IT Strategic Business Partnership

1. Strategic Business Partnership Ayelet Baron WW Sales Strategy & Planning March 2003

2. Agenda About Cisco Becoming A Strategic Partner Case Studies Strategies For Success Q&A

3. About Cisco

4. Started at Stanford IPO; 192 Employees End-to-End Solutions Provider $18.9 Billion Revenue; 34,000 Employees; IP Telephony, Security, Wireless, Networked Home 1984 1986 1990 1994 1998 2002 2003 Shipped First Router Cisco Routers Power the Internet; LAN/WAN Switching, Remote Access #1 Communications Equipment Supplier History of Cisco Systems

5. Cisco Products • Industry’s broadest product line • Leadership products in each category • R&D = 16.9% of revenue • Enables end-to-end network services

6. Cisco Audience • 33,000+ employees in 68 countries • Average years of service 4.5 • 1/3 Engineering/IT, 1/3 Sales, 1/3 all others • All connected to common Internet tools • Most are Cisco shareholders Presentation_ID Updated 01/04 6 6 © 2001, Cisco Systems, Inc. All rights reserved.

7. Foundational Principles Drive Change Fun Market Transitions Teamwork Profit Contribution Trust/Fair/Integrity/Giving Back Empowerment Open Communication

8. CEC: Cisco Culture and Business Ownership Cisco University The New Cisco Employee Connection (CEC) – worlds coming together:Content, Tools, Communication and Technology

9. Executive Communication – Senior Leaders Are Seen and Heard • Integrated media: IP/TV, Video on demand, email, portal support sites • Consistent Message • Candid, Personal, & Open Communication • Posted Q&As • Benefit: Speeds Alignment & Results Video on Demand

10. Global Communication Portals Inform All Employees • Consistent messaging to all employees • Customized, geographical content • Global self-authoring tools and standards • Geography-based dashboards

11. Multiple Role-based Portals for Varying Audience Needs • Executive Dashboard • Managers Dashboard • Director and VP site for special programs • New Hire site • Organization-specific sites Benefit: Ensures access to information for each role and function

12. Key Cisco Frameworks 12 12 12 © 2003 Cisco Systems, Inc. All rights reserved.

13. “I’m never having kids. I hear they take nine months to download.”

14. Departmental Enterprise Inter-Enterprise • Virtual Supply Chain • Online Collaborative Support • E-Treasury $3B • E-Commerce • E-Procurement • E-Learning • E-HR • Virtual Close $2B $2.1B $1.9B • Communications • Internal Directory • External Web Site • Support Self-Service $1.7B $1B $900M FY ’95 FY ’96 FY ’97 FY ’98 FY ’99 FY ’00 FY ’01 FY ’02 FY ’03 Cisco’s Financial Benefit from IT Financial Impact

15. MissionCritical Shortfall risks company's operations Required to run the business and fulfill commitments Contributes Directly to Competitive Advantage Non-MissionCritical Core and Context Core Context 15 © 2004 Cisco Systems, Inc. All rights reserved.

16. A whole function (IT) Manage contract and SLAs Separate IT Systems with reporting Process redesign requires contract renegotiation Elements of a function Real time visibility and active management Shared systems/web services; common data, network standards Allows process redesign andcontinuous innovation Out-Tasking Versus Out-Sourcing 16 © 2004 Cisco Systems, Inc. All rights reserved.

17. Invest Drive Productivity MissionCritical Strategic Partners (Few, Tightly Coupled) Retain In-house Focused Investment Control Costs Non-MissionCritical Specialist Partners Vendor Management (SLAs Driven) Investment and Partnering Strategy Core Context 17 © 2004 Cisco Systems, Inc. All rights reserved.

18. Board manufacturing • Final assembly & test • Logistics & delivery • Desktop mgmt • Remote office WAN • E-commerce apps • Level 1 help desk • Order admin • Field logistics & repair • Temp contracting • Benefits admin • Global mobility Customer Service IT • Inside sales • Advertising • Lead qualification • Payroll processing • Travel • Investment Management Relative Cisco Functional Out-Tasking % Out-Tasked Manufacturing HR Finance Sales 8712_09_2003 18 © 2004 Cisco Systems, Inc. All rights reserved.

19. Becoming A Valued Partner

20. What is A Strategic Business Partner? Business Alignment Trusted Advisor Strategy Customer, Employee and Shareholder Value Change Agent Process Productivity

21. Change Agent Language Relationships Business Impact Necessary Transition Order Taker Trusted Advisor • Respond to requests • Fire fighting role • Not invited to the strategic discussions • Responsible for tools and vehicles • Focus on achievement of function objectives • High business impact • Viewed as a partner in success or failure—skin in the game • Data-driven • Leverages process • Risk taker • Provides business solutions © 2003, Cisco Systems, Inc. All rights reserved.

