Cisco IT Case Study

IT Acquisition Integration

How Cisco IT Standardizes the Acquisition Integration Process

Cisco IT develops standards for assimilating newly acquired companies rapidly,
consistently, and with minor disruption
Cisco IT Case Study / Business Management / Cisco Acquisition Integration: Ciscos acquisition of
more than 115 companies since 1993 could have meant a significant challenge for integrating networks and
other IT elements. Instead, Cisco IT has developed a standard set of principles and processes to help
accomplish these integrations rapidly, consistently, and with minor disruption. Cisco IT continuously
improves its integration expertise by applying the standards to each new acquisition. For Cisco as a
company, these standards mean shorter time to gain the value expected from each deal and the ability to
pursue more acquisitions, more quickly and at lower risk. Cisco customers can draw on Cisco ITs real-world
experience in this area to help support similar enterprise needs.

With our standards for the IT infrastructure and elements, we can

execute our integration plan much faster because everyone knows
what to do. We only need to work on identifying and resolving the
exceptions to the plan, and that is a huge difference for our ability to
complete the integration quickly and smoothly.
Tim Merrifield, Director, Technology Innovations, Cisco Internet Business Solutions Group

Challenge
Cisco executives view the acquisition of other companies as an important strategy for offering new products, reaching
new markets, and growing revenue. Since 1993, Cisco has acquired more than 115 companies, presenting Cisco IT
with the challenge of how to integrate those new networks, IT systems, and applications with their Cisco counterparts.
Each decision that each internal organization makes about integrating an acquired company has a ripple effect on
other organizations, so you have to work carefully, says Tim Merrifield, Director, Technology Innovations, Cisco
Internet Business Solutions Group.
With multiple acquisitions occurring each year, it was essential for Cisco to develop standardized processes for
integrating the new companies in each of the companys major functional areas, including IT. Given the number of
companies that Cisco has acquired, it would have taken too much time to analyze each acquisition, gather IT
requirements, submit an integration plan for approval to an IT governance committee, and each time reinvent the
many other tasks involved in an integration, says Merrifield. We wanted to have a proactive approach to integrating
acquired companies, not the reactive approach that is the usual case.
This case study describes the integration practices that Cisco IT has followed for companies that are merged into
existing Cisco organizations. Cisco has also acquired large companiessuch as Linksys and Scientific Atlantathat
are separate divisions from a legal, operational, and governance perspective. The Cisco IT strategy for supporting
those acquisitions is necessarily different from the total integration strategy described in this case study.

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Cisco IT Case Study

IT Acquisition Integration

Solution
Cisco IT has developed core principles and a process-driven approach for integrating the networks, data centers,
systems, and applications of acquired companies into the Cisco IT infrastructure. Throughout each project, the Cisco
teams consider how the integration activities may be a catalyst for change within the new company in order to
increase the acquisitions value.
INTEGRATION PRINCIPLES
Cisco IT has defined several principles that cover the core issues for successfully merging IT infrastructures and
services, as well as decision-making and organizational activity.
Infrastructure and application architecture. Define the baseline standards and plans for integrating network
transport, voice services, applications, data centers, client computing, systems and network security, and
management of external service providers and other vendors. The plans are based on three key mandates:

Merge all acquired sites onto the single Cisco corporate network

Deploy Cisco products and technologies at the new sites, replacing existing equipment as appropriate `

Follow consistent rules for all user IDs and service entitlements

Cisco does not view IT integration as simply making a physical connection of networks. It also means combining
systems for voice messaging, e-mail, and other applications to gain the most consistency and efficiency, both for IT
and employees, says Merrifield.
Where exceptions are allowed for IT infrastructure or applications, Cisco IT creates a partial integration and works
toward the long-term goal of increasing the integration and adoption of Cisco standards. Integrations can be
optimized if you start with the assumption that the standard process will always be followed unless there is a valid
business reason for making an exception, says Merrifield.
Organizational alignment. Based on the parameters and business goals of the deal, clarify how Cisco IT and the IT
staff from the acquired company will work together. For example, clearly define the roles and responsibilities for all
involved IT staff both during and after the integration activity. This organizational alignment must also consider
differences that may be necessary in certain geographic areas or company divisions.
Financial models. Establish clear agreements about which department will pay for which expenses and how those
costs will be recorded in corporate budgets and accounting records. These decisions cover one-time, recurring, and
long-term integration costs, which are funded either as part of the deal terms or from an existing Cisco budget. Onetime costs cover items such as:

