Cisco Implementation of ERP
Cisco
1. The ERP implementation process provides several examples as to why Cisco is Information Age company as opposed to an Industrial Age company. Although Cisco’s ERP vendor selection was driven by the manufacturing groups needs, this does not qualify them as an Industrial Age company proving that even a manufacturing focused company can still categorize itself as an information age company because of factors such as structure, resource allocation, and communication across functional groups.
One key difference in the two types of companies is structure. In Industrial Age companies, a hierarchy was the dominant business model – with power very centralized among top management. While John Morgridge, CEO, ‘maintained a centralized functional organization,’ at Cisco, the structure of the ERP task force team was nearly the opposite of a hierarchy and in fact drew key people out of many business units. The leaders of the project, Peter Solvik and Randy Pond collaborated with all levels of management from Board Members, to Vice Presidents to Directors of business units to team managers to create a team that would evaluate, select, refine and implement the project. So although the overall company structure was reflective of an Industrial Age company (according to the CEO’s observations) The ERP project team and the way it was comprised was more representative of an Information Age company, which was decentralized with authority and power distributed across many different units and down several lines of command as a result increased communication capabilities.
Second, the way in which the Cisco solves its ERP problem is indicative of an Information Age company. Industry Age companies characteristically stood very much alone and relied on internal support for technology and improvements. They were limited in growth and scope by their own competencies and capabilities. But, in the Information age, economies of scale are achieved by networking, sharing, and looking at other firms’ core competencies to achieve more value. Outsourcing in the Information Age allows a firm, like Cisco, to have access to better, faster, cheaper – in this case being an ERP solution. So, by outsourcing first the firm that evaluates their needs (KPMG) and then determining that Oracle would provide a new ERP system, Cisco shows that they are not an Industrial Age company. An Industrial Age company would have been limited by their own capabilities – but now, companies like Cisco realize what their competencies are and look elsewhere for solutions to problems that fall outside this realm.
Finally, the testing stages that Cisco went through to implement its new ERP system show that it is an Information Age company because of the process of evaluating information to make changes rather than being constricted to the original implementation which would seem more apparent in an Industrial Age company. The ability to document, use, and make changes from the communications from the testing teams would not have been done in an Industrial Age company because [next page]