the impact that the project would have on the company, the team chose to focus on the issues that had sparked the analysis in the first place. In Solvik’s view, Cisco had little choice but to move. He explained his approach to the situation:
We said that we had this big outage in January. That we were the biggest customer of our
current software vendor and that the vendor was being bought by another company. It was
unclear who was going to support our existing systems and we needed to do something. The
reliability, the scalability, and the modifiability of our current applications would not support
our anticipated future growth. We needed either upgrades to the new version of the current
application or we needed to replace it. If we replaced it, we could either do it in parts or do it
as a whole. We evaluated those three alternatives, talked about the pros and cons of each
alternative, and recommended that we replace our systems, big-bang, with one ERP solution.
We committed to do it in nine months for $15 million for the whole thing. (See Exhibit 3 for a
breakdown of project costs.)
Although Cisco was, to some extent, compelled to implement ERP, proceeding without a formal economic justification was also a matter of management philosophy. As Redfield put it:
You don’t approach this kind of thing from a justification perspective. Cost avoidance is not an appropriate way to look at it. You really need to look at it like “Hey, we are going to do business this way.” You are institutionalizing a business model for your organization.
At $15 million, the project would constitute the single largest capital project ever approved by the company. Members of the team prepared to take this number to senior management with some trepidation. The first meeting with CEO Morgridge did nothing to alleviate their concerns. Pond described the meeting with Morgridge this way:
Pete Solvik, Tom Herbert, and I took the proposal to Morgridge and the reaction was pretty
interesting. He made the comment “you know, careers are lost over much less money than
this.” Pete and I were as white as a sheet of paper. We knew that if we failed that we were
going to get shot. Failure is not something the business took to well, especially with this kind
of money.
But Morgridge okayed taking the project proposal to the board. Unfortunately for Pond and Solvik, the reception was not much warmer there. Pond described what happened:
Before we even get the first slide up I hear the chairman speaking from the back of the
room. He says “How much?” I said I was getting to it and he responded: “I hate surprises.
Just put the slide up right now.” After I put it up he said “Oh my God, there better be a lot of
good slides ”
There were and the board ended up approving the project.10 In the weeks and months following the
meeting, Morgridge did his part by making it clear to the rest of Cisco that the ERP project was a
priority. The project emerged as one of the company’s top seven goals for the year. “Everybody in
the company knew this was happening and it was a priority for the business” Pond explained.