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Cisco Case Study EMBA: Measuring Business Value of IT
1. Cisco Case Study EMBA: Measuring Business Value of IT University of Notre Dame March 19, 2004 Ayelet Baron—aybaron@cisco.com WW Sales Strategy & Planning Cisco Systems, Inc.
3. History of Cisco Systems Started at Stanford IPO; 192 Employees End-to-End Solutions Provider Cisco Routers Power the Internet; LAN/WAN Switching, Remote Access #1 Communications Equipment Supplier Shipped First Router $18.9 Billion Revenue; 34,000 Employees; IP Telephony, Security, Wireless, Networked Home 1998 1984 1986 1990 1994 2002 2003
21. Cisco’s philosophy and financial approach to IT spend has allowed IT investment to grow as fast or faster than revenue (as “return” is accounted for on “business side) Investment Approach And Impact On Cisco’s IT Investment
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24. IT Governance Model Funding Mechanisms IT Performance Mgt Process Oversight Standards Approach Client Centric Organization Principles Business Mindset Metrics Strategic Partner IT Business Alignment CULTURE Insuring the maximum value for Cisco’s IT investment
25. Approach: Cisco IT Governance “How We Ensure Value” Strategic “Instinct” Co-location CFP Model Operations Metrics Root Cause Analysis Global Vs Local Decisions Operations Reviews Performance Metrics Mbo’s and Plans Adherence Selection Process Emerging Vs Sun-setting Standards Budget Management Productivity Analysis Business Justification Mindset SDLC Model Balance “Risk Vs Innovation” Project Mgr Education ASP System Integrators Web Portals Management Accountability Business Alignment Standards Management Fiscal Controls Development Methods Continuous Improvement End User Technology Procurement
27. Change Management Framework DESIRED STATE SPONSOR COMMITMENT SKILLS CULTURAL ALIGNMENT RESISTANCE P A I N COMMITMENT TIME SYNERGISTIC RELATIONSHIP R EM E D Y PLAN TRANSITION RISK AREAS Frame of Reference PRESENT STATE
28. Strategic Direction Framework Future State Strategic Transition State ∆ Current State Tactical C A Understand the Current State Implement Transitional State Define Future State B
33. Sponsorship Role Power: the sanctioning power to legitimize the change Pain: a level of discomfort with the status quo that makes change attractive Resources: a thorough understanding of resources necessary for successful implementation and the ability/willingness/ influence to get the right people The Long View: an in-depth understanding of the impact the change will have on the organization Sensitivity: the capacity to fully appreciate and empathize with the personal issues major change raises Scope: the capacity to understand thoroughly the size of the group to be affected by the change Vision: a clear definition of what change must occur Public Role: demonstrates public support & commitment to change A Private Role: meets privately with individuals or groups to convey strong personal support for the change Consequence Management Techniques: prepared to reward supporters of change & express displeasure with those who inhibit it A Willingness to Sacrifice : the commitment to pursue the transition, knowing that there is a price Persistence: the capability to demonstrate consistent support for the change and reject any short-term action that is inconsistent with long-term change goals
34. Sponsor Evaluation To Be Used by CPR Leader to Assess Sponsorship 5 4 3 2 1 The sponsor views this as a cross-functional issue 5 4 3 2 1 The sponsor has a good understanding of how this relates to Cisco’s strategy 5 4 3 2 1 The sponsor demonstrates consistent, sustained support for the initiative 5 4 3 2 1 The sponsor leads by example Strongly Agree Somewhat Agree Neutral Somewhat Disagree Strongly Disagree 5 4 3 2 1 The sponsor sees this as a critical business issue that he/she is committed to address 5 4 3 2 1 The sponsor has a good understanding of the impact of dealing with this issue will have on the organization 5 4 3 2 1 The sponsor understands what resources—in terms of time, budget, dedicated people, training, access to people—are needed for this initiative to be successful 5 4 3 2 1 The sponsor is willing to commit the resources in terms of time, budget, dedicated people, training, access to people— needed for the initiative to succeed 5 4 3 2 1 The sponsor is willing to meet privately with individuals or groups to convey strong personal support for the initiative 5 4 3 2 1 The sponsor is committed to dealing with roadblocks when they arise 5 4 3 2 1 This is one of the sponsor’s top 5 initiatives
43. Windows 2000 Customer Feedback It is very important to me that my individual settings are transferred to my Windows 2000 environment Business events may interfere with my conversion to Windows 2000 Mean 4.0 Mean 2.8
44. To convert my computer to Windows 2000, I would prefer to …
46. Implementing Process to Deliver Value Clear Understanding of Value to Be Delivered Standard, Consistent, End-to-End Definitive, Global, Mandate Value and Process Metrics Adoption, No-Opt Out Scalable, Integrated, Flexible * Systems implementation not always required Customer / Shareholder Value Process Policy Measurement Enforcement Systems Implementation *
48. Evolve to an Integrated IT Business Model IT Business Model Process Metrics Portfolio Management and End-to-End Delivery Architecture & Standards Governance Business Partnership Value Low Total Cost of Ownership Customer and Client Satisfaction Speed and Agility Exploiting New Technology