Pete Solvik's Approach to IT Governance - Case Study Example

CISCO Table of Contents Company Profile 3 Pete Solviks Approach to IT Governance 3 Primary Governance Styles Used At the Network Level, Data Level and Application Level 4 What Problems Did Cisco Have With Its Internal IT By 2001? Why Didnt The ERP System Help More? 5 What Is BPOCs Role? How Much Real Authority Does It Have? 6 Why Did Boston Select The Three Big Projects That He Did? 7 Boston’s Approach to IT Governance 8 Issues Related To "Shadow IT" At Cisco 10 References 11 Company Profile CISCO Systems Inc is a global company and is a leader in internet networking. It was incorporated in 1984 and since its incorporation; it has underwent tremendous growth. In the Q4 of 2010 financial year, the revenue of the company touched $ 10.8 billion. The company focuses on providing quality customer service with a consideration that customers are their integral part (CISCO, “Corporate Overview”). Pete Solviks Approach to IT Governance Pete Solvik joined CISCO in 1993 as CIO. After his arrival he made several changes. At first he moved the IT organization out of the finance group and into the customer advocacy group which changed the reporting relationship of the department. Secondly, he reallocated the IT budget distribution system with the intention that each functional department can control their budget according to their needs instead of gathering all the IT expenses under one head, that is, G&A expenses. Each department could fund their projects according to its priority. He dispersed a central IT leading committee and changed it with a structure which gave the line organization authority to take IT investment decisions on application projects. Primary Governance Styles Used At the Network Level, Data Level and Application Level At network level, the customer advocacy group wanted to establish a customer interaction network which could use Cisco’s technology to route calls. Pete Solvik also established an intranet network for the employees. A web based online resource at Cisco.com was also developed for the customers. Boston emphasized on the management of the existing data by stopping all the small projects. A customer database project was also taken by Boston. ERP system was introduced in Cisco by Pete Solvik to manage Cisco’s manufacturing process and inventories. Further up gradation to the ERP was done by Boston for integrating all the functional units of the organization. What Problems Did Cisco Have With Its Internal IT By 2001? Why Didnt The ERP System Help More? By the end of 2001, CISCO faced a turning point. CISCO’s had a decline in its sales growth. People started spending less on technological products due to the internet bubbles burst and also due to the terrorist attack of 11th September. Pete Solvik also left the company and a new CIO, Boston was appointed. The need for change in the company’s IT strategy was felt due to the dynamic business environment (The Pennsylvania State University, “Personal PSU”). The intention behind the implementation of ERP system was to standardize the information which was being used in the company. Nevertheless, as a result of the IT liberty given to the different functional areas of the business, they programmed their own non-standard functional applications to interact with the ERP system. With the amalgamation of these new modified applications onto the ERP system, it was no longer possible to make huge up - gradation in the ERP system and CISCO was growing at an astonishing rate of 80% per year. ERP required huge customization which added to extra cost incurred by the company and by that time the company had already incurred $15 million. ERP system failed to deliver the value for their investment (The Pennsylvania State University, “Personal PSU”). What Is BPOCs Role? How Much Real Authority Does It Have? BPOC was an inter-functional decision making group set up by CISCO in 2002. Its main role was to determine company’s corporate issues regarding concern for the company according to their priorities. BPOC helped in managing the risk of the company by providing expert services in areas of concern. It also emphasized on maximizing productivity of the enterprise by taking key operational decisions and developing company’s business activities framework. The authority of BPOC was limited to providing of advisory service regarding key issues and taking decisions only. It did not have the authority to approve funds for projects or as said by Aungle, “BPOC was not meant to be an IT steering committee, but it did weigh in on projects that touched the entire company. It was more like a high-level advisory committee with senior representatives from each of the major functions. Cisco did not have a COO, so BPOC was like a virtual COO” (Mcafee, Andrew & Et. Al., “Enterprise IT at Cisco (2004)”). Why Did Boston Select The Three Big Projects That He Did? Boston’s three big projects were; up - gradating the ERP system, establishing an enterprise reporting and business intelligence solution, and developing a ‘single source of truth’ customer database. His first intention was to halt any new projects from implementation and priority was given to fixation of the underlying data. He believed that new applications would be a waste of time and resource until and unless the underlying data was managed. His second objective was to develop a business intelligence and enterprise reporting solution by linking all the different business intelligence tools that were not linked with the company. Thirdly, Boston focused on creation of a new way of managing funds for IT projects as he was in a way to centralize the budgetary decision making. Boston’s Approach to IT Governance Boston joined CISCO in 2001 as CIO. His first and second objective focused on the strategic alignment of business with IT. He upgraded the ERP system with an aim to link all the functional areas in an attempt to meet all the needs of the units. This helped in linking of IT with different business departments. His third area of focus was on the new ways of funding for the IT projects. It helped in efficient and effective fund management. He also focused on increasing the performance of business by developing a more effective way of linking all the different business intelligence tools. Which Of The Five Areas Focus Of IT Governance Was Addressed By Boston And BPOC? If Boston’s governance style is taken into consideration then it can be observed that he focused on strategic alignments of business by linking on all the functional departments which were not linked with the IT and by linking different business intelligence tools. He also helped in resource management by concentrating on the new ways of managing funds for IT projects. As far as BPOC is concerned, it focused on the risk management of the company by helping the company in taking key decisions. BPOC also helped in resource management by assisting the company in enterprise resource planning system. Issues Related To "Shadow IT" At Cisco Shadow IT describes when organizational departments start running its own projects or systems which are not under the supervision and management of IT department of the company. At CISCO, due to the IT liberty given to different functional departments, created many small non-standard applications that were programmed to interact with the ERP system. This increased the burden of extra cost for the company. Boston’s policy was to halt all these shadow projects and to manage the data available with the company on the basis of priority. References CISCO. “Corporate Overview”. October 30, 2010. Corporate Information, 2010. Mcafee, Andrew & Et. Al. Enterprise IT at Cisco (2004) Harvard Business School, 2007. The Pennsylvania State University. “Personal PSU”. October 30, 2010. User, 2010. Bibliography Gartner Inc. “IT Architectures (ITA)”. October 30, 2010. One Approach to IT Governance, 2002. Read More