Technology and Business of Cisco Systems Inc - Essay Example

Technology and Business Assessment Cisco Systems Technology and Businesses Globalization and technological innovations have had great influence on the way businesses are conducted. E-commerce due to the explosion of the Internet users has become a great opportunity for businesses and is having an enormous impact on the way business is conducted. The ultimate benefit of accepting technology is that when properly implemented, technology can create greater efficiencies due to its integrative nature and decrease in overall redundancies. Cisco systems was an early adopter of technologies and this visionary competence has led it through its stunning growth to what it is today. Company Overview As stated on its website, Cisco Systems, Inc. is the worldwide leader in networking for the Internet. Cisco hardware, software, and service offerings are used to create Internet solutions that allow individuals, companies, and countries to increase productivity, improve customer satisfaction and strengthen competitive advantage. The Cisco name has become synonymous with the Internet, as well as with the productivity improvements that Internet business solutions provide. Cisco Systems vision statement claims that their vision "is to change the way people work, live, play and learn." Source from website < http://newsroom.cisco.com/dlls/company_overview.html>) Company History Stanford University Computer Scientists Sandy Lerner and Leonard Bosack founded Cisco Systems. There was a genuine need for large scale computer networks based on industry standard technologies and while in college, they found that the inefficiencies of the current infrastructure led to great technical hitches in being compatible with the numerous mail clients. This inspiration served as a spark that set their ideas in motion and when they left the campus, they were ready to embark upon the operation. The Problem Surprisingly, its stupendous growth was the harbinger of its problems. Cisco grew rapidly and to cater to the company and product information distribution, launched an official website in 1991. It had a 50% share of the networking market and struggled to keep up with the calls it was receiving. By 1992, its market share was 85% and the customer service requests and training programs were severely straining its existing systems that were not built for these volumes. By 1993, Cisco boasted a growth of an astounding 270% growth, but its IT department was sorely lacking to cope with a half billion-dollar company growing by 50% each year. Unable to sustain, its customer service was not up to the standards desired and Cisco was losing its ratings. Its IT budget was a paltry 0.75% of sales that was way below industry standards. The Plan CIO Pete Slovik and Senior Executive, Doug Allred, brought a revolutionary concept that entailed that the IT spending was linked to the business units that in turn necessitated close alignment to the company goals. The managers of the business units would be required to independently take decisions about the investment required to reach the company targets and the level of customer satisfaction. Cisco's internal network would play a strategic role in providing the connectivity needed for the business units to build applications creatively and therefore this would require a thorough revamp of its internal infrastructure. Because it was a major decision that would cost millions, cash-strapped Cisco deliberated over the decision. Small technical difficulties kept occurring and in 1994, Cisco's systems broke down unable to cope and Cisco was forced to close down for two days. The Solution The board went ahead and approved the proposal for a $15 million Oracle ERP system. This would entail a 2.5 percent of the 1993 revenues, thrice the IT budget of the previous year. The total cost of completing the ERP was $100million. It is not an overstatement to say that the Oracle ERP system became the backbone of the Cisco E-Business. It unified all of the Unix Servers and became a source of centralized information. (Complete case study details available from website < http://mba.tuck.dartmouth.edu/pdf/2001-1-0001.pdf>) Cisco and ERP Enterprise resource planning (ERP) is a system that integrates a number of the back office functions of planning, manufacture, distribution, accounting and human resources etc into a single system. ERP is a method of serving each individualized department with minimal redundancies and hence has several customized software applications integrated by a single interface. Being vast and comprehensive, an ERP implementation can cost millions of dollars to create, and may take several years to complete. Cisco has been acclaimed for its ERP venture. Cisco represents the classic, accelerated implementation approach. They claim to have implemented ERP in nine months for 15 million dollars. This served to integrate the business units and share information across all of them. The Oracle ERP system was intelligently tailored to adapt the emerging needs as well to include and wider customer base, vendors and integrate newer modules and capabilities for future needs. This scalability ensured that the organization did not overwhelm the system due to its future growth. Benefits of ERP The advantages of the ERP system when properly implemented are tremendous. The integration of information of the departments allows easy sharing of information as well as improvements in customer service and sales and accounting controls among others. Cisco's moved to a virtual close, reducing the time it needs to close the monthly books from 14 days to just four hours. Cisco and E-Business Once the ERP system was in place, Cisco returned to assess its worsening customer service problem. Its volumes demanded an increased amount of hires for servicing and customer call centers that it could not meet. Customers were dissatisfied due to