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Cisco System Inc. Implementing ERP

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Cisco System Inc. Implementing ERP

  1. 1. Cisco System Inc. Implementing ERP
  2. 2. Case Background  It reviews cisco system approach to implement oracle’s enterprise resource planning (ERP) software product.  It studies diverse, critical factors and obstacles faced by cisco during its implementation.  Deterioration of cisco’s legacy environment in functional areas led to implementation of ERP.
  3. 3. INTRODUCTION  Cisco System, Inc., was founded by two Stanford Computer Scientists in 1984.  The company’s primary product is the “router”.  It soon began to dominate the markets with the rise of Internet technologies.  By 1997, its first year on the Fortune 500 Cisco ranked among the top five companies in return on revenues and return on assets.  Cisco’s market capitalization passed the $100 billion mark just 14 years after being founded.
  4. 4.  In 1988 don valentine, vice chairman of the board of cisco hired john Morgridge as chief executive officer (CEO).  Morgridge maintained a centralized functional organization.  While product marketing and R&D were decentralized into three “lines of business”.  The manufacturing, customer support, finance, human resource, information technology (it) and sales organizations remained centralized.
  5. 5. History of IT at Cisco  Pete Solvik joined cisco in January 1993 as the company’s CIO.  Cisco was running a Unix-based software package its core transaction processing.  The functional areas supported by the package included: o Financial o Manufacturing o Order entry system  Solvik let each functional area make its own decision regarding the application and timing of its move as he avoided the implementation of ERP solution
  6. 6. What factors led to implementation of ERP ?  Failure of cisco’s legacy environment showed the short comings in existing systems.  An unauthorized method for accessing the core application database malfunctioned, corrupting cisco’s central database.  The company was largely shutdown for two days, this major shutdown made the company realize that its systems were on the brink of total failure.  It would take too long to get applications in place by making decision and implementation separately within group.
  7. 7. Selecting an ERP Product  Cisco realized implementing ERP will require very strong team to work for the project and would also need strong partners.  Cisco required a partner with great technical skills and business knowledge, so they selected KPMG as their integration partner.  Team of 20 people were formed to identify the best software packages.  The team’s strategy was to build as much knowledge as possible by leveraging experience of others.  By tapping research sources such as the Gartner group, cisco narrowed the field to five packages within two days.
  8. 8.  After week of evaluating the packages at a high level, the team decided on two prime candidates: oracle and another major player in the ERP market.  After cisco’s analysis of the request for the proposals (rfp) responses, each vendor was invited for three-day software demonstration.  The selection of oracle was based on the three major decision points:  The project was being driven pretty strongly by manufacturing and oracle had better manufacturing capability than other vendor.  Oracle made number of promises regarding long term developments in the functionality in the packages.  Flexibility offered by the oracle as the headquarters of both were 20 miles away from each other.
  9. 9. Seeking Board Approval  Before going to the board for approval, the team needed to answer two important questions :  How much would it cost?  How long would it take?  The total cost for the project was expected to be $15 million and the time duration for completing the implementation process was 9 months.  This project was single largest capital project approved by the cisco.  Implementing the ERP project was the priority for the cisco and it emerged as one of the company’s top seven goals for the year.
  10. 10. Building The Implementation Team  With board approval, the ERP team started setting up a structure for the implementation.  KPMG’s performance through the software selection process and its commitment to staff led to extended relationship between cisco and KPMG.  The team had to expand from its core 20 members to about 100 members  Team members from were placed onto one of five tracks.  Each track had the following : • Cisco information system • Cisco business leader • Business and IT consultants
  11. 11.  All the tracks were managed from a “project management office” which included  Cisco’s business project manager, Tom Herbert.  The KPMG project manager, Mark Lee.  All these were controlled by executive steering committee composed of :  Vice President of manufacturing  Vice President of Customer advocacy  Oracle’s senior VP of applications  Partners in-charge of West Coast consulting for KPMG
  12. 12.  The committee’s role was to provide:  High-level sponsorship for the project  Ensure visibility  Motivate the team
  13. 13. Implementing Oracle  The team’s implementation strategy employed a development technique referred to as rapid iterative prototyping.  Using this approach the members broke the implementation into a series of phases called “conference room pilots.”(CRPs)  Each CRP’s purpose was to build on previous work to develop a deeper understanding of the software and how it functioned within the business environment.
  14. 14.  CRP0:  It began with training and implementation team and setting up the technical environment.  It focused on getting the team trained in Oracle applications.  Tried to getting up the application and running.  Team members from all areas of company were “locked” in an off-site meeting.
  15. 15.  To discuss appropriate setting for hundreds of parameters within software.  Team members were joined by specialist from Oracle and KPMG  Team’s experience during the first phase of project indicated that without significant number of changes software will not support effectively.
  16. 16.  CRP1:  The goal of this phase of the project was for each track to make the system work within its specific area.  Emphasis was on getting the system to accommodate cisco processes without modification.  Team members generated detailed scripts that documented the purpose for and procedures used to complete a process.  To ensure all contingencies were accounted for, business process prototype tracking sheets were developed.
  17. 17.  Team members carefully documented issues while modelling, which were addressed in weekly three-hour meetings held by program management office.  there were huge number of business processes that the software couldn't support.  The team’s response to gaps was to develop a means for categorizing and evaluating each gap individually.
  18. 18.  Need to modify oracle led to unplanned changes in the project plan and budget.  Implementation team determined oracle package would not adequately support after sales support needs of the company.  So, team embarked on a concurrent effort to evaluate and select a service support package.
  19. 19.  CRP2  In the CRP2, the implementation team found itself in the most difficult part of the implementation.  The project scope had expanded to include major modifications and new after sales support packages.  A new approach was employed by the team in which all data communication took place via “data warehouse”.  Utilization of a data warehouse allowed all of cisco’s applications to access a single source for their information needs.
  20. 20.  It group started moving from their other projects and spent time on the core project in the company which was changing and needed more energy and resources.  The implementation team continued to deepen its understanding of the oracle and service packages and determined how to best make them work for cisco.  The final goal of crp2 was to begin testing the system to see how well it would stand up to the processing load.
  21. 21.  CRP3  Its focus was on testing the full system and assessing the company’s readiness to “go live”  A final test was conducted to see how the system would perform with a full transaction load.  At the end of crp3 each one of the functional leads presented its piece of the process results and later the system was put into action.
  22. 22. Cutting Over to the Oracle  The initial success of the oracle system was something less than expected.  On an average, the system went down nearly once a day.  The Primary Problem :  Hardware architecture and sizing.  Correcting the deficiency required additional hardware purchase which would increase the total expenditure.  Cisco had purchased the equipment on the basis of promised capability as a result the responsibility for fixing the hardware problems fell on the hardware vendor.
  23. 23.  The Second Problem :  Ability of the software to handle the transaction volume required in the Cisco.  The company had gone wrong in its final testing of the system.  Cisco had run individual processes sequentially rather than at the same time.  After cutover, when processes were running together sytem lacked the capacity to process the required load.
  24. 24.  Overcoming Of The Problem :  ERP project status became the number one agenda item for weekly executive staff meetings.  Strong vendor commitment from oracle, the hardware vendor and KPMG led to an eventual stabilization of the software and improved performance.
  25. 25. After Stabilization  Problems associated with implementation of oracle was short-lived.  Over the next three month on its implementation cisco and its vendors together stabilized and added capacity to the system.  Thus successful implementation of the system was concluded with a celebration party for the team and the company management.