Cisco Case Notes And Case Slides for
Understanding Business Ethics | Latest
Update
History of IT at Cisco - CORRECT ANSWERS-Pete Solvi joined Cisco in January 1993
as the company's CIO. At the time, Cisco was a $500 million company running a UNIX-
based software package to support its core transaction processing. The functional areas
supported by the package included financial, manufacturing, and order entry systems.
Cisco was "far and away" the biggest customer of the software vendor that supported
the application.3 Solvik's experience and the company's significant growth prospects
convinced him that Cisco needed a change.
We wanted to grow to $5 billion-plus. The application didn't provide the degree of
redundancy, reliability, and maintainability we needed. We weren't able to make
changes to the application to meet our business needs anymore. It had become too
much spaghetti, too customized. The software vendor did offer [an upgraded version],
but when we looked at it we thought "by the time we're done our systems will be more
reliable and have higher redundancy but it will still be a package for $300 million
companies and we're a $1 billion dollar company."
Solvik's initial inclination was to avoid an ERP solution. Instead, he planned to let each
functional area make its own decision regarding the application and timing of its move.
Keeping with Cisco's strong tradition of standardization, however, all functional areas
would be required to use common architecture and databases. This approach was
consistent with the organizational and budgetary structures that Solvik had installed
upon his arrival. Solvik felt strongly that budgetary decisions on IT expenditures be
made by functional areas while the IT organization reported directly to him. Solvik's
objection to ERP solutions was also born out of concerns about the types of "mega-
projects" that ERP implementations often became.
A Defining Moment - CORRECT ANSWERS-In the following year, little progress was
made. Randy Pond, a director in manufacturing4 and eventual co-leader of the project,
described the dilemma facing the functional areas in late 1993: We knew we were in
trouble if we did not do something. Anything we did would just run over the legacy
systems we had in place. It turned into an effort to constantly band-aid our existing
systems. None of us were individually going to go out and buy a package. . . . The
disruption to the business for me to go to the board and say "Okay, manufacturing
wants to spend $5 or $6 million dollars to buy a package and by the way it will take a
year or more to get in . . ." was too much to justify. None of us was going to throw out
the legacies and do something big.
, The systems replacement difficulties of functional areas perpetuated the deterioration of
Cisco's legacy environment. Incremental modification continued while the company
sustained an 80% annual growth rate. Systems outages became routine. Product
shortcomings exacerbated the difficulties of recovering from outages.
Finally, in January of 1994, Cisco's legacy environment failed so dramatically that the
shortcomings of the existing systems could no longer be ignored. An unauthorized
method for accessing the core application database—a workaround that was itself
motivated by the inability of the system to perform—malfunctioned, corrupting Cisco's
central database. As a result, the company was largely shut down for two days.
Cisco's struggle to recover from this major shutdown brought home the fact that the
company's systems were on the brink of total failure. Solvik, Pond, and a number of
other Cisco managers came to the conclusion that the autonomous approach to
systems replacement they had adopted was not going to be sufficient. An alternative
approach was needed. Solvik described what they did: - CORRECT ANSWERS-We
said, "we can't wait casually by while Order Entry, Finance, and Manufacturing go out
and make three separate decisions." It would take too long to get those applications in
place. We needed to take faster action. At that point we got sponsorship from the SVP
of Manufacturing, Carl Redfield. He was with Digital before Cisco, in PC manufacturing.
He took the lead and said, "O.K., let's get on with this.... let's start from the
manufacturing perspective, and see if we can get the Order Entry and Financial groups
in the company interested in doing a single integrated replacement of all the
applications, instead of taking a longer time doing separate projects." And so in
February, about a month after the [company shutdown], we went about putting together
a team to do an investigation to replace the application.
Redfield understood from previous large-scale implementation experiences at Digital
how "monolithic" IT projects could take on lives of their own. He echoed Solvik's
concerns about project size and had strong views about how Cisco should approach a
large implementation project. - CORRECT ANSWERS-I knew we wanted to do this
quickly. We were not going to do a phased implementation, we would do it all at once.
We were not going to allow a lot of customization either. There is a tendency in MRP
systems for people to want the system to mirror their method of operation instead of
retraining people to do things the way the system intended them. This takes a lot longer.
Also, we wanted to create a schedule that was doable and make it a priority in the
company as opposed to a second tier kind of effort.
Selecting an ERP Product - CORRECT ANSWERS-Cisco's management team realized
that implementing to meet business needs would require heavy involvement from the
business community. This could not be an IT-only initiative. It was critically important to
get the very best people they could find. Solvik elaborated: "Our orientation in pulling
people out of their jobs [to work on the project] was if it was easy then we were picking
the wrong people. We pulled people out that the business absolutely did not want to
give up."
