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Case Study 1: Cisco

Cisco Employee Connection (CEC) is Ciscos inward-looking SIS, an intranet that addresses the unique needs of every Cisco employee. CEC offers ubiquitous communications (e.g., distribution of marketing materials, major corporate announcements), streamlined business processes (e.g., travel expense reimbursement), and integrated business systems (e.g., scheduling meetings, a problem-reporting system).

One application that illustrates CECs benefits to both Cisco and its employees is Metro, a travel-expense reporting system. Assume an employee uses a corporate credit card to charge an expense. Metro displays all expenses on a current credit card statement, and the employee can then move all relevant charges to an expense report. In pre-Metro days, a travel reimbursement took four to five weeks; Metro reimburses the employee in two to three days.

Cisco has benefited richly from these strategic information systems. For example:

- Eighty percent of technical support requests are filled electronically, reducing help desk labor costs and almost always with a customer satisfaction rate that exceeds

that of human intervention.

- Providing technical support to customers over the Internet has enabled Cisco to

save more than $200 million annually, more money than what some of its

competitors spend on research and development.

- CCO metrics show 98 percent accurate, on-time repair shipments, and customer

satisfaction increased by 25 percent between 1995 and 2000.

- By outsourcing 70 percent of its production means, Cisco has quadrupled output

without the time and investment required to build new plants.

- MCO has allowed Cisco to lower business costs in processing orders (from $125 per order to less than $5), improved employee productivity, and reduced order cycle times.

- Metro not only reimburses employees faster, it increases employee productivity and saves Cisco auditing costs. Today Cisco employs only two auditors to audit expenses for 15,000 Metro users per month.

- Cisco estimates total annual savings from CEC at $58 million, including $25 million in employee training savings and $16 million in employee communication.

A recent Cisco advertising campaign featured children and adults from all over the world asking the viewer, Are you ready? for the Internet. Cisco not only promotes Net readiness through its advertising, but also lives Net readiness by applying network connectivity throughout the company to maintain its competitiveness in network technology.

Questions for Minicase 1

1. How does each of Porters five forces apply to Cisco?

2. The case emphasizes benefits to Cisco. How do suppliers benefit? How do customers benefit?

3. Are the initiatives in place at Cisco available only to such a high-tech company? Specifically, what difficulties would a more traditional company face in becoming Net ready?

4. How can Cisco use the knowledge it has acquired from internal implementation of these systems to fulfill its goal to be a network solution provider to its customers?

Sources: Hartman and Sifonis (2000); newsroom.cisco.com.