In 1993, Solvik had realized Cisco’s drawback at the time he joined Cisco as CIO. He realized that the IT department was not able to contribute enough to the business, in other words, the internet technologies failed to give enough value to Cisco’s business. Moreover, Cisco’s system at that time was not capable of keeping in pace with the growth rate of Cisco; indeed, the system was lack of scalability, flexibility, and robustness. For these reasons, we can deduce that Cisco’s growth was impeded at that time because its growth was hampered by the misalignment between business demand and IT supply. If we plot Cisco’s status in the Business-IT Maturity Model, it will situate at level two at the left side of the curve; this location means that the supply of IT failed to meet Cisco’s business demand. Conclusively, this drawback might engender potential menace to Cisco.
In January of 1994, Cisco’s latent menace manifested itself and rendered Cisco shut down for two days. The major behind this shutdown was because of a malfunctioning that corrupted the central database, and this corruption had in turn brought the system in nearly total failure. Cisco’s IS management anticipated that total failure of the system was imminent and this total failure would put Cisco’s business in jeopardy. Thus, Solvik opted to modify Cisco’s business process, and they picked between radical change approaches and incremental change approaches. Incremental change approaches were not pragmatic since it would take longer time to redesign the business process compared to radical changes approach. Besides, radical change approaches were more appropriate for company that is on the brink of fiasco. Therefore, the Solvik at last chose radical change approaches.
Based on the Business-IT Maturity Model, Cisco was in level two, which means the IT was primarily for support and foundation systems. In order for Cisco to transform from level two to level three, Cisco must utilize IT to improve its business. The Business-IT Maturity Model states that level two business demands are (1) business process/network redesign, (2) enable business and partnerships, (3) enterprise process solutions, (4) management information, and (5) process orientation. All of these demands could be fulfilled by means of the Enterprise resource planning (ERP). Therefore, Cisco’s decision of employing ERP to implement the business process reengineering is on the right track.
ERP is business process management software that help companies to manage business data and information. However, integrating ERP to Cisco posed a great challenge because an ERP that can fit all business processes does not exist. In order for an ERP to integrate properly to Cisco, either the business process must be modified to fit the ERP or the ERP must be modified to fit the business process. Thus, the integration of ERP may take a long time and enough preparation must be done to minimize the difficulty of this daunting task.
Solvik must picked the best ERP that could be easily integrated in Cisco. To achieve this goal, he chose KPMG to be Cisco’s partner in the ERP project because KPMG was highly experienced in the corresponding industry. In addition, Cisco imposed certain criteria during the selection of ERP vendor. Cisco scrutinized every vendors by providing some sample data for each candidate to demonstrate how its software capture every Cisco’s requirement. Besides requirements, the ERP must be able to support the rapid growth of Cisco. In a variety of ERP vendors, Oracle was the lucky winner.
Major hurdles and how the team reach its goal
Although ERP was indispensable regarding to Cisco’s condition at that time, one major hurdle must be overcame before the implementation of ERP. From the perspective of Cisco’s board, this project entailed a large amount of time and money; hence, it was not favorable to a company that is at stake. For this reason, Solvik must