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Business Case Study: Organizational Change at Cisco IT

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  • 0:03 What Is Cisco Systems, Inc.?
  • 0:38 Network and Data…
  • 2:02 Life Cycle Business Model
  • 5:37 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

This lesson looks at Cisco, a global company that made a dramatic organizational change to eliminate redundancy and improve efficiency. Cisco is lauded for moving from a traditional organizational structure to its own life cycle business model.

What Is Cisco Systems, Inc.?

Cisco is a global company that has over 72,000 employees and 300 locations in 90 countries. The company designs networking equipment and has annual revenue of around 50 billion dollars. Cisco's information technology (or IT) division focuses on Internet Protocol (or IP) products, which have been credited with boosting the enormous growth of the Internet. In 2006, the company began an initiative to reduce costs and increase productivity. The company started with part of its IT division.

Network and Data Center Services

Cisco IT Network and Data Services (or NDCS) supported the design, implementation, and maintenance of network systems. With around 400 employees, NDCS operated within a traditional organizational structure, where decision-making occurred from the top down. NDCS had two divisions, Intelligent Network Services and Data Center Services and Support. Each division had its own financial support department along with five engineering and operations sections between them.

The duplication of tasks, lack of flexibility, inadequate production, and other deficiencies highlighted that NDCS wasn't prepared for Cisco's foreseeable growth. With noticeable inefficiencies, strapped employees, and excessive turnaround times, it was clear that something needed to change. Because of a lack of focus, Cisco's leadership brought in Cisco Advanced Services' Network Availability Improvement Services (NAIS) to analyze workflow and make improvements.

NAIS was tasked with finding what needed to be changed and how to implement those changes. Cisco leadership was looking for ways to improve efficiency and collaboration among employees. NAIS conducted interviews and analyzed how IP jobs were processed. The end result was a remediation plan, which recommended that NDCS move away from its traditional organizational structure.

Life Cycle Business Model

In a report completed in 2006, NAIS encouraged Cisco leadership to implement a life cycle model at NDCS. A similar model was used successfully in Cisco's customer support branch, Cisco Services. Cisco implemented this change in 2008.

Cisco leadership used the report to restructure NDCS with its own life cycle business model. This model was made up of six phases:

  1. Prepare
  2. Plan
  3. Design
  4. Implement
  5. Operate, and
  6. Optimize

Let's look at each of these and see how other companies might use this model when undergoing an organizational change.

Prepare

When we think of how to prepare for something, we need to get ready for it. For NDCS, prepare means thinking strategically about how to use existing technologies to push the envelope and find new ways of doing things. By being able to predict what might be needed in the future, it's easier to spread costs over a longer time period.

Plan

Being able to look inside NDCS and see whether it has the resources it needs to successfully expand and support the growth of other departments is imperative to Cisco's plan phase. Having a clear picture of what NDCS needs to support growth helps the company plan for the best use of its resources.

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