Capital equipment purchases to support Cisco IT standards, such as deploying Cisco products to maintain an
all Cisco network

Resources required to support the integration event

Depreciation of fixed assets, software licenses, and other elements that will be discontinued after the
integration is complete

Recurring expense allocations cover the employees, network circuits and services, and other ongoing costs.
Financial resources may also be required for long-term costs to cover extended application integration
activities, delays in infrastructure integration activities due to contractual agreements, and similar tasks.

Governance. Clarify decision-making participation, processes, and authority for employees in the newly combined
Cisco IT organization, covering issues such as:

Strategic planning

Architecture oversight and enforcement

Application development methodologies

Data and information security policies

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IT Acquisition Integration

Legal and regulatory compliance (e.g., Sarbanes-Oxley, data privacy)

Internal audit alignment and accountability

General policies for IT services, processes, procurement, contractual obligations, and setting priorities

Communication models. Proactively plan appropriate, relevant, and targeted communications about the integration
plans and timelines. Communications plans should allow for customization based on the nature of the acquisition and
the integration activity. These plans should also consider cultural norms in the new company about the content and
delivery method for information.
Team Structures. Cisco IT has also defined three standard teams for handling integrations. In most cases, the same
employees serve on these teams, which yields two significant benefits for Cisco. First, the employees bring the
wisdom of prior experience to each new integration effort, which saves time and reduces problems. Second, these
employees expand their knowledge with each integration, for continued improvement of practices and processes.
The Cisco IT core team typically includes a technical integration leader, project manager, technical lead, and
business analyst. The infrastructure team includes Cisco employees who address issues and needs in specific areas
of the IT infrastructure. The global business processes team defines the broader business issues that affect the IT
integration (Figure 1).
Figure 1.

Three teams of Cisco employees from IT and other departments, plan and execute the integration of each acquired
company. (Diagram source: Cisco Internet Business Solutions Group)

Core Team

Development

Coordinates & Leverages

Extended Team Members

Marketing

Data Center Messaging

Finance

Infrastructure Team

Voice

Global Business
Processes

IT CORE TEAM

Site

Technical Integration Leader

Project Manager
LAN/
BD
Help
Technical Lead
WAN
Business Analyst
Desk

Customer
Support

Sales

HR
Client
Computing

Security

Customer
Service

Fulfillment / Supply Chain

INTEGRATION PROCESSES
The integration principles inform the process-driven approach developed by Cisco IT for integrating a newly acquired
company. These processes are grouped into conceptual stages that correspond to the major deal milestones. (The
milestones are established by the Cisco employee designated as the business development lead in the corporate
integration function.) (Table 1)
Table 1.

Stages of the Cisco IT process-driven approach to integrating an acquired company.

Stage

Deal Activity

Tasks

Preparation

Scope assessment, business modeling

Pre-Announcement Planning

Detailed due diligence and initial integration planning

Pre-Close Planning

Final integration planning

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Transition

Activation of employees, resources, and integration activities

Integration

Planned integration activities are completed and measurement initiated

Monitoring

Ongoing measurement and action initiated toward new activities that

increase the value obtained from the acquisition

Stages 1 and 2: Discovery and Due Diligence

The processes in Stages 1 and 2 are completed before the pending merger or acquisition deal is publicly announced.
A Cisco integration team begins to gather essential information, prioritize tasks, and plan communications and
schedules. A scope definition process uses checklists and questionnaires to identify:

The integration goals and business drivers

The new companys sites and special facility needs; business applications and systems; and security
requirements

Customer commitments, regulatory issues, and legal considerations

Contracts for original equipment manufacturer (OEM) products, services, and outsourced functions

The new companys IT team expectations, employee assignments, governance practices, relationships, and
policies

Determination of whether a shadow IT presence or separate IT control will be necessary on a temporary or

permanent basis

Evaluation of short-term procurement decisions and interim processes

Key stakeholder interviewsoften held at the new companys sitealso identify integration concerns and
company cultural issues.

