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80 per cent of Cisco business to be online soon

80 per cent of Cisco business to be online soon

Computer networking giant Cisco Systems aims to have 80 per cent of its business transactions conducted online by July, an executive from the San Jose-based company told a conference here on Tuesday.

"We're one of the examples out there showing that Internet commerce is real and very much alive," Ray Woo, senior product architect at Cisco, told attendees of Giga Information Group's online business symposium, "Leadership Strategies for Implementing Electronic Commerce."

Just three years ago, only 4 per cent of Cisco's business was conducted through its Web site. By February of this year, however, the volume had reached 74 per cent, with about $US23 million in sales daily.

Revenue coming in via the Internet has also skyrocketed. In the first quarter of this year, Cisco reported $US1.9 billion in online revenue compared with $US81 million for the same period in 1997.

On Tuesday Cisco posted a fiscal third-quarter profit of $US646 million, with overall quarterly sales revenue up 44 per cent over the year-ago period, to $US3.15 billion. The company also announced its eighth two-for-one stock split since 1990.

In addition to a hefty hike in customer satisfaction, Woo said that compared with the traditional business model, Cisco's shift to the Internet saved the company $US680 million last year. "That's a very significant number, even for a company like Cisco, and can support our continued growth," Woo added.

The single largest area of savings, $US327 million, came from the online delivery of software to customers, Woo said. Another $US175 million was saved in supply chain management, which included $US75 million in annual operating costs.

Cisco saved an additional $US37 million by moving all of its employee services -- such as travel expense reimbursement -- to the company's intranet, Woo added.

"For a company the size of Cisco, with 17,000 employees, we only have two employees dedicated to online expense auditing and administration," Woo said. "We saved more than 10 people by using online employee services." Expenses are also reimbursed within two days, he added.

Cisco's online focus has become so intense that some new employees get their network connections before they get their telephone connections, Woo said with a laugh.

Additional benefits from Cisco's online initiative include a nearly 100 per cent accuracy rate in order processing. Before, about 30 per cent of orders had errors, Woo said.

Customer service costs have also been slashed.

The company's electronic-commerce initiative began in 1995 with a two-week telephone survey of its customers.

"We found that the first thing our customers were looking for was order status, second was pricing, third was configuration and fourth was invoices," Woo said. "And that's exactly the order in which we built Internet commerce into our Web site."

Woo said Cisco has an admittedly bare-bones Web site to handle the more than 7 million hits it receives every day.

"We don't have any Java applets, we don't have any ActiveX controls, we don't have any fancy graphics. Our Web site is designed to take orders, not for someone to come in and basically browse around [and look] at fancy pictures," he said.

What's powering this online world? Oracle, Woo said.

"We're probably the largest single implementation of Oracle applications in the world," he said. "We have over 100 terabytes of data in Oracle databases and all of our business systems are 100 per cent standardised for Oracle -- that's 500 Oracle databases."

Cisco has two Series 6000 Sun Enterprise servers for its Internet site, two Sun SPARC servers for its intranet and a Sun Enterprise Server 5000 dedicated to employee services, Woo said.


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