This case study goes through the evolution of IT at Cisco. Brad Boston joined as the CIO at Cisco in 2001. He started the process of aligning IT with the underlying business. We start by analyzing the IT policies put in place by his predecessor Peter Solvik. Then we go on to see how Boston transformed the IT organization and its relationship with the other functional entities. Finally, we will take a look at the results of Boston’s new strategies and the challenges that come with them.
IT before Boston
Peter Solvik was the CIO of Cisco from 1993 to 2001. Before Peter joined Cisco, IT was viewed as an overhead and its spending was buried in the G&A expenses. It was not viewed as a strategic business partner that would help them scale efficiently. Peter changed this characterization of IT in the following ways:
IT was moved out of the Finance group and in to the Customer Advocacy Group.
The IT budget was detached from G&A and allocated to the functional entities (Sales, HR, Manufacturing etc.) giving them ownership of their own IT projects.
Client-Funded-Project (CFP) system: The central steering committee was disbanded. The functional entities made their decisions on which project to fund for their group. The work would be executed by the centralized IT group. The budgets within a functional entity were further sub-divided on a regional basis.
Under Solvik, Cisco embarked on a bug ERP project that was needed to help it efficiently manage its burgeoning business. Infrastructure projects like the intranet for employees, web-based online technical support for customers, web-based order initiation for customers, online software upgrades and supply chain automation were undertaken during this period. The number of projects assigned to the IT organization grew more and more and Cisco had to recruit more IT employees.
IT Transformation lead by Boston
Brad Boston joined Cisco as its CIO in 2001 after Solvik left. He saw the following issues with the way IT was being managed:
IT decisions made in functional silos without centralized line of sight caused duplication of efforts and a maintenance nightmare. Cisco had 9 different order-status tools, 50 customer survey tools and 15 business intelligence tools to name a few.
Without centralized planning, individual functions had developed their own tools that took raw data from the ERP system and used it for a specific purpose. The ERP system was no longer a standard implementation with a lot of additions and extensions. Upgrading the ERP would be extremely difficult.
Boston took stock of the situation and followed up with actions detailed below. He put a hold on all new project development. Each function was made to come up with a prioritized list of projects. Three projects were selected among the various candidate projects: ERP upgrade, business intelligence solution and centralized customer database. The budget for IT projects was restructured. 65% of the budget were allocated to corporate projects like data centers, VPNs, PCs, Phones etc. The remaining 35% was split among the silos as CFP budget. The CFP budget would also be used for enterprise wide projects if the functional silo would benefit from them. A BPOC (Businedd Process Operating Committee) was formed that would make recommendations on which IT projects will be funded and which would have to wait.
Boston aligned his team with the functional silos. One member of IT would represent each functional silo. An owner was assigned to each key initiative. Cisco products were used whenever possible in IT projects thereby creating a showcase for customers to see.
Did it work?
The three key initiatives were progressing well. Boston reorganized his team in to business process groups (quote-to-cash, ideas to product, market to sell) that would span multiple functional silos to address the major activities of the company. This would give the owner of a particular business process group to define and build applications for a business process and not for a functional silo.
IT hired people in other geographies in order to understand and build better applications that would take care of the particular region’s requirements.
There were still challenges on the budget front as the functional silos had to pitch in enterprise-wide projects and sometimes had to deal with project rejections by the BPOC. Groups had started hiring contractors for doing their own projects bypassing a corporate hiring freeze. These contractors did not come under IT making it difficult to make centralized IT decisions.
Boston felt that his changes were working. However, there were still challenges ahead. He wanted to preserve the CFP model so that the functional entities have an ownership in the corporate projects and individual functional projects. He felt that centralized planning (with members from IT and the functional entities) eliminated duplication of applications, delivered better applications due to better requirements gathering, reduced non-standard additions to ERP and utilized the budget efficiently.
Enterprise IT at Cisco
Analysis by Ram RamanathanThis case study goes through the evolution of IT at Cisco. Brad Boston joined as the CIO at Cisco in 2001. He started the process of aligning IT with the underlying business. We start by analyzing the IT policies put in place by his predecessor Peter Solvik. Then we go on to see how Boston transformed the IT organization and its relationship with the other functional entities. Finally, we will take a look at the results of Boston’s new strategies and the challenges that come with them.
IT before Boston
Peter Solvik was the CIO of Cisco from 1993 to 2001. Before Peter joined Cisco, IT was viewed as an overhead and its spending was buried in the G&A expenses. It was not viewed as a strategic business partner that would help them scale efficiently. Peter changed this characterization of IT in the following ways:
Under Solvik, Cisco embarked on a bug ERP project that was needed to help it efficiently manage its burgeoning business. Infrastructure projects like the intranet for employees, web-based online technical support for customers, web-based order initiation for customers, online software upgrades and supply chain automation were undertaken during this period. The number of projects assigned to the IT organization grew more and more and Cisco had to recruit more IT employees.
IT Transformation lead by Boston
Brad Boston joined Cisco as its CIO in 2001 after Solvik left. He saw the following issues with the way IT was being managed:
Boston took stock of the situation and followed up with actions detailed below. He put a hold on all new project development. Each function was made to come up with a prioritized list of projects. Three projects were selected among the various candidate projects: ERP upgrade, business intelligence solution and centralized customer database. The budget for IT projects was restructured. 65% of the budget were allocated to corporate projects like data centers, VPNs, PCs, Phones etc. The remaining 35% was split among the silos as CFP budget. The CFP budget would also be used for enterprise wide projects if the functional silo would benefit from them. A BPOC (Businedd Process Operating Committee) was formed that would make recommendations on which IT projects will be funded and which would have to wait.
Boston aligned his team with the functional silos. One member of IT would represent each functional silo. An owner was assigned to each key initiative. Cisco products were used whenever possible in IT projects thereby creating a showcase for customers to see.
Did it work?
The three key initiatives were progressing well. Boston reorganized his team in to business process groups (quote-to-cash, ideas to product, market to sell) that would span multiple functional silos to address the major activities of the company. This would give the owner of a particular business process group to define and build applications for a business process and not for a functional silo.
IT hired people in other geographies in order to understand and build better applications that would take care of the particular region’s requirements.
There were still challenges on the budget front as the functional silos had to pitch in enterprise-wide projects and sometimes had to deal with project rejections by the BPOC. Groups had started hiring contractors for doing their own projects bypassing a corporate hiring freeze. These contractors did not come under IT making it difficult to make centralized IT decisions.
Boston felt that his changes were working. However, there were still challenges ahead. He wanted to preserve the CFP model so that the functional entities have an ownership in the corporate projects and individual functional projects. He felt that centralized planning (with members from IT and the functional entities) eliminated duplication of applications, delivered better applications due to better requirements gathering, reduced non-standard additions to ERP and utilized the budget efficiently.