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Cisco
Systems is a Silicon Valley legend. Very few have leveraged
the Net as Cisco has. But what’s not so well known is that
Cisco has leveraged the Net and rolled out the same best practices
that have bought it success globally in India too. Shipra
Arora reports
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| Manoj
chugh says the Internet vision and excellent
implementation has taken Cisco far ahead of competition |
For
a company empowering the Internet generation, the Internet
itself drives its business. Therefore, it comes as no surprise
that Cisco Systems presents itself as an case study practising
what it has been preaching about the gospel of the Internet.
Fact is, Cisco has managed to save about $ 1.4 billion globally
by leveraging Internet technologies for conducting its business
operations, which are completely online as of today.
The vision has been an indispensable part and parcel of Cisco’s
success over the years, next only to its technology and R&D
prowess, claims Manoj Chugh, president, India and SAARC region,
Cisco Systems. And to prove his point he points towards the
upward rise in Cisco’s revenue graph from 1994 onwards,
the year which marked the company’s initial sojourn into
Internet and Web-based technologies. “While till 1994
Cisco had been one among many player, from there on you can
see a marked improvement in the efficiencies of our business
processes, as a result of implementation of Internet applications.
This is what led to Cisco breaking away beyond the reach of
competition,” claims Chugh. In number terms, while Cisco
along with the rest of the competition was hardly touching
the billion-dollar mark in 1994, the years ahead saw an over
100 percent growth per annum in Cisco’s revenues, taking
them to over $5 billion by the year 2000, while the competition
still lingered around the $1 billion mark.
According to Rajeev Chopra, vice president marketing Cisco,
India and SAARC, the company in 1994 was faced with the challenge
of scaling its operations and providing increased levels of
service without letting costs get out of hand. While increasing
manpower was one of the options, it was feasible only to a
certain limit, considering the fact that economies could not
be maintained with increased manpower for scaling operations
to the extent Cisco had envisaged. This led the company’s
management to look at e-automation of the company’s processes
to lead to higher operational efficiencies and increased productivity
at lower costs. Thus marking the commencement of Cisco’s
e-drive within the company, which since then has been constantly
evolving itself.
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| According
to Rajeev chopra Cisco’s
Net initiatives are aimed at improving efficiencies and
reducing costs |
While
e-business has continued to be a constant success factor for
Cisco over the years, it has been accompanied by a constantly
evolving, well-defined e-strategy, which has been driving
the implementation of all Internet applications within the
company. “It is very critical for a company to first
have a proper roadmap laid down in order to avoid any operational
inefficiencies on account of lack of perspective and direction,”
explains Chopra. Elaborating on Cisco’s Internet business
strategy, Chopra points out that the company decided to commence
the implementation process with business critical but yet
easy-to-implement applications, and then slowly move on to
the not-so-business-critical but complicated and difficult
to implement applications. Says Chopra, “We realised
that it was more intelligent and efficient to first go ahead
with those applications which can be implemented within a
six-month time frame and then build up and make incremental
improvements on those applications.” Hence, even while
going for the long term objective, the company has never lost
sight of its short-term and mid-term goals in order to ensure
excellent Return on Investment (ROI).
With the strategy well defined, the next step for the company’s
management was to clearly define objectives in order to direct
its Internet business strategy on the right path. Chopra says
that guided by the business perspective, as opposed to the
IT perspective, all the e-initiatives of Cisco were to be
directed towards the twin objectives of improving productivity
and reducing costs. The objectives continue to guide Cisco
even today as the company reaches the $20 billion turnover
mark.
E-commerce wave
 The
first wave of applications used within Cisco included the
preliminary but very critical aspects of the company’s
business process like e-commerce, employee self-service and
customer care support. Cisco has been using the Internet very
effectively for conducting business online. According to Chugh,
100 percent of orders placed with the company in India are
through its website at www.cisco.com. In fact, during fiscal
2000, Cisco Systems globally realised financial benefits to
the tune of more than $500 million by using the Web for its
customer service functions. Chopra explains that when the
systems were manually run, sometimes there used to be in-corrections
in the order in terms of product configuration. Now with the
setting up of online systems, there is an Internet-based application
that tracks down all wrong orders right in advance. This allows
Cisco to have a completely clean order entrance-which helps
to effectively and efficiently manage its diverse range of
products and services.
