February 28, 2000

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Sizzling Cisco:
IT Takes Starring Role In Cisco's Acquisitions Adventures

By Marguerite Reardon

isco Systems' $6.9 billion purchase of Cerent Corp. and $2.15 billion acquisition of Pirelli S.p.A.'s optical systems business made headlines last year. But behind the scenes, Cisco's IT integration group was quietly at work, melding these companies' infrastructures and processes into its own business frameworks.

With 51 acquisitions since 1993, Cisco's IT "SWAT" team has had a lot of experience managing the details behind the deals. "Cisco has the uncanny ability not only to make targeted purchases, but also to integrate the company and technology well into its products and into the company," says John Morency, executive VP of Sage Research.

Tim Merrifield, manager of Cisco's IT Acquisition Integration Team, and his 10-employee group move into action at the newly purchased company as soon as a deal is announced. "We want the new company's employees to feel they're a part of Cisco as soon as possible," Merrifield says.

Cisco's goal is to have most of these companies on its phone, E-mail, enterprise resource planning, customer-care, and forecast systems, as well as integrated with its Web site, no more than 60 days after a deal closes. For close to 20 acquisitions, users could order the acquired company's products from Cisco's Web site the day the deal closed. Getting to that point starts with Merrifield's group setting up a virtual private network between Cisco and the newly purchased business, so that both companies' officials can share information over a secure network. Employees from Cisco's telecom and data-networking groups are also brought in to work with the IT integration team, and to become the long-term support staff for those specific operations.

Merrifield says, however, that Cisco doesn't "integrate for integration's sake. We do it where it makes sense." For example, GeoTel Communications Corp. was using an NT platform to develop its NT-based call-center product when Cisco acquired the company. Though Cisco runs its key systems on Unix servers, it didn't have a comparable development environment and saw no reason for GeoTel to change its procedures.

Most of Cisco's acquisitions have been of vendors close to its Silicon Valley headquarters, with anywhere from 20 to 150 employees. But as Cisco begins to acquire larger companies further away from San Jose, integrations become more complex and the time needed to complete them can get longer. Cisco's recent acquisition of the Pirelli business unit has been the most challenging so far, says Merrifield, who has traveled to Milan, Italy, three times since Christmas. Besides the distance and language factors, Pirelli is the second-largest business Cisco has integrated into its operations, with 750 employees. Also, the optical division had to return its equipment to Pirelli's business concern, so Cisco had to do some refurbishing.

But as Merrifield looks ahead to what's expected to be another acquisitions-filled year, he says he can rely on the lessons he's learned from past experiences. "Often, in our zealousness to get things done quickly, we make mistakes," Merrifield says. "But after 49 acquisitions in five years, I've learned not to repeat them. At the rate we're going, we'll have many more opportunities to keep improving."

Return to main story, "Sizzling Cisco."

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