Cisco Essay

418 WordsSep 10, 20132 Pages
What was Pete Solvik's approach to IT decision-making at Cisco? Did he think that line managers should get to make all IT decisions? If not, which ones did he want the IT function to make, and which did he want the business units to make? ANSWER: Solvik’s approach to IT decision-making at Cisco was to decentralize IT, providing line organizations the ability to select and fund IT projects. Solvik thought line managers should make all IT investment decisions and Cisco utilized a client-funded project system focusing on ROI. In addition, Solvik’s approach supported the existing Cisco culture. Solvik’s decentralized IT approach allowed line managers to make technology investment decisions, while centralized IT executed projects. IT made decisions about the overall company infrastructure (e.g Cisco intranet, supply chain website) while line managers chose and funded projects seeming to have the most profit potential. This removed the perception of IT as “overhead.” IT also helped integrate acquired companies in parallel with scaling up the company infrastructure. In addition, Solvik’s vision of IT decision making was shared and supported by CEO Chambers who felt Cisco should spend whatever was necessary if it helped the business grow and be more productive. Solvik’s IT decision-making model utilized a CFP system with a focus on ROI. Since line organizations paid for projects out of their own IT budget, there were elements of ABC in play. Projects costs were placed in line organization buckets and charged to Cisco’s profit centers. Line managers evaluating IT investments also chose a valuation method based on several factors. For example, Cisco used ROI instead of NPV or EVA because business benefits were clear, detailed analysis was not always performed, and time value of money was not a factor; the goal was to find the next “breakthrough

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