Most CIOs are familiar with the virtual close. Cisco has aggressively marketed it - and the rest of its internal software - as a huge competitive advantage. In numerous news accounts, CFO Carter was quoted as saying that these systems made the company both huge and nimble: Goliath's brawn with David's agile sling.

CIOs were envious, competitors fearful. No one came away from a virtual close demo without high praise, like Fortune: "Cisco uses the Web more effectively than any other big company in the world. Period." Or Business Week: "It should mean zilch-o earnings surprises." Cisco was also a perennial CIO-100 award honouree in the US.

But not everyone was so impressed, Fred Hickey, editor of the High-Tech Strategist, notable for his hype-free, dogging assessments of networking companies, calls the power of the systems "bogus". Frank Dzubeck, president of Commun-ications Network Architects, a networking consultancy in Washington, DC, who has worked with Cisco, calls the infrastructure "over-rated and incomplete. There was a lot that wasn't real with [Cisco's] supply chain, with the inventory management," Dzubeck says.

"For the last year, Cisco and John [Chambers] have said over and over again how their information systems make them so efficient and so on the ball," says Jeffrey Young, author of Cisco Unauthorised (Prima Publishing, 2001), which details Cisco's long climb and the beginnings of its return to earth. "You couldn't go anywhere without hearing that if you weren't trying to be like Cisco, you were falling behind, their systems are so brilliant. I'm sorry. It's clear it's not the case."

What Cisco's systems didn't do was model what would happen if one critical assumption - growth - was removed from both their forecasts and their mind-sets. If Cisco had run even modestly declining demand models, Chambers and Carter might have seen the consequences of betting on more inventory. But Cisco had enjoyed more than 40 straight quarters of stout growth. In its immediate past were three quarters of extreme growth as high as 66 per cent. The numbers the virtual close presented to the eye of the beholders - the Cisco executives - painted a picture of the present as lovely and pleasant as a Monet landscape. According to many observers, Cisco's fundamental blunder was to rely on that pretty picture to assume the future would be equally pretty.