Employee self-service
The
Internet-based employee self-service application on the other
hand has been directed towards optimising the workforce, and
improving employee productivity. The application, which runs
on the company’s intranet, Cisco Employee Connection
(CEC), provides for customisation and personalisation for
all Cisco employees. According to Chopra, the application
includes features like online availability of expense statements,
online employee management, online employee reviews, promotions
and employee requests. Further, there is also online deposits
of payments directly to accounts, as well as online availability
of all information that Cisco’s employees might want
to know stock option plans, for one. The application also
provides for a forecast tracker feature, wherein every sales
person in the company gives a sales forecast for the month
online, which helps the company to constantly keep track of
resources and thereby efficiently manage them.
Customer is king
On
the customer support front too Cisco has been effectively
leveraging the Internet and Web-based technologies towards
improved customer satisfaction. According to Chugh, there
has been close to a 25 percent increase in customer satisfaction
globally thanks to the deployment of its online customer support
systems. More than 80 percent of technical support questions
on the Web are answered online, thus reducing call centre
volumes. In fact, call volumes have grown at a much slower
rate than revenue (growth rate of 35 percent of revenue from
fiscal year 1997 through 2000). During the same period, agent
headcount grew at an even lower rate (25 percent of revenue).
But most importantly, Cisco’s customers continue to validate
the success of its online self service according to a recent
customer survey, 85 percent of customers indicated that they
prefer the Web as the starting point for resolving their customer-service
concerns.
The implementation of these three critical internet applications
within Cisco was followed by the next level of e-evolvement
within the company with the implementation of Virtual manufacturing
and Virtual Close applications.
Virtual manufacturing
Once
an order is accepted, the application directs the order to
the respective links within the company’s ERP system
running at seven locations in India, including six sales offices
and one R&D centre in Bangalore. Then based on complex
algorithms like capacity of the manufacturing unit, its availability
during a particular time, location, etc, the application allocates
the order to a particular manufacturing unit. All this happens
online. On the supply front, the system also has a very robust
supply chain management application which takes online orders
from suppliers over its partner extranet, Cisco Partner Connect
(CPC), and integrates it into the ERP system. The inventory
is further allocated accordingly to each of the manufacturing
units. According to Chugh, the company has been experiencing
the benefits of its internet-based Virtual Manufacturing application
in the form of almost a 15 percent increase in productivity.
“The e-enablement of the manufacturing process has not
only reduced inventory costs but has also resulted in accelerated
time to market and just-in-time manufacturing, leading to
an increase in productivity,” adds Chugh. Further, the
Internet application has allowed Cisco to forecast and foresee
market trends for effective planning.
Virtual close of books
The
use of the Internet has also significantly impacted Cisco
in terms of management of its financial resources. In 1995,
Cisco was so successful that it made the exercise of closing
accounting books a struggle. Cisco was acquiring companies
at an amazing pace; its organic growth stressed company systems,
finance included. Hence, the top management’s goal at
that time was to reduce the close cycle, while cutting finance’s
costs significantly and emphasising data integrity as much
as speed. It would have taken five years to fulfil this goal
but for the groundbreaking model that Cisco’s finance
team devised. Today information that’s only hours old
flows onto the desks of managers around the world, and the
depth of data is as impressive as its speed. Sales, bookings,
margins, and discounts can be checked, and data can be broken
down by country and product category even by individual account
representatives. The most significant improvement in this
regard is visible in Cisco bringing down account closing time
from about 14 days to virtually 1 day as a result of availability
all inputs online at the click of a button. Today, Cisco is
able to close its books at the end of the quarter, month,
and year by noon the next day. And Cisco predicts that what
it terms as virtual close will become the norm for most large
companies who want to work the smart way.