22. Roadmap Set It up Right Prove the Value Get Invited Create the vision, determine the approach and get the right people on board Show success through bottom line results Be there when the strategy & initiatives are decided and scoped Change the Way You Work • Gradually educate and communicate across various levels of the organization • Create business metrics, targets and incentives to achieve desired results © 2003, Cisco Systems, Inc. All rights reserved.

23. Case Study #1Collaborative Problem Resolution

24. Business Problem Inconsistent global methodology to identify, prioritize and address complex business problems resulting in inefficiency, productivity loss and lack of cross-functional teaming, and issues not getting resolved Our Opportunity: Having the methodology in place to solve complex, cross functional business issues in a short window of time © 2003, Cisco Systems, Inc. All rights reserved.

25. WW CPR Team • Committed Business Sponsors (3) • Cross-functional representation • Global team • Directors/Senior Managers • Experimented with the methodology, while creating it • Piloted in APAC © 2003, Cisco Systems, Inc. All rights reserved.

26. What is the Collaborative Problem Resolution (CPR) Process? • Collaborative Problem Resolution (CPR) is a problem-solving methodology, enabling business leaders to address complex, business challenges quickly • It produces better and faster business decisions by: • Focusing on tangible business results, including productivity and profitability • Engaging sponsors who are committed to action • Identifying the right people—geographically and organizationally • Eliminating redundancy by focusing on prioritized issues • Develop breadth and depth of leadership © 2003, Cisco Systems, Inc. All rights reserved.

27. People Process Problem Platform Key Elements of CPRThe 4P’s

28. Key Components of CPR Identifying the Right Problems to Focus on the Highest Prioritized Business Challenges • Business issue is identified as one of the top 5 for WW Sales, the Theatre, Country or area with a committed sponsor • Project has the highest business impact for Cisco Getting the Right People Organized in the Right Way is Key • Participants bring some domain expertise with an understanding of the business challenge and possible • solutions • Participants are passionate about addressing the issue • Participants are stretched by the project • SLDP participants and other high potentials • Small core team for each project – process should allow flexibility for different team sizes • Executive sponsor (for active guidance; roadblocks; VP+ level) • Business partner (for day-to-day engagement; Dir+ level) • Extended team to include functional analytical support © 2003, Cisco Systems, Inc. All rights reserved.

29. Key Strategic Drivers Getting the Right Process in Place that Can Be Leveraged and Scaled Globally is Critical • Creating a global and local governance process • Prioritizing and tracking the top business issues and their resolution • Using a consistent framework and methodology to identify and resolve business issues • Integrating the process in how we do business at Cisco Results and People Should Be Showcased at the Right Platforms • Global Platforms • SVP Quarterly Staff meetings • Business Sector Councils • Executive councils • Chambers’ senior staff • Theatre Platforms • Theatre Staff Meetings • Theatre Ops Reviews © 2003, Cisco Systems, Inc. All rights reserved.

30. CPR Benefits • CPR Enables Teams to Focus on the Most Important Issues identified with executive involvement • Ensures engagement and commitment from executive management • Provides a showcase opportunity • CPR Clears the Path for Complex Problem Resolution • CPR tools—structured brainstorming, idea prioritization and action plan development—are ideal for making improvements • Deploying CPR teams on these problems saves time by identifying the systemic problems requiring resolution • CPR Leverages Internal Cross-functional Knowledge • CPR taps into our internal knowledge by having cross-functional representation on key issues • CPR teams provide the ideal vehicle for engaging those who must live with the solution through ownership and accountability for results. Nothing cuts through resistance to change faster than results • CPR engages Leaders to Build Improvement Priorities • CPR helps align leadership teams on priorities for decision-making and execution • CPR should help sort out the "mountain vs. foothills" opportunities before resources are committed © 2003, Cisco Systems, Inc. All rights reserved.

31. Business Problem Checklist • Relevant? Top 5? • Incremental value-add to audience? • Focused? • Quantifiable results? • Not duplicative? • Crisp Recommendations? • Implemented for FY04? • Do-it, or clean hand-off? © 2003, Cisco Systems, Inc. All rights reserved.

32. Case Study #2 Cisco IT

33. Cisco’s IT Evolution IT Supports Business Strategy IT Enables New Capabilities and Roles Trusted Business Partner • IT worksindependentlyof business • Seeing as nonvalue adding • IT seen as “high” cost • Focus on technical performance Value Creation Outcome Defined Proactive BusinessValue • Enables business strategy and integral part of the business • Effective use and leverage of technology and “virtual” resources • Focus on Shareholder value Internet Enabler • Supports andenhancesbusiness strategy • IT seen as a critical process • Focus on cycle time, cost reduction, service quality Reactive CFP& ERP IT as Cost Center • Supports businessstrategy • IT seen as a support process • Focus on Returnon Investment 1991 1993-95 1997 2000

34. Business Challenge From: A service delivery organization… To: A Consultative Business Partner offering: • Strategic Solutions • A Catalyst for Change • Technology Leadership • Breakthrough Productivity

