1.Executive Summary of the Case
This case study goes through the evolution of IT governance at Cisco and the related project management. This case is a classic example of the result of a decentralized governance of business units. What happened to CISCO due to the decentralized governance, how the business processes were modified to overcome the chaos created by the decentralized governance and how the employees and management reacted to this change in CISCO’s business governance?
This case clearly illustrates the effect of a totally decentralized governance and how changing to a centralized governance leads to unrest and resistance. It also illustrates how the cultural/managerial change effects the business decisions needed to be made by a company to achieve success. Essentially, the case shows that IT governance must be aligned with business activities and tie all functions together to support the company’s strategy. 2.Problem Statement
Will BPOC give a go-ahead for the proposal that the customer advocacy group was proposing? The proposal was to build a state-of-the-art customer interaction network that would centralize all incoming calls into a globally managed set of contact centers. Though this is a potentially valuable project, CISCO’s new centralized governance means that the customer advocacy group needs to get an approval from the BPOC. Will the BPOC realize the potential? Will it support the project and commit to a full cross-border and cross-functional implementation? If I was in Boston’s shoes, do I think he should approve the proposal? 3.Proposed Solution
First, we need to understand the new strategies put in place by the CIO Brad Boston in late 2001 and why the new strategy faces resistance. This directly has an effect on the result of the BPOC’s decision on whether to go ahead with the central call center or not and how it might affect the stakeholders. i.IT Strategy before Boston became CIO
-Peter Slovik was the CIO until 2001 before Boston took over. Before Slovik, IT was not viewed as a strategic business partner that would help scale efficiency. To change this perspective, Slovik decentralized governance by:
oDetaching the IT budget from G&A and allocating it to the functional entities such as manufacturing, sales and HR. These functional entities had ownership of their own IT projects oThe functional entities had no central steering committee which would make decisions for them. They were responsible for making their own decisions as to which project needs to be funded from their group -This resulted in multiple systems which performed the same functions. Each of these redundant systems interpreted data in its own way and hence resulted in conflicting reports. -Even though CISCO had single ERP system, this ERP system had so many redundant applications, interfaces and extensions to it that the same data was interpreted differently, thus creating inconsistency and basically making the ERP system practically useless. ii.Boston’s IT Transformation
-After Slovik left, Boston joined CISCO as its CIO in 2001. Boston took the following actions after analyzing the IT situation oFocused on centralization which he believed would create more opportunities for innovation by reducing the amount of redundancy. It would also ensure better auditory compliance and change management, allowing other business units to focus on using IT investment to drive business value and collectively own the priorities of the company oBoston put a hold on creation of any new tools/applications/customized projects because these just ate up IT budget but would not be of any use in the long run. In addition to this, any new oHe implemented an amnesty program to uncover all the “shadow IT” projects.
“Shadow IT” refers to the implementation of IT oriented resources for use in business processes without being officially approved by the management. Boston realized that these projects had to be minimized else it can threaten the existence of the organization due to its lack of security controls and audit governance. Since, it is illegally done to get the required functioning up and running, it is difficult to locate the existences of such projects and uproot them. oHis second area of focus was deciding which IT platform projects were of highest importance to the company. This he selected based on the reviews he got from the business functions. He picked three projects: Oracle ERP system upgrade, Enterprise Reporting and Business Intelligence Application and developing an e-customer customer database. These projects were believed to be the highest importance to contributing to the company’s growth. o Boston’s third area of focus was coming up with a new process for funding IT projects at the company. iii.BPOC at CISCO
BPOC was set up in the late 2002. BPOC was a cross-functional decision-making group created to set and drive corporate priorities for the company. The role of the BPOC was like the COO. BPOC had full formal authority to approve any IT initiatives. Though it did not fund the IT projects, it approved them. BPOC was created to set and drive the corporate priorities for the company. iv.Call Center Project – Approve or not
True. The call center project is important but so are the others which were being under taken at that point of time. BPOC can approve the call center project if it feels that the benefits are high (like value of this initiative, ROI of the project, how will it help retain customers) and the risks of undertaking this project are low. Also, since there are some multi-million dollar projects underway, specifically the ramp up of the ERP system, BPOC should consider how feasible is it on the budget of IT spending to undertake such a high value project.
It should also consider if CISCO has the resources to support such projects simultaneously. How will the stakeholders react if this project is given a go-ahead? And if it does not approve the project, Boston should know how to handle it since employees are already irritated with the new transition into centralized governance. Apart from this factor, I think BPOC should not approve it right now. It can be undertaken as a follow up project once the IT of CISCO is stable.