Through with the first two phases of its e-evolvement, Cisco
is currently in the process of the third stage of its evolvement
with the implementation of more complex applications like
e-sales and e-learning.
E-sales
The
Internet being a useful sales channel that provides a very
flexible environment to assist with the sales process and
also a powerful tool to boost productivity, Cisco’s management
decided to leverage Internet technology for empowering its
sales force and improving productivity. The e-sales initiative
is meant to do just that.
Since information is spread through multiple systems, finding
and synthesising data can take up as much as 20 percent of
a salesperson’s time. This is time that could be spent
talking with customers, generating new leads, or ensuring
customer requirements are being met. The e-sales portal, launched
in March 2001, is designed to eliminate these manual processes
by automatically integrating all the data a salesperson needs,
and displaying it in one location. While the Internet enables
access to large volumes of data, the e-sales portal brings
all that information together in one place. Dynamic and Web-based,
the portal presents real-time, business-critical information
that enables the company’s sales force to manage their
accounts more effectively, thereby enhancing the customer’s
experience with Cisco.
The company uses the following e-sales tools that offer the
company a tremendous advantage in improving productivity sales
statistics, bookings, and linearity: The account manager’s
recent orders, sales results for the week, month, quarter,
and fiscal year can be sorted chronologically or geographically.
A graphical display of the even spread of bookings over time
(linearity) is also available.
E-learning
Considering the high-end technology products that Cisco deals
in, training of both employees and partners has been a very
significant part in the company’s scheme of things. However,
with a growing employee, partner and geographical base, training
programmes had assumed significant proportions in terms of
costs. This prompted Cisco to take to the e-learning model
in order to deliver training cost-effectively. The company
has built an entire training roadmap on its intranet for its
employees, wherein each employee has been given a password
and user ID, along with a set of course modules assigned to
him. The roadmap marks both the instructor-led and online
courses separately, wherein most theory-based instructions
have been converted into online training. Cisco provides its
employees with a very comprehensive and interactive online
training environment through applications like video-on-demand.
According to Chopra, the e-learning programme also enables
employees to take tests online, along with provision for online
evaluation as well. The top management can also track down
and evaluate each employee’s performance in these training
programmes and accordingly assign them to the next level of
training. Says Chopra, “With the launch of our e-learning
programmes Cisco has been able to optimise its training initiatives
to a great extent and save on the unnecessary wastage of time
and expenditure involved in travelling.” Cisco will be
further working towards e-enabling its training programmes
for its partners in order to lead to greater optimisation
of resources.
Cisco has also started leveraging Internet technology to effectively
conduct its education programmes with the recent launch of
its Career Connection programme, an online career platform
for the networking industry. Career Connection will bring
educational institutions and students associated with the
Cisco Networking Academy Program together with private and
public organisations looking for Internet and networking talent
in an online community. With over 30,000 students enrolled
in 750 Networking Academies across the Asia Pacific region,
Career Connection will generate tremendous synergies and accelerate
further the development of Internet and networking professionals.
“The
aim is to connect our academic community students and graduates
with government and industry and provide a common platform
for them to connect regionally. While the academic community
will be able to cross-fertilise and share best practices across
the region, the industry will be able to source professionals
for their specific requirements.
IP communication
The
hallmark of Cisco’s e-initiatives has been the setting
up of its robust communication infrastructure. The company
boasts of a closed user group Voice-Over-IP network over which
it runs both its IP telephony, and video-conferencing and
video-on-demand applications. With the use of a converged
single IP network driving voice, data and video applications,
Cisco has been benefiting in terms of larger and cheaper bandwidth
availability, thus impacting the bottom line to a great extent.
Boasting of a converged and unified architecture, Cisco’s
robust infrastructure is driving the company’s e-initiatives
from being mere growth factors to becoming key strategic advantages
for the company. Thus ensuring Cisco an enviable position
far ahead of competition in the Internet age.
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