lack of technical support. Therefore, to combat the inadequacy, Cisco launched the Cisco Information Online and the Technical Assistance Center (TAC) to the site. There was a discussion board and here customers can log in to look for a suggestion to solve a problem or suggest a remedy for the problem. The site was a huge success. Benefits Cisco achieved great benefits in terms of time and cost. It did not hire more employees, but at the same time, the customers no longer had to call and wait long times to get a solution to their problems. The website offered them instant access, up-to-date information and the knowledge to fix most problems on their own without waiting. Customers were satisfied and Cisco began to rise from its fallen ratings. Cisco furthered its advantages in 1995, by incorporating the features of by making provisions for the customer to reprint invoices, check the status of service orders, and even configure and price products. This left the sales department with more time to focus on other issues. It also involved the service providers and set a desired standard of service and empowered them to act appropriately. According to the data provided by Cisco Connection Online, customers are referred to a range of pre-qualified service providers. Instead of monitoring them at every level, it trusted them to succeed within the framework it has set up. Cisco not only took care of its customers, but also relieved pressure on itself in dealing with customer issues. Cisco Connection Online In 1995, Cisco Connection - a family of online and CD-ROM based services was introduced and was integrated into the ERP systems. This feature allowed the worldwide Cisco customers to access the latest information without the need for reentering the data again and again by the Cisco employees. Buoyed by the success of using IT, Cisco wanted to further tap the potential of the Internet for its use. Cisco formed an Internet Commerce Group (ICG) to look at the opportunities that were presented. As a result, it decided that to enhance its sales, using the web as tool for purchase. To reach its customers, Cisco sells through several channels that include a direct sales force, third-party distributors, value-added resellers, service providers and system integrators. Earlier, most of its purchase orders were done through a telephone call. There was a lot of miscommunication and this resulted in wastage of resources and customer times due to the redundancies. Of the orders placed on the phone, 25% of the orders had errors. Customers were frustrated that a placing an order ended up being so complex and they had to provide the information again and again. The existing site was now integrated into the Oracle ERP system with all the information available. This enabled the customer with all the information needed for the purchase- product configuration, pricing and customization add-ons. This enabled the customer to totally configure and purchase the product of his needs. Additionally, once purchase order was placed, it allowed viewing of the order status and shipping details. It also housed installation guides and help tips. Benefits The e-commerce site was completed and launched in July 1996. By 1997, 27 percent of all orders were placed using the Internet. In addition, the CCO was rated among the top ten technology and computing websites by Interactive Magazine. Within the first four months online, Cisco had sold $75 million worth of products on the Internet. The site was simple but sophisticated enough to ensure products were accurately configured. As a result, Cisco was able to drop its customer-order error rate from 25 percent to 1 percent. By 1997 70,000 registered users were accessing the site 700,000 times a month. (Source from website < http://mba.tuck.dartmouth.edu/pdf/2001-1-0001.pdf>). The web became its primary source of technical support for both the customers and resellers and this saved Cisco close to $150 million dollars a year. Above all, its customer satisfaction index was really high which had been a prime reason for it embracing IT. To give Cisco its due, it did not rest on its laurels. It went one step ahead and planned to integrate its site with customers' ERP sites. Cisco attempted to produce a software product in house. Its Cisco connection Online was constantly updated and revised based on customer and employee inputs. The site was translated into local languages and pricing was given in local currency, based on the exchange rate. Cisco and Customer Service Cisco has taken customer service to the extreme. Cisco has invested in technology to gauge up-to-the-minute customer loyalty statistics. Since the year 2000, Cisco has used the services of an Indianapolis based technology provider to operate a "Cisco global satisfaction reporting tool," a Web-based system that allows every worker at the company to access a database of customer information presented as a variety of reports. (Source: http://searchcrm.techtarget.com/originalContent/0,289142,sid11_gci884089,00.html) Recently, in March 2006, Cisco was the recipient of the award distinction that recognizes Cisco as the first global networking company to be certified for delivering outstanding technology service and support jointly developed by J.D. Power and Associates and the SSPA. This e program evaluates "overall customer satisfaction and helps technology support organizations increase their efficiency and effectiveness in customer service. The certification will also help consumers identify companies that have demonstrated customer service excellence before selecting what products to purchase." "Cisco is dedicated to ensuring customers' success with our technology through exceptional service delivery," said Joe Pinto, senior vice president of Cisco Technical Support Services. "We are proud of this industry recognition of our service quality and our commitment to our customers." (Quoted from website Read More