Understanding Business Ethics | Latest
Update
History of IT at Cisco - CORRECT ANSWERS-Pete Solvi joined Cisco in January 1993
as the company's CIO. At the time, Cisco was a $500 million company running a UNIX-
based software package to support its core transaction processing. The functional areas
supported by the package included financial, manufacturing, and order entry systems.
Cisco was "far and away" the biggest customer of the software vendor that supported
the application.3 Solvik's experience and the company's significant growth prospects
convinced him that Cisco needed a change.
We wanted to grow to $5 billion-plus. The application didn't provide the degree of
redundancy, reliability, and maintainability we needed. We weren't able to make
changes to the application to meet our business needs anymore. It had become too
much spaghetti, too customized. The software vendor did offer [an upgraded version],
but when we looked at it we thought "by the time we're done our systems will be more
reliable and have higher redundancy but it will still be a package for $300 million
companies and we're a $1 billion dollar company."
Solvik's initial inclination was to avoid an ERP solution. Instead, he planned to let each
functional area make its own decision regarding the application and timing of its move.
Keeping with Cisco's strong tradition of standardization, however, all functional areas
would be required to use common architecture and databases. This approach was
consistent with the organizational and budgetary structures that Solvik had installed
upon his arrival. Solvik felt strongly that budgetary decisions on IT expenditures be
made by functional areas while the IT organization reported directly to him. Solvik's
objection to ERP solutions was also born out of concerns about the types of "mega-
projects" that ERP implementations often became.
A Defining Moment - CORRECT ANSWERS-In the following year, little progress was
made. Randy Pond, a director in manufacturing4 and eventual co-leader of the project,
described the dilemma facing the functional areas in late 1993: We knew we were in
trouble if we did not do something. Anything we did would just run over the legacy
systems we had in place. It turned into an effort to constantly band-aid our existing
systems. None of us were individually going to go out and buy a package. . . . The
disruption to the business for me to go to the board and say "Okay, manufacturing
wants to spend $5 or $6 million dollars to buy a package and by the way it will take a
year or more to get in . . ." was too much to justify. None of us was going to throw out
the legacies and do something big.
, The systems replacement difficulties of functional areas perpetuated the deterioration of
Cisco's legacy environment. Incremental modification continued while the company
sustained an 80% annual growth rate. Systems outages became routine. Product
shortcomings exacerbated the difficulties of recovering from outages.
Finally, in January of 1994, Cisco's legacy environment failed so dramatically that the
shortcomings of the existing systems could no longer be ignored. An unauthorized
method for accessing the core application database—a workaround that was itself
motivated by the inability of the system to perform—malfunctioned, corrupting Cisco's
central database. As a result, the company was largely shut down for two days.
Cisco's struggle to recover from this major shutdown brought home the fact that the
company's systems were on the brink of total failure. Solvik, Pond, and a number of
other Cisco managers came to the conclusion that the autonomous approach to
systems replacement they had adopted was not going to be sufficient. An alternative
approach was needed. Solvik described what they did: - CORRECT ANSWERS-We
said, "we can't wait casually by while Order Entry, Finance, and Manufacturing go out
and make three separate decisions." It would take too long to get those applications in
place. We needed to take faster action. At that point we got sponsorship from the SVP
of Manufacturing, Carl Redfield. He was with Digital before Cisco, in PC manufacturing.
He took the lead and said, "O.K., let's get on with this.... let's start from the
manufacturing perspective, and see if we can get the Order Entry and Financial groups
in the company interested in doing a single integrated replacement of all the
applications, instead of taking a longer time doing separate projects." And so in
February, about a month after the [company shutdown], we went about putting together
a team to do an investigation to replace the application.
Redfield understood from previous large-scale implementation experiences at Digital
how "monolithic" IT projects could take on lives of their own. He echoed Solvik's
concerns about project size and had strong views about how Cisco should approach a
large implementation project. - CORRECT ANSWERS-I knew we wanted to do this
quickly. We were not going to do a phased implementation, we would do it all at once.
We were not going to allow a lot of customization either. There is a tendency in MRP
systems for people to want the system to mirror their method of operation instead of
retraining people to do things the way the system intended them. This takes a lot longer.
Also, we wanted to create a schedule that was doable and make it a priority in the
company as opposed to a second tier kind of effort.
Selecting an ERP Product - CORRECT ANSWERS-Cisco's management team realized
that implementing to meet business needs would require heavy involvement from the
business community. This could not be an IT-only initiative. It was critically important to
get the very best people they could find. Solvik elaborated: "Our orientation in pulling
people out of their jobs [to work on the project] was if it was easy then we were picking
the wrong people. We pulled people out that the business absolutely did not want to
give up."
