion.
Cisco ERP Implementation
- 1. ERP Implementation at CISCO Group 8 Saili mane (12IT113) JAY SHAH (12IT126) ANURAG PATEL(12IT117) CHINMAY JOSHI (12IT112) BHARGAV PATEL (12IT118)
- 2. The Concept of ERP ERP software ties all departments in a company together into one common system ERP allows Information Technology to integrate with your company's core business processes to achieve specific business objectives Information Technology Core Processes Specific Business Objectives
- 3. Major ERP Suppliers The Top Five ERP Vendors 1. SAP 2. Oracle Corporation 3. Peoplesoft, Inc. 4. JD Edwards & Company 5. Baan International
- 4. Benefits of ERP Improve productivity Increase customer demand (sales) Increase competitive advantage Increase market share Position company for sale
- 5. Business Drivers for ERP improving productivity 31% customer demand 24% competitive advantage 16% others 29%
- 6. How Does ERP Improve the Business? ERP helps improve information sharing, enhance business performance, and promote service efficiency 1. Allow companies to better understand their business. 2. Helps companies standardize business processes and more easily enact best practices. 3. More efficient processes enable companies to concentrate their efforts on serving their customers, maximizing profit, and building a competitive advantage.
- 7. ERP Cost/Benefit Analysis Average Cost for ERP Among the 63 companies surveyed—including small, medium and large companies in a range of industries—the average cost for an ERP implementation was $15 million. Average Payback for ERP (Time & Dollars) Among the 63 companies surveyed, it took eight (8) months after the new ERP system was implemented to see any benefits. The median annual savings from a new ERP system was $1.6 million.
- 8. ERP Strategies 1. The Big Bang-companies cast off all their legacy systems at once and install a single ERP system across the entire company. 2. Franchising-Independent ERP systems are installed in each unit, while linking common processes, such as financial bookkeeping, across the enterprise. 3. Slam Dunk-ERP dictates the process design in this method; where the focus is on just a few key processes, such as those contained in an ERP system's financial module. The slam dunk is generally for smaller companies expecting to grow into ERP by initially purchasing only a few modules.
- 9. ERP Implementation Procedure Steps for ERP implementation Cost analysis Blueprinting of Business Processes Staff Training Integration Data Conversion “Going Live” with ERP
- 10. CISCO Systems Inc. It was founded by two Stanford computer scientists in 1984. It subsequently went public in 1990. It manufactures routers. With rise in internet usage, the demand for Cisco products grew rapidly. Fortune 500 ranked Cisco among top 5 for return on revenues and assets. Microsoft and Intel were the other big companies in this list.
- 11. Company Structure John Morgridge was appointed CEO in 1988. Worldwide leader in networking for the Internet Provide Internet Protocol-based (IP) networking suite of solutions Cisco solutions are in most corporate, education, and government networks worldwide
- 12. Core Product Offering Cisco provides the broadest line of solutions for transporting data, voice, and video within buildings, across campuses, or around the world Primary products are “routers” and “switches” Main competitors are 3Com and Dlink Market share leader with over 75% of the market
- 13. Time for a Change January 1993, Cisco was $500 million company running a Unix-based legacy software package CIO Pete Solvik saw the need for change Initially, Cisco avoided an ERP solution They wanted to grow to a $5 billion-plus company. They were not able to make changes to the application to meet our business needs anymore. The application had become too customized.
- 14. Problems faced with the legacy applications Company’s annual growth rate was 80%. Transaction rate had increased drastically. The legacy systems did not have the capacity to handle the load. Any attempt to improve the applications would crash the system. IT department would spend its time repairing the legacy systems. One day, it was corrupted and thus shut down for 2 days.
- 15. Expected Benefits of ERP Implementation They wanted an ERP that could maintain centralized structure of the company. They wanted to put manufacturing, order entry and finance in one place. They wanted an ERP that could do it. Capacity of the ERP could be improved in the long- run as the size of the business increases. They wanted an ERP that wouldn’t have to be modified according to the business needs.
- 16. Pre-implementation Steps Select a good integration partner to help in selecting a good ERP solution and vendor. They chose KPMG. Do market research and ask other companies what they know about ERP systems. Based on market research and KPMG’s advice, they selected Oracle. Decide a price and time needed for implementing the ERP. Get board approval for funding the project. Build ERP implementation team one each from KPMG, Oracle and Cisco.
- 17. Project Approval Target timeline was 9 months Projected cost was $15 million Largest capital project ever approved by Cisco Steering committee at top to ensure project visibility, sponsorship, and motivation Split into 5 key areas (Order Entry, Manufacturing, Finance, Sales/Reporting, and Technology) All areas consisted of internal Cisco employees, KPMG consultants, and Oracle consultants
- 18. Cisco ERP Implementation Team Structure Executive Steering Committee Project Management Office Sales/Reporting TechnologyFinanceManufacturingOrder Entry IT Lead Business Lead Business Consultants IT Consultants Users Business Lead Business Lead IT Lead IT Lead IT Lead IT Lead Business Consultants IT Consultants Business Consultants IT Consultants Users Business Consultants IT Consultants Users IT Consultants
- 19. ERP Rollout Broke into phases called CRP’s (Conference Room Pilots) CRP0 = Training and technical configuration CRP1 = System works for each specific area CRP2 = Modifications (red, yellow, or green), continued training, and initial testing CRP3 = Full system testing “preparation to go live”
- 20. List of Modifications Packout-custom barcoding, queues, inventory, and shipping modifications Canada-separate set of books for separate currency Product Configurator-enables Cisco to enter “rules” for product ordering OE Form-discounts, cost data, multinational orders, etc. Net Change Bookings-daily log of all order activity
- 21. Initial Challenges Hardware failures System instability Software unable to handle initial volume Team effort-overcame problems within 3 months
- 22. ERP Results Project completed on-time Project completed on budget Cisco ERP team bonus totaling $200,000 Overall successful systems replacement Minimal company interference
- 23. ERP Implementation Dates Project Kickoff Prototype Setup Complete Implementation Team Training Process, Key Data, Modification Designs Complete Functional Process Approval Hardware Benchmark and Capacity Plan Validated Critical Interfaces, Modifications and Reports Complete Procedures and End-User Documentation Complete CRP Pilot Complete-Go/No Go June 2, 1994 July 22, 1994 July 31, 1994 August 31, 1994 September 30, 1994 October 15, 1994 December 1, 1994 December 16, 1994 December 22, 1994 January 3, 1995 January 27, 1995 January 30, 1995
- 24. Critical Success Factors They tested it thoroughly and made the required modifications immediately wherever needed. They knew what the software could or couldn’t support. They worked together in a tight team and stuck to the schedule. Employees gave their 100% in the project to make sure they did quality work
- 25. Why was Cisco’s ERP Implementation a Success? Recognized the problem & developed a realistic plan of attack Project was a high priority in the company Upper management supported the project All areas of the company were involved Diligent vendor/consultant selection Limited customization Meet target implementation dates Stayed within the initial project budget
- 26. Areas Where Cisco Was Lucky On the day of the presentation to board for project approval, the legacy system crashed. It helped the IT dept. to convince the board members faster. Cisco’s contract with the hardware vendor for capability of hardware rather than specific configuration helped in keeping costs low. The Oracle and KPMG teams were always with them and put in their 100% even when they weren’t required to. Hardware company’s president sponsored the final stage. All the additional costs were borne by the hardware vendor company from its own pocket.
- 27. THANK YOU