cisco systems: systems, products, forecasting models, and costs of errors by: ann mesavage richard...

Cisco Systems: Systems, Cisco Systems: Systems, Products, Forecasting Models, Products, Forecasting Models,

and Costs of Errorsand Costs of Errors

By:

Ann Mesavage

Richard McManus

BackgroundBackground

Largest manufacturer of switches and routers

Briefly was the most valuable company in 2000- ($555 billion company worth, stock price $80/share)

Is thought to have 85 percent of the switch market for the internet

Cisco’s successCisco’s success

Large outsourcerMany acquisitions- between $20 billion to

$30 billion between 1993 and 2000Sell many items over internetWebsite- Cisco Connection Online (CCO)

“Cisco uses the Web more effectively than any other big company in the world. Period.” - Fortune Magazine

Cisco’s Success (cont’d)Cisco’s Success (cont’d)

Internet: supply chain extranet- Manufacturing Connection Online (MCO)

Cisco Employee Connection - four fifths of technical training online

Online quotasCustomer serviceJob applicationsAccounting- closing accounts, “virtual close”

ProblemsProblems

2000-2001 recessionFall in technology related stockDotcom companies- sales down, affect on

CiscoSales fell: $22.3 billion (2001) to $18.9

billion (2003)

Effects on CiscoEffects on Cisco

Oversupply in inventory (unsold)Competitors/suppliers cut back on moneyShare price down by 80%, stock closed at

$14Competition with smaller companies Slow down in Asia and Europe

Affects on Cisco (cont’d)Affects on Cisco (cont’d)

Large layoff (6,000-8,000 employees)

CIO Peter Solvik

CFO Larry Carter

CEO John Chambers

Errors in Forecasting Errors in Forecasting

Did not factor growth into modelsToo much inventoryOver reliance on technologyWrong economic factors

- focused more on orders, than big picture

“Do our systems do a great job of telling us where we are today? Yes, but they don’t tell the future.” – CEO John Chambers

Cisco RestructuredCisco Restructured

Centralized engineering and marketing organization

Track products and profitability Improving “virtual close” system Improve brand recognition “Cisco is not as familiar to people as some of the

other large IT players… there is definitely the opportunity to increase awareness.” - Sue Bostrom, Cisco’s chief marketing officer

PollPoll

WebsiteWebsite

Very User Friendly Gives Up to Date

News Broken Into Many

Categories like “Products & Services”, “Ordering”, and “Support”

http://cisco.com/

WebsiteWebsiteAllows the User To Create An Account

– Accounts: Purchases Made Online Tracks Products that the User Purchases

Also Provides Training And Events– Allows users to learn about the business value of

networking solutions and get best practices for deploying and managing the latest technologies

– Provide live Webcasts or on-demand sessions in video or audio-only formats for “students”

WebsiteWebsite

Provides Users with Product Literature– Brochures– Bulletins– Case Studies (How Products Have Helped Out

Businesses With IT)– Customer Success Stories– Data Sheets– Presentations– Press Coverage– Q & A Forum

ProductsProducts

Specialize In Many Products And ServicesList of Products from A-Z

– Examples: Switches Network Routers Optical Networking Interfaces And Modules Universal Gateways And Access Servers

Provides Information On All Products

SwitchesSwitches

Cisco switches help maximize network value by providing optimal support for business requirements while delivering superior investment protection.

SwitchesSwitches

Many Different Varieties For Different Applications– Examples:

ATM Switches Blade Switches LAN Switches WAN Switches

Network RoutersNetwork Routers

Provide Routers for Small, Midsized, and Large Businesses

Each Have Different Features To Meet the Requirements of Different Types of Businesses

Network RoutersNetwork Routers

Provides Routers for Network Providers

Optical NetworkingOptical Networking

Service providers can optimize networks by integrating intelligent optical transport, flexible bandwidth management and converged voice/video/data services

Fiber Optics

Interfaces And ModulesInterfaces And Modules

Deploy data and voice capabilities in an integrated routing platform to help increase productivity, decrease costs, and lower the cost of ownership

Interfaces And ModulesInterfaces And Modules

Variety of Interfaces And Modules– Transceiver Modules– Ethernet Switching Network Modules– Line Cards– Network Modules– Optical Services Modules– Voice Modules And Interface Cards

Universal Gateways And Universal Gateways And Access ServersAccess Servers

Current market conditions enable service providers to increase revenue by offering wholesale Voice over Internet Protocol (VOIP) services

Universal Gateways And Universal Gateways And Access ServersAccess Servers

Voice Over IP Solutions (VoIP)– ASP Termination Services– Dial Access Solution For Service Providers– National And International Transport Services– Prepaid And Postpaid Calling Card Services– Voicemail/Unified Messaging

QuestionsQuestions

What is the “virtual close” system?

QuestionsQuestions

Short Answer:

Why is Cisco.com so successful on the international market?

QuestionsQuestions

Cisco was briefly the mot valuable company on Wall Street

QuestionsQuestions

Who uses Cisco.com?A) International Businesses

B) Small Local Businesses

C) Network Providers

D) All Of The Above

QuestionsQuestions

What does VoIP stand for?

A) Voice Internet Packaging

B) Voice Over Internet Protocol

C) Voice Interpreting Packages

D) None Of The Above

QuestionsQuestions

Another name for Cisco’s website is:

References• Case Study- “Cisco Systems: Poster Child for the Digital Firm?” Managing the Digital

Firm.• (2001, Mar 21). Behind the Tech Slump. The Economist Newspaper Ltd., 1. Retrieved

October 11, 2006, from ProQuest database.• (2001, Mar 10). An Old-Fashioned Price War. The Economist Newspaper Ltd.,1.

Retrieved October 11, 2006, from ProQuest database.• Morrissey, P., Boardmen B., Franklin, C., MacVittie, D., Molta, D. (2004, Oct 28). The

State of Cisco. Network Computing, Vol. 15, pg. 68. Retrieved October 11, 2006, from ProQuest database.

• Boyle, D. (2006). Cisco Systems, Inc. Better Investing, Vol. 55, 43. Retrieved October 15, 2006, from ProQuest database.

• Tribble, S. (2006, Oct 5). Cisco Introducing Itself to Consumers: Campaign Aims to Improve Brand Recognition. Knight Ridder Tribune Business News, 1. Retrieved October 19, 2006, from ProQuest database.

• Berinato, Scott. What Went Wrong at Cisco. 1 Aug. 2001 http://www.cio.com/archive/080101/cisco.html.