More than 1,000 people flocked to Mayfield Heights late last fall when Cisco Systems CEO John Chambers flew into town for a Northeast Ohio appearance at which he played the part of a new economy evangelist, urging all in attendance to merge Internet initiatives with their businesses as soon as possible.
It’s hard to argue with Chambers’ exuberance. During the past 15 years, Cisco Systems has blossomed into a $15 billion company and acquired dozens of smaller businesses, all the while using Internet initiatives to help reach a formerly unthinkable rate of growth. And, although it may not be surprising that a company that sells products crucial to the existence of the Web is such a staunch proponent of developing Internet initiatives for your business, the numbers are difficult to ignore.
First, 87 percent of Cisco’s annual revenue is derived from purchases made on the Web. That breaks down to about a cool $38 million a day. Then there’s the fact that Cisco has acquired 35 businesses in the past five years and integrated them seamlessly into the company with the help of a strong electronic network.
Paul Wilson, consulting solutions manager for Cisco’s Internet Business Solutions Group, says business owners should not be intimidated by the overwhelming size of Cisco when trying to figure out how to introduce similar Internet initiatives into their own companies. The owner of any type of business, he says, can look at how Cisco has used the Net during the past 10 years and see how it could spur drastic changes in the efficiency of their own organizations.
“Really, it’s just fundamentals, basic business fundamentals, and being able to understand the changes the Internet brings,” he says. “It is shifting the information power from the seller to the buyer. The consumer has more information and power to switch and change than they’ve ever had before.
“Whether you’re big or small, you have to understand that to leverage that.”
Customer service
In the early 1990s, Cisco executives set a goal of growing the company by 70 percent each year. Before the dawn of the Internet, such lofty goals would have required the company to hire more than 700 engineers each year just to handle the technical calls to the company’s customer service center.
Besides the sheer expense of such rampant hiring, there were simply not enough qualified candidates available, even if the company had wanted to hire such a large number of people.
Executives wanted a self service way for customers to deal with technical problems, which would lessen the volume of calls to Cisco’s customer service center. They settled on printing all of the technical bugs online, where customers could also download small programs to fix the problem they were experiencing.
“It did two things for us,” explains Wilson. “It allowed customers to serve themselves 24 hours a day, seven days a week, and also created cost efficiencies for us through not having to hire all these engineers. And it also increased customers satisfaction, because the customers weren’t troubleshooting the problem for two weeks before they found out there was a bug fix for it.”
Employee productivity
Wilson describes Cisco Systems as an “information democracy,” in which the company’s 6,000 employees can freely share information with each other via a corporate intranet.
“It is important to have a very knowledgeable work force, because the real asset young companies are going to have is information,” he explains. “The ability to have empowered, knowledgeable employees reduces overhead, makes employees very efficient and provides for a constant learning organization.”
But, it is not just the speed at which information can be shared that makes the difference for Cisco. The company has also developed a variety of e-HR initiatives, which cuts down on the time-consuming, yet necessary, paperwork that accompanies any new hire.
Benefit enrollments are done online, a new hire “survival guide” is posted on the corporate intranet, and employees can apply for a cellular phone or pager, or simply update their information in the company directory with a click of the mouse.
Supply chain management
The speed at which Cisco Systems can move has a lot to do with the way the company’s supply chain is organized. First, more than 55 percent of its high-tech products are outsourced to more than 20 manufacturing firms. The arrangement allows Cisco to focus on its core competencies of design and innovation.
Meanwhile, Cisco ensures quality by placing computer pods at the end of suppliers’ assembly lines to ensure each product meets the company’s standards for performance.
“We’ve created a highly networked organization to our suppliers, and we use security as an enabler rather than a barrier,” explains Wilson. “We allow suppliers to have direct access to our demand forecast, which keeps their inventory down, and they can build just-in-time inventories.
“It also shortens the time for new product introductions.”
E-commerce
It’s not exactly news that simply selling your product online is not going to be enough to drive consumers to your door. But Cisco was way ahead of the curve when it came to researching consumer tastes and designing a site that would be the most appealing to the highest number of users.
In fact, it has a separate customer advocacy arm that essentially allows consumers to help design its e-commerce initiatives by beta testing with at least 10 large clients before rolling out any new version.
“We would test that with some of our larger customers first and then, as we roll out an initiative, we monitor the use of that and try to analyze why we aren’t getting the participation rate we want,” explains Wilson. “We then go back to our customers again and revise our strategy based around input from them. It’s really just keeping your fingers on the pulse of the customer before, during and after you roll out an initiative.”
Customers overwhelmingly agreed that the ability to track their orders was one of the most important functions of an e-commerce site, so Cisco devised a way for them to go into the company’s information technology system, pull out their Federal Express tracking label and check the status of their order.
“We got very, very high customer satisfaction ratings from that,” says Wilson. “It also saved us a bunch of headcount in our call centers by just taking that call volume completely out.”
If you’re still wondering what all of this means for your company, Wilson suggests a visit to www.netreadiness.com. The Cisco Systems site asks a series of questions that allows business owners to get a feel for the Internet-readiness of not only their companies, but of themselves.
“It asks some very tough questions,” he says. “The questions alone stimulate enough change in an organization to really be very successful.” How to reach: Cisco Systems, www.ciscosystems.com
Jim Vickers ([email protected]) is an associate editor at SBN.