Screening Criteria

Means of achieving criteria

Evaluation

Offer both short term and long term win-wins for Cisco and the acquired company

Have a technology that can be delivered through Ciscos existing distribution channels Have a technology and products which can be supported by Ciscos support organization. Is able to leverage Ciscos existing infrastructure and resource base to increase its overall value Have a similar understanding and vision of the market

Share a common vision and chemistry with Cisco

Have a similar culture Have a similar risk taking style

Be located ( preferably) in Silicon Valley or near one of Ciscos remote sites

Have a company HQs and most facilities close to one Ciscos main sites

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Have a complementary technology that fills in a need in Ciscos core product space

Business strategy : To provide one-stop shop for end-to-end networking solutions . Challenge : Product categories included High-End Routers, WAN switches and network management systems. Product portfolio didnt consist of switching platforms or value added telephony services.
Summa Four : Extending the product portfolio ?

Deregulation of the telecommunications industry : Shift from proprietary switches to standards based open programmable switches -> less time to market and reduction in development costs.

Development of a next generation product(Project Alpha) Industrys first standards based programmable switch : Helps in achieving the end-to end networking solutions provider. Cisco Systems, Inc: Acquisition Integration for Manufacturing

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Have a technology that can be delivered through Ciscos existing distribution channels

Major buyers were telecommunication service providers ( like AT&T, MCI, Sprint, BT) for both the companies, hence the same distribution partners and VARs can be leveraged.
Have a technology and products which can be supported by Ciscos support organization.

Summa Fours technology of value added telephony applications was completely new as compared to Ciscos existing knowledge base. Moreover, its MRP system was not compatible with Ciscos MRP system. Its home gown test system was far less automated than Ciscos Autotest system.
Is able to leverage Ciscos existing infrastructure and resource base to increase its overall value

If certain products like VCO/4K turned out to be profitable , then Ciscos additional capacity and testing infrastructure can be used to produce more of the product.

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Have a similar understanding and vision of the market

Summa Four was a small firm playing in the niche market and concentrated on one product category only. Cisco had an impressive product line and acquisition was the way to gain access to new technologies.
Have a similar culture

Cisco being a big organization had complex processes. Summa Four had built the business in a simple fashion where personal connections and informal processes allowed for quick action.
Have a similar risk taking style

Although nothing specifically mentioned, Ciscos huge product portfolio would enable it to take more risks than a smaller firm like Summa Four
Have a company HQs and most facilities close to one Ciscos main sites

Summa Fours HQ and manufacturing facility were located in Manchester which was one hour away from Ciscos R&D facilities.

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A PRIORI DUE DILIGENCE Cross functional team from Cisco Review companys manufacturing processes Identify risks Provide input to valuation discussions

MANUFACTURING INTEGRATION TEAM

MANDATORY INTEGRATION STEPS

SITUATION SPECIFIC INTEGRATION STEPS

Integration team comprising of experienced members from Cisco and acquired company Senior manager within acquired company appointed as the integration team leader

Merging information systems: MRP and Autotest

Manufacturing facility decisions

Employee Integration issues

Buddy System

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Cisco Systems, Inc: Acquisition Integration for Manufacturing

A priori due diligence of the companys manufacturing facilities ensures that Cisco is acquiring a company that will better its prospects and not lower Ciscos profitability

By appointing the senior manager of the acquired company as the integration team leader, the employees there were comfortable and secure- felt that since someone trusted was leading the integration efforts- so nothing would go wrong. Buddy system ensured that new employees learnt by watching and interacting with Cisco people within their company
Integrating information systems into Ciscos MRP and Autoset platforms to reduce complexity and hassle of maintaining multiple systems due to large number of acquisitions Evaluating suppliers important to ensure quality and reliability of vendors- maintain credible brand image of Cisco Since decisions about retaining or shutting down manufacturing facilities and employee integration issues are highly sensitive, evaluating them separately for every acquisition on a case by case basis ensures better transition

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Merging information systems

Summa Four used a home-grown, PC based test system that was far less automated than Ciscos Autoset system Summa Fours MRP system was from Symix whose software was incompatible with Ciscos MRP system

Evaluating suppliers

Summa Four purchased large number of individual parts (~5000) from 250 suppliers 85 suppliers were completely new to Cisco- Supply Ops group will take time to evaluate and approve 200 of Summa Fours parts were sole sourced- only one vendor- created pricing and continuity of supply risk

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Cisco Systems, Inc: Acquisition Integration for Manufacturing

Employee Integration

Summa Four and Cisco were different in terms of scale210 employees in Summa Four versus over 10,000 employees in Cisco Summa Four had a simple functional organization, personal connections and informal processes. Cisco had far more complex processes. Summa Four employees worried about the level of influence they would be able to exert in Cisco Unclear about what role the Summa Four products would play in Cisco Cultural implication and feeling of being just one of many in the long line of Cisco acquisitions

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Cisco Systems, Inc: Acquisition Integration for Manufacturing

THANK YOU!!!