The due diligence processes lead naturally into the planning of actual integration activity. This planning starts just
before the deal is announced and continues until the day when the deal closes.
Stages 2 and 3: Integration Planning
Integration planning begins with an assessment of the existing IT infrastructures, elements, and services in the new
company. Initial decisions are made about whether the major IT components will be fully integrated into the Cisco
environment, partially integrated, or remain separate with limited if any integration (Table 2).
Table 2.

The initial integration plans assess all key areas of the new companys existing IT infrastructure.

IT Infrastructure Area

Assessment

Transport

Global and regional LAN/WANs; IP migration status and plans; network connectivity (wired
and wireless).

Voice

Existing systems, services and contracts for voice telephony, voicemail, and mobile phones.

Data Center

Locations, utilization policy, and capacity planning, identification of data center elements such
as servers and storage; business continuity and disaster recovery capabilities

Client Computing

Standards and support for desktop and notebook PCs as well as related email, calendaring,
file sharing, and printing serivces. Also defines user entitlements for remote intranet access,
personal digital assistants (PDAs), and other advanced IT services.

Security

Policies and deployments for firewalls and other security elements.

Vendor Management

Existing contractual obligations, planned capital purchases, and business plans that will
create new requirements for IT.

Applications

Core financial, human resources, and project tracking applications; employee portals; sales
applications such as lead tracking and customer relationship management (CRM).

During this stage, the Cisco teams develop detailed plans for integration resources, costs, and schedules. Cisco IT
may also provide limited consulting to the acquired companys staff about contracts, purchases, and vendor
relationships that may be established prior to the deals closing date. Any exceptions to Cisco IT standards are
identified and the decision is made about whether the integration will be completed as a rapid cutover or as a gradual
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migration.
One part of the planning addresses what will happen on the first day after the acquisition closes and the new
company begins to operate as part of Cisco. This effort is conducted as joint IT and business planning, and covers:

Meeting the central processing and communications needs of sales, finance, operations, and customer
support groups

Deploying core communications and collaboration systems for voice, data, contact center, and messaging

Launching IT leadership and governance activities

Delivering information and training to the new employees

Managing PCs and user accounts as well as employee and contractor access to the network, applications,
and IT services

Stage 4: Execution
In Stage 4, the integration plans are finalized and the integration processes begin when the acquisition deal closes.
These processes include:

Activating resources to begin the tasks identified in the final integration plans.

Deploying interim services for core communication and collaboration activities, such as interim network access
through a wireless LAN or VPN.

Delivering onsite training and support as needed, including special support for selected personnel or tasks.

Transferring client computing and LAN support to Ciscos internal support groups.

Taking responsibility for vendor management and control of the acquired companys fixed assets.

Stages 5 and 6: Ongoing Operations

After the initial integration activity is complete, the acquired company operates as a part of Cisco. Work continues as
needed to resolve any remaining issues related to the IT integration activity, vendor relationships, or management
and governance.
The integration team conducts a post-integration analysis and review to identify lessons learned and additional focus
areas for future integration efforts. A formal turnover meeting is held for each IT service and application to resolve
any remaining issues around ownership, accountability, or alignment. The team also reviews client satisfaction
surveys and prepares all required legal documentation for proper retention.
If an office or other site of the acquired company is to be closed, the team follows standard processes for
appropriately terminating the affected assets, services, and contracts; archiving data; and decommissioning systems.