35. Change Management Framework SYNERGISTICRELATIONSHIP TRANSITION RISK AREAS SPONSORCOMMITMENT REMEDY PAIN DESIREDSTATE SKILLS RESISTANCE PRESENTSTATE Frame of Reference COMMITMENT CULTURALALIGNMENT PLAN TIME

36. Focus & Investment IT Strategic Plan 2002 • Taking Partnerships to New Heights • The Way We Work Transform • Leading Internet Capabilities • Ongoing Assessments • Cascading Workshops • Ongoing Engagement Implement 2000 • Internal Communication Capability • Cross-functional Team: IT & Business • Online solutions: IT & Cisco • Ongoing Communication Plan & Engage • IT Senior Staff • Internal Clients • IT: 75 Interviews Worldwide • Strategic Off-site Assess 1999 Stages

37. Example 0.8 0.9 0.7 1.1 0.8 1.0 Client Feedback IT Performance vs. Business Need

38. Change Readiness Assessment—InternalKey Risk Areas Strong belief that IT senior staff supports the changes we need to make Some concern about IT senior staff sharing common goal around Business Partnership Caution around leadership by example - walking the talk Management has a history of losing focus on important projects when other problems or issues compete for its attention Failure to involve middle managers in planning change has resulted in their indifference and opposition to initiatives Managers in past changes said they supported a change but their behavior often suggested the opposite Employees understanding of how Cisco’s business goals translate into specific things they can do in their jobs In deciding to support a change, people do what they think will please their boss rather than what is best for Cisco There will be some difficulty in explaining BP to employees Communication in IT is open and candid IT’s usage of rewards, measurement and other processes to communicate its seriousness and signal a change A compelling reason to change has not been clearly communicated Employees will not easily understand the costs associated with not implementing BP Employees expect change to happen at Cisco Employees will not be motivated to achieve Business Partnership Employees will need to be invested in the new way of operating Employees will not feel a sense of control in implementing Business Partnership BP will be regarded as requiring employees to make substantial changes to their own day-to-day activities Employees do not have the assimilation capacity for Business Partnership IT Senior Staff has the skills and abilities to execute and deliver Business Partnership Managers already possess Business Partnership skills Employees already possess Business Partnership skills Employees have the skills and abilities they need to accomplish this change COMMUNICAT ION S P O N S O R S H I P RESISI TANCE SKI LLS

39. Example Internal AssessmentRisk Area: Sponsorship IT Senior Staff ... IT Senior Staff Supports This Change...

40. Behavior ChangeCommitment Internalization Awareness Commitment Translation Understanding

41. Communication Plan LEADERSHIP SYSTEMS/PROCESSES MEDIA • Training for Sr. Staff • Delivery of BP Workshops • Quarterly IT All-Hands/IPTV • Sr. Staff Meetings • Management Staff Meetings • Chats with CIO • CIO Corner • IT Connection • Sr. Staff Forums • BP Team • Client Feedback • MBO Alignment • Quarterly IT Business Partnership Award IT Champion Award • Performance Reviews • CAP Awards • Training Program • IT Communication Function Centralized company-wide • IT Connection • IT e-Communities • IT Client Portal • Best Practice Website • Meetings & Off-sites • Chats with CIO • Manager Weekly e-alert • Meeting-in-a-Box

42. IT Connection will become the number one business communication tool in supporting IT through knowledge sharing and innovative methods of increased productivity across geographic boundaries, creating a collaborative environment of informed and interdependent IT employees IT Connection Mission 42

43. Leadership IT Senior Staff engagement in e-business efforts in IT IT Portal becomes an every day mindset/expectation—how we work Technology Flexible application and data architecture for quick delivery Scalable infrastructure Portal software Integration of disparate DBs Governance Clear MBOs/metrics that drive execution Dedicated resources Identify overlap Competency Ruthless execution on “quick hits” Globalization of e-business solutions and team Speed and agility in opportunity IT ConnectionRoadmap

44. Collaborating Across IT

46. Mean 3.8 Mean 4.2 Client Satisfaction

47. Success Strategies

48. Partnership Model Where are we now? How will we get there? Who must do what? Where do we want to be? How are we doing? • Situation analysis/Change Readiness Assessment • Gap analysis • Global team • Identify quick wins • Deliver plan • Identify new needs • Monitor results • Assess business results • Integrate and leverage • Leadership buy-in • Define sponsor roles • Strategic direction • Benefit analysis • Best practice sharing—integrate • Change management &communication plan • Establish metrics • Get buy-in • Set up teams Sponsorship & Communication

49. Ensure Successful Implementation Assess Business Needs & Gaps Create Actionable Game Plans Leverage Resources Identify key Initiatives Engagement Model Business Partnership is a relationship of mutual trust and influence built on shared ownership of and complementary contributions to business results

50. The New Agenda • Create value-added business change – not simply support how we do business • View your clients as the business and the customers—how do we help make them more effective? • The outcome of communication is more aligned strategy and business results • Communication is not just another support organization that takes orders—it has earned the right to be a key driver of the business