Cisco is a company with a clear vision and an ambitious goal of becoming the global Internet expert. The company set its sights on challenging the norm of the time and working on making voice calls over the Internet free. Established in 1984 by two Stanford graduates, Cisco became the most valuable business on earth by March 2000. The company’s strategy is to provide a complete solutions offer to its customers through offering a wide product range and growing the business through acquisitions and business alliances. From its original core technology of routers, the company is now focusing in three independent networks of phone, local and wide area and broadcast networks. The turnaround point for the company was its database failure and forced two-day shutdown in 1994. This event highlighted the need to change company’s approach to systems replacement and the need to integrate all of company’s applications.
The company decided to adopt new practices and retrain its staff rather than mirroring the “old and tried”. The decision was made to collaborate with Oracle to develop a single ERP solution to replace all current systems. The project was a success and was followed by replacement and standardization of all company’s platforms and applications worldwide. Further to this project, Cisco web-enabled all its applications, resulting in customer service, HR and supply chain efficiencies. Cisco’s success continues and is being made possible by its growth through acquisitions and strategic alliances (such as that with KPMG). The company is where it is today largely due to its effective integrated Internet business systems, resulting in great efficiencies for the company and its various stakeholders.
1) Cisco – Information Age Company.
Cisco is far from being an Industrial Age Company. The main reason for this is that the company has been able to recognise the value in IT and use it to better their performance and achieve the desired growth. According to Weill & Ross (2009), it is a characteristic of an IT Savvy firm. To be more specific, through integrating their processes and applications into an ERP solution and then to proceeding to full replacement of all of its IT solutions worldwide, Cisco moved to a digitalized platform. According to Weill & Ross (2009), digitalized platform is an integrated set of electronic business processes and technologies. This would hardly be a characteristic of an Industrial Age company. Further to that, Cisco’s approach to implementation of its ERP solution and deciding not to mirror known and learnt old approaches but to make a bold move and rather retrain its people in new systems, demonstrates forward thinking and innovation, which is critical to get significant value from IT.
Again this is a more fitting characteristic of an Information Age company rather than an Industrial Age company. In implementing the ERP system, the company successfully identified where it lacked necessary expertise and was not scared to outsource their needs analysis to KPMG and then the ERP project to Oracle, who had significant knowledge and experience in the solutions Cisco were after. The “outside the square” thinking allowed the company to focus on own competences and keep them in-house while tapping into the expertise of others through outsourcing and alliances. This is a definite characteristic of an Information Age company. Finally, keeping communication lines open across functional divisions and getting an input from across the business to avoid making the project an IT-only initiative and to ensure it addresses the real needs is another reason why Cisco is an Information Age company.
2) IT contribution to the company’s strategy
IT greatly contributed to the company’s strategy to provide comprehensive one-stop-shop business networks solution for its customers, to set industry standards for networking, to systemize acquisitions and pick the right partners. Firstly, it was the company’s IP-based IT Architecture that enabled them to effectively and smoothly handle business acquisition and fully integrate these new acquisitions in a short period of time. Secondly, ERP implementation and application of web-enabled IT allowed Cisco to meet its goals of streamlining its internal processes and improving productivity, to improve customer satisfaction through the provision of online technical support, to pioneer net commerce and set industry standards and to achieve an extremely efficient supply chain.
IT and systems implemented were at the heart of executing the company’s strategy. Thirdly, IT is an integral part of Cisco’s information system. According to Picolli (2008), information systems satisfy firm’s information needs and thus improve firm’s efficiency and enable it to achieve its goals. Being an important part of this efficiency improvement process makes IT a significant contributor to Cisco’s strategy.
3) The role of CIO Pete Solvik
Pete Solvik’s role was integral in Cisco being able to derive significant value from IT and recognise it as a strategic asset as opposed to a liability. Prior to Cisco’s defining moment, it had the ambitious goals but the company was running standard operations not being able to support what it aspired to become. Solvik brought fresh visions and innovative thinking to the company. His initiatives were to redefine how IT was viewed internally and depart from finance cost centre reporting perception of the department. He was also able to see the limitations of Cisco’s systems and the potential of improvements. According to Weil & Ross (2009), when IT systems are deficient you need to first change the entire approach to IT. Only once this is accomplished can the digitalized platform be implemented. Solvik did manage to do that. Weil & Ross (2009) emphasize the need to strong leadership in turning IT into a strategic asset. And this is ultimately what Solvik’s role was in Cisco’s transformation.