Cisco looks to IBM

This week we looked at a case study analyzing the ROI and the approach that Newman & Ebrary took in completing their goals and objectives from the enterprise 2.0 project. I have been tasked with finding another case study which can be analysed and discussed.

First off what is an ROI? According to Entrepreneur ROI is defined as Return on Investment or the most common profitable ratio, or can be defined as as a means to measure a companies performance. ROI's are crucial in a business because they can be used to justify the investment on a specific project such as an enterprise project. The formula used to calculate ROI is as follows 

credits to Jenders

However ROI or Return on Investment is not necessarily always the same as profit. ROI deals with the money you invest in the company and the return you realize on that money based on the net profit of the business. Profit, on the other hand, measures the performance of the business. It is crucial not to confuse ROI with return on owner's equity. 

I have chosen the ROI case study provided by Nucleus Research. This case study is about Cisco and how they created a project to convert their current website software systems to IBM's software application systems and their client support program. 

Who are they? 
So who is Cisco as a company? they design, manufacture, and sells internet-protocol (IP) based networking products and other products and services related to the communications and information technology industry worldwide.This case study focuses on the experience of Cisco’s consumer business division, largely based on Cisco’s Linksys division in 2003.

The Project
As a globally recognized leader in networking solutions, Cisco’s technical superiority and high performance are key to its brand and reputation. Cisco’s business has historically been focused on the enterprise market; however, the acquisition of Linksys moved it to the leading position in consumer networking technologies as well. This presented new market opportunities and challenges for Cisco. Some of these challenges are, that many consumers are less technically-savvy than Cisco’s enterprise customers, meaning support and service are a critical part of customer satisfaction and loyalty. Because most customers’ main interaction with Cisco is through its Web site and all support is through the site, the ability to access information when they need it and get a high level of responsiveness from Web based interactions has a clear impact on Cisco’s brand image and reputation.Cisco first implemented a Fatwire  content management system running on BEA WebLogic  in 2005. In 2008, the company was planning a major re-branding effort and, at that point, the company decided to recreate the existing consumer-facing site to reflect the new branding as well as to support the evolving needs of the business. That opportunity led Cisco to also reconsider technology platforms for two reasons: first, because the division had experienced support problems with its existing platform and second, because other divisions’ experience with WebSphere had shown it could provide the level of support and performance Cisco needed. The division determined that moving to WebSphere would support its performance needs while aligning more closely with Cisco’s enterprise architecture strategy. Basically Cisco needed a Web application server and support system that could keep up with the needs of Cisco and Weblogic and Fatwire was not good enough anymore. 

Why switch systems?
A large factor in the decision that Cisco made to change systems from Weblogic to IBM's WebSphere was due to the enterprise team recommending it over all other vendors. They coupled the integration of WebSphere with Accelerated Value Program which is a help center or a service which provides technical support to clients. There were also a few benefits, most being soft or intangible, that came with the completion of this project such as: Improved customer experience.( Taking advantage of the IBM program team's expertise and proactive performance-tuning efforts enabled Cisco to ensure its consumer customers can rapidly access the information and services they need, reinforcing Cisco's brand image as a high-end experience-focused vendor), Increased support staff productivity.(Because Cisco personnel have to spend less time explaining support issues and doing research and troubleshooting to understand the interrelated WebSphere and content management platform, they can devote more time to other activities), Accelerated time to issue resolution( The program extends beyond WebSphere support to understand the overall platform environment, and the IBM program team can leverage that history and knowledge each time Cisco has an issue, speeding the time to resolution). Another soft benefit would be that because of the Accelerated Value Program's efficiency and quick resolutions it has allowed Cisco to turn their attention to other areas of thier company such as continuously delivering innovation and improving the customer experience through their website. These benefits are some of the more intangible ones, some tangible or hard benefits would be that this transition will require no training or extra personnel costs therefore saving the company money. Increasing customer satisfaction and communication with customers could lead to a rise retention and possibly in sales.

The Accelerated Value Program was put to the test during the holiday season of 2011, a lot of customers call in during this time to ask questions about gifts they may have received. The day after Christmas, Cisco recognized that it had a potential issue with the Web site. The combination of the IBM Accelerated Value Program team’s tuning efforts and rapid problem resolution enabled Cisco to resolve issues, ensure site stability, and support customer demand without a brand-damaging impact on customer experience. The handling of this incident cemented Cisco''s choice and they chose to stick with the accelerated value program and WebSphere. 


ROI results 

As you can see from the image above taken from directly from the case study, the project worked very well for Cisco and in the end their figures were, 
ROI(based off of indirect benefits and costs): 

ROI = $318,260 - $130,000 / $130,000 * 100

      =$188,260 / $130,000 * 100

      =  1.448 * 100 

      = 144.9 % rounded up to 145%


This proves that their approach towards this ROI project was well thought out and the decisions to switch to IBM was a good one. An added result is that the acceleration program increased staff motivation which ultimately lead to a 40% increase in productivity. In summary Cisco's approach to their issue was very well thought out and rolled out. They knew that their current web application software and support service wasn't keeping up with their needs or their customers needs so they chose to change to IBM's products and services, The only weakness i can think off is that they did not integrate further social technologies into their ROI plan such as a Blog or Application for the customers phones, although the app may have cost the company a fair amount of money to produce it would've been a quicker, easier way for customers to find out about products ask questions, however in general Cisco has maximized their profit and also have increased staff productivity and are continuously improving customer satisfaction through the means of their web site.

Because this was a fairly longer post than usual I don't think a question is necessary however comment on your thoughts on this matter and if there is anything I could improve on.