Ciscos Organizational Change
Cisco Background Cisco is an IT enterprise that was founded in 1984 by Leonard Bosack and Sandy Lerner. Bosack and Lerner eventually got married and were the first to develop a multi- protocol router. McJunkin and Reynders (2000) describes the multi-protocol router as “a specialized microcomputer that sat between two or more networks and allowed them to talk to each other by deciphering, translating, and funneling data between them” (Mcjunkin & Reynders, 2000).
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The organization was responsible for opening and linking all the computer networks around the world together.
This linking of all the computer networks was much like the way telephone networks are linked around the world. The local-area network (LAN) was the first market Cisco competed in and offered quality routers which became the “traffic cops of cyberspace” (Mcjunkin & Reynders, 2000). Cisco eventually became the leaders in this market with their data networking equipment and by 1997, McJunkin and Reynders (2000) states “80% of the large scale routers that powered the Internet were made by Cisco” (Mcjunkin & Reynders, 2000).
As the global Internet grew Cisco began to expand its product line, which included a wide range of networking solutions. Website management tools, dial-up and other remote access solutions, Internet appliances, and network management software were all apart of this expansion. In 1990 Cisco market value was an astonishing $222 million and the organization continued to grow into a multinational corporation with over 10,000 employees. Cisco revenues had more than tripled by 1997 and “revenues had increased over ninety-fold since the IPO, from $69. 8 million in fiscal 1990 to $6. billion in fiscal 1997” (Mcjunkin & Reynders, 2000). Organizational Problem Cisco is now a large IT enterprise with over 300 locations in 90 countries with a framework that makes its operation more efficient and responsive. The structure of Cisco is comprised of “46 data centers and server rooms supporting 65,00-plus employees” (“How Cisco IT”, 2009). The traditional structure of Cisco is one that has staffers doing both implementation and operational work. The traditional structure of Cisco was one that caused staffers to drop operational projects to complete deployment.
According to Cisco “with the traditional organizational arrangement, there was much duplication of effort and lack of focus across the organization” (“How Cisco IT”, 2009). Cisco’s original organizational model (see exhibit 1) was comprised of regional network teams and regional voice teams. These teams were accountable for all aspects of operating and implementing services and their environment. A change in the organization was needed in order for Cisco to attain the levels of efficiency, additional scalability and agility the IT enterprise needed.
The main challenge Cisco faced during this change process was the need for the IT Network and Data Center Service (NDCS) to become more organizationally focused. Within Cisco there is an advanced service called Network Availability Improvement Services (NAIS), which identifies areas within the organization that need change. In order to do this NAIS “assesses and remediates the people, process, and tools needed to mitigate operational risk and network complexity by running an Operational Risk Management Analysis (ORMA)” (“How Cisco IT”, 2009).
For the issue lack of focus, NAIS began by “interviewing business and IT leaders and senior engineers, and then gathers technical, process, tools and organizational documents and templates”. An assessment is then developed by NAIS, which outlined an achievable vision and a detailed road map for NDCS to follow (“How Cisco IT”, 2009). Organizational Change After the ORMA report vice president of NDCS John Manville had to restructure the NDCS department to “map to its own lifecycle business model” in order to solve the problems the department was facing (“How Cisco IT”, 2009).
The new business lifecycle model the NDCS department had to map to was comprised of six phases; Prepare, Plan, Design, Implement, Operate, and Optimize. Manville’s approach to restructuring the NDCS group to improve efficiency and focus was an Action Research Approach. McShane and Steen (2009) define action research as “a problem-focused change process that combines action oriented and research orientation” (McShane & Steen, 2009). Manville formed a client-consultant relationship with the NAIS department within Cisco, which then determined the readiness for change in NDCS.
NAIS then diagnosed the need for change after the department gathered and analyzed sufficient data to show the lack of focus and duplication of effort within NDCS. The NAIS department “begins the process by interviewing business and IT leaders and senior engineers, and then gathers technical, process, tools and organizational documents and templates” (“How Cisco IT”, 2009). The introduction of the restructuring intervention is an action that was needed to correct the problem NDCS was facing and to build a better organizational structure. Manville introduced this intervention to the department by testing the lifecycle methodology within it.
This intervention involved “moving some resources from the former engineering and operations teams to the new implementations team” (“How Cisco IT”, 2009). This change was key to the operations team gaining more focus on task and not being distracted by deployments. The implementation of this change was over two years, which means that Manville’s restructuring was incremental. McShane and Steen (2009) define incremental change as when an “organization fine-tunes the system and takes small steps toward a desired state” (McShane & Steen, 2009).
The change to the NDCS department was stabilized and results shows that the change was effective. The maturity of the department improved significantly from 2006 to 2008 (see exhibit 3). The results also showed that before this change was introduced in NDCS there were “150 client-impacting incidents per quarter” and a “defective root cause percentage consistently above 40 percent” (“How Cisco IT”, 2009). After this change was introduced, focus on operation excellence improved with client-impacting incidents reducing to 70 per quarter and defective root cause percentage is consistently below 10 percent (“How Cisco IT”, 2009).
Not only did the maturity of the department improve through this change process but also customer satisfaction (see exhibit 4). Cisco (2009) explains, “NDCS has achieved customer satisfaction scores of 4. 856, with 5 being the best possible score” (“How Cisco IT”, 2009). Conclusion Cisco was able to improve efficiency, focus and results delivered each quarter by the NDCS department through organizational restructuring and change. Shawn Shafai, an IT manager of Network Services at Cisco stated, “The new organizational structure gave us the opportunity to focus on our core operational work.
Our critical metrics quickly displayed the positive results from these changes, and outstanding results started consistently being delivered quarter after quarter” (“How Cisco IT”, 2009). The unfreezing of the organizational structure by Manville was essential to implement change in NDCS. After the results from restructuring NDCS were effective NAIS and Manville decided to refreeze the changes in order to reinforce and maintain the desired behaviors. Exhibit 1 Cisco’s original Organizational Model Exhibit 2 NDCS Lifecycle Model Exhibit 3 Cisco’s improvement from 2006 to 2008
Exhibit 4 NDCS Customer Satisfaction References McShane, S. L. , Steen, S. L, (2009). Canadian Organizational Behaviour 7th Edition. McGraw-Hill Ryerson. McJunkin J. , and Reynders, T. (2000). Cisco Systems: A Novel Approach To Structuring Entrepreneurial Ventures. Retrieved from gsbapps. stanford. edu/cases/documents/EC%2015. pdf (2009). How Cisco IT implemented Organizational Change and Advanced Sevices for Operational Success. Retrieved from http://www. cisco. com/web/about/ciscoitatwork/downloads/ciscoitatwork/pdf/NDCS_Restructuring_AdvSvcs_Case_study. pdf