Cisco Systems - Using the Web for internal efficiency.

Output rate is a good variable to assess the performance of this process. An actual check of how many sales were closed in a particular day is a good measure for this variable. This can be cross matched with the targets allocated for a particular day/month which will then help better identify whether the salespeople are meeting their sales targets. Keeping a check on this thrice a day helps management to quickly react to a particular drop in target achievement or even identify a need to hire more staff at particular hours of the day to help meet optimum customer service levels.

Measuring downtime can also be considered as a good performance variable for this process. If the downtime level is too high, this implies that the staff are not very productive, they are spending far too long away from their jobs or with one particular client and hence are not providing consistent service. Typical measures of downtime would be to check on how long the breaks staff take are, the time delay in between appointments, the total time out of operation as compared to the scheduled work day, and so forth.

Daily Financial Report Generation – This business process involves generating reports using financial data entered online. For example, since most sales are generated via the Web, the actual revenues earned in a day can be called up at any given point in time. In many companies, financial data takes weeks to gather and compile into a report prior to it being analysed by the company’s financial directors. This is usually because they have software programs or then intensive book-keeping methods that accountants or financial consultants would have to physically sort through to come up with the previous day’s figures. At Cisco, thanks to their Oracle based systems, the CFO can call up company's revenues, margins, orders, discounts given on those orders, and top ten customers for the last 24 hours at any given point in time. This helps the company react more quickly to market shifts and competitive threats. Such business processes help top executives of  to stay in tight control of the business without suffocating employees' entrepreneurial spirit.

Productivity can be seen to play a very important role in evaluating the performance of a report-based work process. This can especially be seen in the case of using computers to generate reports. Computers can however also serve to reduce productivity. This is usually because computers tempt people to make unnecessary modifications and enhancements to their reports. For example, in this case of financial reporting, staff may spend needless hours refining the way they present the data instead of using that time to productively do some other work.  

Security is a major performance variable that is linked with this business process. Nearly all financial information related to a company is confidential. Hence, the security and accuracy of such data within the company is of major concern to its management and owners. Any breach of security would be fairly dangerous for the company as most decisions made within the company are based entirely on such vital financial information. Typical measures of this would be to keep a check on the number of process breaches within a given frame of time, a record of the seriousness of these process breaches, a record of the number of accesses made into the information stored, and so forth. The information system, in this case, would track all non-standard transactions such as changes to finished transactions.

Quarterly Book Closing Process – This business process involves using the Net to shorten the time needed to close its books at the end of each quarter from the ten days it took four years ago to two days now, and a projected one day at the end of its next fiscal year. This process has been so efficient that it has actually managed to cut the spending on finance from 2% of sales to 1%. Initially the plan was to shorten the closing period to provide more accurate financial data and to cut the amount of time staff spent on bookkeeping. However, this later transcended into the understanding that for this to happen, everyday data had to be entered on a more timely and accurate basis. This required that the whole accounting and finance system be more organised. This "virtual close" helped aid in detecting changes in market conditions almost instantly. For example, a year ago when they saw a rise in demand in countries in Europe that had been flat, Cisco management immediately authorized accelerated hiring there long before any of their competitors did. This active responsiveness is extremely beneficial for them in the competitive IT industry.  

Consistency is a major performance variable in this business process. One of the major benefits of making use of the Web and the accounting information system is that it forces the organization to do things consistently. In this case, not much flexibility is given to process participants primarily because they are dealing with facts and numbers that do not require any major human judgement. Typical measures in this case will include the actual defect rate from the targeted two day closing, the percentage variation from the closing dates of the last two quarters’ average, the rework rate into reopening books, and so forth.  

Productivity may also be considered as a feasible performance variable in this case. This can be explained using the fact that book-keeping staff are assessed on their ability to produce greater efficiency and output per labour hour involved. The information systems involved help automate data processing functions such as calculating, ledger balancing and so forth that are likely to be impeded by human error. It also helps schedule workload so as to improve resource utilization. In this case, it has worked quite successfully as it has managed to reduce the cycle time from four days to two days with the same amount of manpower resource. However, although higher productivity levels are encouraged it must be noted that it not be on the account of losing out on quality or accuracy of the information reported/generated. This may have a negative effect on the company’s overall decision-making.

Downtime may also be a vital factor in this process. Considering the fact that computer systems perform automate most of the process, the necessity to have backups and recovery methods become automatically important in case of systems failure or corruption of files or data. Typical measures for this would include number of times systems have failed each quarter, a record of available back-up data, total time system out of operation and so forth. If downtime level is too low it may be a sign of participants in the process being overworked or pressurised into completing processes without breaks. This may have an adverse effect on the quality of the information generated through this process.

Each performance variable for each business process involves legitimate choices, with too much often just as bad as too little along any of the views. Although any number or combination of performance variables can be used to measure the effectiveness of business processes at Cisco, the ones mentioned above are most likely to give an accurate impression of the effectiveness of Cisco’s Web based efficiency. Most companies have used information systems for decades with the purchase of computers and networks. However, as we have seen in the case of Cisco, the addition of the World Wide Web has made it possible for all the aspects to connect to provide a synergy in the information available to management, clients and staff. This is what constitutes the core of any successful e-business.

