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Cisco Systems, Inc.

: Implementing ERP
GROUP 5: Pankaj Kumar Singh Parul Srivastava Piyush Rai Pradeep Meena Prateek Shukla

CISCO systems

Team 5

MAJOR CRITICAL SUCCESS FACTORS 1. Strong Partners: Cisco realized that for successful completion of the project strong partner with great technical skills and business knowledge was required. They chose KPMG to assist them in this project. Oracle was also chosen for technical assistance. Oracle was chosen as they had better manufacturing capabilities than other vendors who bid and the project was driven strongly by manufacturing. 2. Strong Team: Cisco ensured they included the best of the talents available with them for the project. The selected team was also very much committed to deliver the best as for them this project came as a huge opportunity. Presense of high ranked members in the steering committee also helped. 3. Strategy: The team adopted a strategy of collecting as much information and knowledge as possible from experience of other companies. 4. Fast decision making: CISCO together with KPMG narrowed down the list to 5 packages after shortlisting within 2 days. In another one week they finalized on two choices one of which included ORACLE. 5. A target date was set and timely implementation was given high priority. 6. The team also took care of estimating the project budget. Proper breakdown of the project was done to achieve estimation as accurate as possible. Approval from the board for the funding of the project was also taken. 7. They used rapid iterative prototyping which was used to break the implementation into series of phases. Developing on the previous phase gave the company a deeper understanding of the functioning of software. 8. Weekly meeting was organized to review the work and make the required corrections. The meeting was also used for motivating the employees and pushing the work ahead. 9. Timely assessment of the project and quick decision making as per the project requirement was also one of the reasons for success. For example the team quickly realized that avoiding modification in ERP software was not possible so they quickly adapted to the need and the required changes were incorporated. 10. The deadline was strictly adhered to despite of few inevitable modifications resulting in delays. 11. A technical environment set up was done to train the implementation team.
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CISCO systems

Team 5

COST ESTIMATION OF CISCO PROJECT Based on the facts given in the case, an estimated breakdown of the ERP implementation phase was created and an estimate about the major additions to costs was made (Table 1). Table 1: ERP Implementation Breakdown
PHASE MAJOR ACTIVITIES Training the team in the Oracle applications CRP0 Getting the application up and running Configuring the Oracle package ESTIMATED TIME (Weeks) START DURATION END 0 0 2 2 2 2 2 2 4 REMARKS ON PLANNED/ACTUAL VARIANCE As per plan As per plan As per plan

Details and procedures CRP1 Modifications (G,Y,R) Selection of after sales package

4 4

12 14

16 18

As per plan Extra work during modification phase, adding on software and integration cost Unplanned

18 After Sales Package CRP2 Technical issues resolution Data warehouse for centralized data commmunication Project additions - major IT work CRP 3 testing the full system Stablization (After Launch) 18 18 18 30

6 6 6 12 6 8

24 24 24 30 36

Unplanned: Extra work during this phase, adding on software and integration cost As per plan Extra work during this phase, adding on software and integration cost Major headcount cost added during this phase

Major headcount cost added during this phase

Software Cost: Due to extra modifications being added in CRP1 phase and unplanned addition of the after sales package, there would be some additions to the software costs. The variance was assumed to be 10%. System Integration: Extra modifications in CRP1 phase and unplanned addition of the after sales package, along with unplanned work on data warehousing would cause significant variance in the system integration costs. The variance was assumed to be 25%. Hardware: Due to the nature of their contract with the vendor, the addition in the hardware costs would be negligible. Headcount: The project estimate CISCO personnel time costs apart from the core members. Thus there would be major additions in the headcount costs. The unplanned addition of after
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CISCO systems

Team 5

sales software would add to headcount costs. During CRP2, change in project scope required almost the whole IT team to work on technical additions, which would significantly add to the headcount costs. Also, CRP3 stage required the team to work on a lot of unplanned implementation issues. This would also add to the headcount costs. A 100% addition to the headcount cost was estimated. Based on the estimations and assumptions, the actual cost for the project was estimated as $ 18.76 million. As compared to the planned cost, which was $ 15 million, the Cost Performance Index (CPI) for the project was estimated at 1.251. Thus the CPI for the project was on a higher side and significant crash costs were added to finish the project on schedule. Table 2: CPI Estimation
Breakup (%) 16 38 32 Planned Cost ($ millions) 2.4 5.7 4.8 2.1 15 3.765 1.251 Estimated Final Cost ($ millions)

Cost Heads

Remarks

Software System Integration Hardware

Headcount 14 Total Cost ($ millions) Cost Variance ($ millions) CPI

10 % 2.64 addition 25% 7.125 addition 4.8 No addition 100% 4.2 addition 18.765

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