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CISCO INC.

Implementing ERP

AGENDA
Problems Analysis of the Problems THE Problem Possible Solutions and Analysis Implementation and Analysis The Aftermath

PROBLEMS
Current System Software Provider (Issues) Future Growth

ANALYSIS OF THE PROBLEMS

Companys Approach

Legacy System Centralization Avoiding ERP

Outages

MAJOR PROBLEM

Shutdown for two days

POSSIBLE SOLUTIONS AND ANALYSIS


Band-aided System Unix based upgrade Decentralized buying ERP System

IMPLEMENTATION
One Phase activity Customization Mirror of Operations

IMPLEMENTATION (CONT.)
Strong Integration Partner Selecting and Implementing Experienced with ERP Business knowledge and Technical Skills KPMG

SELECTION OF ORACLE
Request for Proposal (10 days)

10 days

Response (2 days) 2 days Visiting References (Meanwhile)

Software Demonstration (3 days) 3 days

ORACLE
Manufacturing Capability Long-term Development Flexibility

TIME AND COST

9 months and $15million

TEAM FORMATION
Extended

core team from 20 to about

100 Best and brightest from across all Ciscos business community 5 team tracks Order entry Manufacturing Finance Sales/Reporting Technology Team management structure

CONFERENCE ROOM PILOT

CRP 0

Began Training Getting the application up and running Demo of quote and cash
Make system work within their specific areas Go without modifications Process Documentation/ tracking sheets Modification strategy After Sales Support package

CRP 1

CONFERENCE ROOM PILOT

CRP 2

Including major modifications Communication through single Data warehouse Historical and Future data bridging Test Software and Hardware

CRP 3
Check readiness to go live Rerunning on a Saturday Made the nod their heads

ANALYSIS OF CRP

CRP 0&1: Build on previous work to develop a deeper understanding of the software
Identifying necessary modifications Compressed training hours Six months work in one month (Lack of Tests)

CRP 2&3: Implementation with modifications


Implementing within each specific area Substantial Modifications Need for Data-warehouse Head nodding

GOING LIVE!
Disturbingly Unstable (Avg. 1 time shutdown) Hardware Architecture and sizing Vendors Responsibility Huge transaction volumes Inefficient processing of common tasks After Two months of efforts, System was now STABLE

ANALYSIS
Top-management Support Collaborative Efforts Top management Support Effective Negotiations Limited Modifications

ANALYSIS (CONT.)
Net Sales
$9,000,000 $8,000,000 In thousands $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 1995 1996 1997 Years 1998 $2,232,652 $4,096,007 Net Sales $6,440,171 $8,458,777

PERCENTAGE CHANGE IN REVENUE


% change
90 80 70 60 50 40 30 20 10 0 1995 1996 1997 1998 % change

RETURN ON INVESTMENT
ROI = (Gain from Investment Cost of Investment) / Cost of Investment (186121600*-15000000)/15000000

1140.81%
Considering 80% growth rate and assuming ERP will facilitate in Achieving this growth.

* Gaining 80% growth, assumed from year 1995 revenue

CAN WE DO IT AGAIN?

NO!

Good Timing

Cost Reductions

Luck!

RECOMMENDATIONS

Pro-Active Approach Risk Analysis for System failures

Continuous Upgrading

IMPLICATIONS TO THE APPROACH


No Cost-Benefit Analysis Oracles first release
Lack of Testing Aggressive Timeline
Under-estimating Cost

More bugs Higher Risk of Failure

Large volume of Data Sequential testing

Stressed Employees Higher probability of making mistakes

THANK YOU!