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Question 2

Review the chapter’s discussion of integration. Identify three types of integration that seem to apply at Cisco and identify ways in which Cisco might be more integrated than it already is. Also identify any possible personal or organizational downsides to its current degree of integration.

Cisco Systems is probably one of the most cited examples by many authors when trying to highlight the effective use of information systems in business processes. Cisco’s competitive edge came from its ability to source out distinctive methods to service its customers and coordinate with its suppliers. For business processes to be effective there has to be some amount of assimilation between them so as to provide synergic benefits for the organization. By definition, integration is mutual responsiveness and collaboration between distinct activities or processes. 

From reading the brief on Cisco Systems, the most likely levels of integration present in the organization are:

(1)        Common culture                

In this case, the employees that are involved in independent business processes share the same general beliefs and expectations about how they are to communicate and work together. There is sufficient evidence that this is present at Cisco in the statement that highlights that ‘Cisco’s employees have come to expect that everyday data processing tasks that annoy and frustrate employees of most companies will be done quickly and efficiently through Web-based applications’. They all follow the same strong Cisco culture of using Web-based applications to record and monitor their daily activities and this makes it easier for them to work together and resolve conflicts whenever necessary. When employees have a common belief and understanding of the organizational culture, they are better able to focus and work towards common organizational goals. For example, both the salespeople and engineering staff know that they need to record their daily activities and expenses on the Web-based application to ensure that the accounts department and other management teams have access to this information on a timely basis. Everyone works to doing their own bit on time so that the overall flow of information within the firm is accurate and efficient.

(2)        Common standards        

This can be observed when many different business processes use the same standards but otherwise operate independently. For example, at Cisco Systems, salespeople and engineers making client contact visits need to record and enter their expenses in a pre-set format. This way, it makes it easier for the information system to then formulate these expenses in a report format which then gets submitted to management. Operating with agreed upon standards of this type creates better organization, quick data processing, economies of scale and may also enhance the possibility of other forms of integration in the future. However, forcing employees to observe common standards may hamper entrepreneurial spirit. After all, in such a rigid framework of compliance there is hardly any room for creativity. This may lead to a dull work environment with no scope of innovation.

(3)         Information sharing                 

This level of integration is achieved when different businesses processes share some of the same information even though the information sharing does not directly involve mutual responsiveness. At Cisco Systems, information is shared at many levels. For example, the top-down transparency policy supports managers at every level in the company to having extensive, up-to-date information on sales and other important business transactions. However, feedback on this information is not necessarily passed back to the sales team or other business functions. Cisco’s sales database is updated three times a day, allowing Cisco management to keep close tabs on whether sales goals are being met. However, this information is not real time. A sale would not be recorded until the next daily updating. Hence, it would be termed as being ‘online’ but not ‘real time’. However, the information is relatively accurate to the daily sales figures and hence beneficial to be shared among the management teams. This could be a possible organizational downside when understanding that bulk orders made at any given point in the day will not be reflected until the next update.

The level of integration in a firm need not stop at these basic levels. There are two higher levels of integration, namely, coordination and collaboration which would result in making the firm and its processes so integrated that the unique identity of separate processes begins to disappear. There is no real evidence in the brief of Cisco Systems having an integration level of ‘coordination’. This would require the various business processes to maintain their own unique function and identity but pass information back and forth. Managers have access to data that is entered by employees. However, there is no reverse communication. Thus, the exchange of information is mainly one-way. Even business processes use information from other business processes but do not necessarily send any feedback about the same. For example, take the case of the financial reporting process. It takes information entered by salespeople and the accounts department and compiles a report using the same. However, there is no evidence showing that the details of this report are then again communicated back to the sales staff. Hence, we cannot assume that Cisco Systems has reached this level of integration.

Under collaboration, the business processes would need to merge so much so that they are all interdependent on each other. Having efficient networks and information systems can only go to the extent of facilitating information sharing. Any further integration needs active commitment by the participants. For example, at Cisco Systems, it may well prove to be highly beneficial for them to adopt this fifth level of integration but if management is reluctant to divulge confidential financial data and analysis back to their line staff, the entire purpose is defeated.

While it may not be advisable for Cisco Systems to have completely integrated systems where changes in one are automatically reflected in the other, too frequent a response may make it difficult for each process to get its work done. This is probably why the sales database is not updated automatically but only thrice a day. Hence, it may be more feasible for them to work on two separate information systems and support an interface that uploads the data on a fixed schedule, like twice or thrice daily. This approach is simpler than real-time integration and should there be any problem in one system, it can be rectified on the spot without tit having affected the other work system.

One could only possibly recommend that management at Cisco Systems decide to move one level up at this stage in time to integrate on a ‘coordination’ level and harbour two way responsive communications. This must be done, however, keeping in mind that management must trade-off between having highly integrated systems risking complexity and controllability issues as opposed to insufficiently integrated systems that are unsystematic and inefficient.

BIBLIOGRAPHY

Books

Alter, S., 2002, 4th edn, Information Systems – The Foundation of E-Business, Prentice Hall, NJ, USA

Journal Articles

Brown, E., May 24 1999, “9 Ways to Win on the Web”, Fortune

Thurm, S., April 19, 2000, “Eating Their Own Dog Food: Cisco Goes Online to Buy, Sell, and Hire,” Wall Street Journal

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