Results
Defined principles, standard processes, and consistent actions and decisions for integrating acquired companies
have yielded significant business and technical benefits for Cisco. The major business benefits include:

Shorter time to gain the value expected from each deal

Ability to pursue more deals, more quickly and at lower risk

Faster and less disruptive integration efforts

Increased cultural integration and sense of inclusion for employees of the acquired company

Increased probability for achieving the synergies and value expected from the acquisition

Decreased complexity and higher efficiencies for integration activity

Deepening of an organizations integration experience

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IT Acquisition Integration

If you develop a proactive integration competency, you can increase your business portfolio by acquiring more
companies, help ensure the success of deals by making the acquired companies effective quickly, and gain additional
cost savings through more effective collaboration and knowledge sharing, says Merrifield.
Framework elements tie together the success of Ciscos business and IT integration activity. These elements provide
a proactive, guide and architect approach to integration planning compared to the traditional approach of respond
and react. By using this framework, Cisco is able to accelerate future integrations and achieve economies of scale,
cost reductions, and business process flexibility (Figure 2).
Figure 2.

An integration framework helps Cisco IT maintain a proactive approach to assimilating a newly acquired company.
(Diagram source: Cisco Internet Business Solutions Group)

Guide & Architect

Respond & React

Ad-hoc
integration
approach
Little or no
standardization
of technology or
applications

Cultural &
structural
considerations
identified
Critical process
issues identified
Baseline
standards

Doing your best

to survive the
situation & get
the job done

Injecting key
learnings,
addressing
critical areas for
effectiveness

STAGE 1

STAGE 2

Integration Framework

Infrequent deals

Critical business
process areas
aligned

Fully aligned
business & IT
fundamentals

Standards
established

Comprehensive,
flexible and
highly adaptive
models for all
deal types

Proactive
modeling in place
Advance
planning,
becoming
proceduralized

Flexible,
responsive yet
methodical
Vision matches
execution

STAGE 3

STAGE 4

Optimal State

The major technical benefits of the Cisco IT approach to integration include:

A single corporate network and a standard IT infrastructure and application architecture, which reduce
operating costs as well as management and support requirements.

A fully aligned IT organization and well-defined governance structure that helps to clarify roles and
responsibilities and simplify decision-making.

Repeatable, scalable processes that can be reused in most new acquisition integration projects, reducing the
time and disruption involved.

With our standards for the IT infrastructure and elements, we can execute our integration plan much faster because
everyone knows what to do, says Merrifield. We only need to work on identifying and resolving the exceptions to the
plan, and that is a huge difference for our ability to complete the integration quickly and smoothly.

Lessons Learned
From the experience gained from more than 100 integration projects, Cisco IT has identified several lessons as
valuable for handling new acquisitions.

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IT Acquisition Integration

Treat acquisition integration as a normal business activity. Most of the time, IT hears about the acquisition after
it has been announced and then pulls together a different, ad hoc team for each integration effort, says Merrifield.
Our executives set the tone that integrating an acquired company is a normal part of how Cisco conducts business
and we have built standard teams and processes in Cisco IT to support this activity.
Apply a holistic approach. Approaching integration planning holistically significantly increases the probability of
success. This approach means involving all parts of both companies in a single, high-level team (e.g., finance, human
resources, IT, operations, sales), not distinct groups working on separate functional areas with minimal interaction.
Follow a structure to integrate quickly and consistently. Rapid and structured integration of acquired companies
helps to achieve the expected business value. When you apply standards, strategies, and processes consistently,
you gain internal discipline and the integration activities are in alignment. This means that you will not have a
functional organization deviating from the plan and committing to something that IT cannot deliver and vice versa,
says Merrifield.
Build integration expertise. A post-project analysis identifies lessons that can be applied to future integration plans
and activities. Consistency in processes and team membership also build integration expertise with each new
acquisition.

Next Steps
As Cisco continues to expand its business through acquisitions, Cisco IT will continue to apply, as appropriate, the
integration practices and processes described in this case study.

FOR MORE INFORMATION

For additional Cisco IT case studies on a variety of business solutions, visit Cisco on Cisco: Inside Cisco IT
www.cisco.com/go/ciscoit

NOTE
This publication describes how Cisco has benefited from the deployment of its own products. Many factors may have
contributed to the results and benefits described; Cisco does not guarantee comparable results elsewhere.
CISCO PROVIDES THIS PUBLICATION AS IS WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
Some jurisdictions do not allow disclaimer of express or implied warranties, therefore this disclaimer may not apply to
you.

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