CISCO (A)

Q.1 Can other companies benefit from investing in e-business functionality to the same extent the Cisco has? Other company can gain benefit from investing e- business functionality same extent with Cisco. The infrastructure and program is in the market right now. The company just chooses the right ones are match with the requirement. However, the implementation and the execution may not same. Every company have own strategy and the infrastructure and the program must design based on that strategy. Flexibility was as critical as functionality to Cisco e-business system. There are no systems that are adequate with the situation over time. There must be some revision, adaptation and change. The flexibility also comes from decision making process. The business units have independent position to relate with cost and strategy. Because the business unit face own unit unique environment and the business unit itself know to deal with it. While doing so other companies must take into account that though IT industry is attractive industry, it has limited number of competitor and substituted product - It has high entry barrier. Q.2What can other corporations learn from Ciscos approach to guiding e-business transformation? I. II. III. Competency to provide variety product Complete information technology solution for business Adoption of innovative techniques and technology to service customer and streamline its own business process efficiently and effectively IV. V. VI. Re- invention in e-business Maximizing customer satisfaction Minimizing the cost

VII. VIII. IX. X.

Achieving customer loyalty System integration between Cisco and its supplier Customer-training programs Human resource was critical factor; other company can learn how Cisco treats the employee.

CISCO (B) Q1.What do you think of the way Cisco funds new e-business initiatives? Until 1993, Cisco funded new e-business initiatives in a manner similar to what is in place at many corporations today. Funding came through the IT department, which was a cost center that accrued as administrative overhead (G&A). The department was funded at 0.75 percent of Ciscos revenues. Cisco took steps to align the objectives of the IT department with the strategic goals of the company as a whole in 1993. The existing funding mechanism meant that e-business initiatives were all evaluated on the basis of cost reduction, often overlooking impacts on sales, customer satisfaction, or employee retention. Cisco created a system that decentralized IT investments. The new Client Funded Model (CFM) gave each business-unit manager the authority to make whatever expenditures were sensible to increase sales and customer satisfaction. In addition, the organizational structure was changed so that IT reported to a new group called Customer Advocacy. Ciscos efforts in the area of standardized B2B commerce platforms illustrate the companys innovation process. Cisco has automated the purchasing process for its largest customers by writing custom software that integrates the customers purchasing systems with Ciscos order management systems.

Q2.Do you think Cisco should centralize any aspect of the innovation process? Which of the three possibilities above seems most appropriate (or can you suggest a different one)? Why? How would you define the specific charter of the new organization? Up to some extent it is advisable to centralize any aspect of innovation process as far as technology and innovation is concerned. While the decentralized system, combined with an emphasis on staying close to the customer, has been incredibly successful for Cisco so far, it is not perfect. First, as the company grows, it becomes more complex. The alternative to the current decentralized system is some sort of centralized organization that focuses on innovation. At a conceptual level, Cisco executives are tossing around at least three possibilities:

1. A Technology Research and Training Team centralized : Think-tank that studies emerging technologies and keeps business managers informed of what will soon be possible 2. 3. A Venture Engineering Team: Centralized technology research and implementation team An Internal Venture Capital Group: Centralized technology business analysis and funding team According to me A Technology Research and Training Team centralized one of the possibilities that CISCO is looking for is best one because technology research and training team help in developing as well as discovering new Innovations which is ultimately beneficial to CISCO. There are many number of ways in which the charter of this new organization could be configured. What specific activities would it be responsible for? Who would staff it? How would it be funded? How would it be evaluated? Can it be configured in such a way that efficiencies and elusive white space opportunities are captured without destroying the innovative spirit at Cisco or its decentralized (Internet-like?) culture? Losing either could outweigh any benefits of centralization. Q3.Can Cisco measures its innovative efforts? Tie compensation to these efforts? If so, how? Ciscos efforts in the area of standardized B2B commerce platforms illustrate the companys innovation process. In the past, Cisco has automated the purchasing process for its largest customers by writing custom software that integrates the customers purchasing systems with Ciscos order management systems. To extend this functionality to far more customers, Cisco, in conjunction with an industry consortium known as RosettaNet, is developing protocols and platforms that will simplify this process and obviate the need for (painful, brute-force) custom solutions. Cisco can measure its employee innovative measures by using innovation metrics. Cisco could measure input and the output of innovation. It could encourage employees to spend a specific amount of time on innovation efforts. This would not only ensure that employees have sufficient time for R&D efforts but also ensure such efforts at not at the cost of current business. Currently, Cisco has an incentive system that focuses on customer satisfaction and holds managers accountable. The compensation structure at Cisco is based on 3 metrics- revenue growth, earning growth and customer satisfaction. This helps in encouraging employees to constantly innovate to meet the changing needs customers. Also more than 40% of stock options spreads beyond management ranks to the other levels. Potential right to own the company through these stocks provides additional motivation to employees to strive more.