PowerPoint Presentation

OHT 10.1

Chapter 10Change management

OHT 10.2

Learning objectives

•Identify the different types of change that needto be managed for e-commerce;

•Develop an outline plan for implementing e-commerce change;

•Describe alternative approaches toorganisation structure resulting fromorganisational change.

OHT 10.3

Issues for managers

•Should we change organizational structure inresponse to e-business? If so, what are theoptions?

•How do we manage the human aspects of theimplementation of organizational change?

•How do we share knowledge between staff inthe light of high staff-turnover and rapidchanges in market conditions?

OHT 10.4

Key change management issues

•Schedule – what are the suitable stages for introducing change?

•Budget – how do we cost e-business?

•Resources needed – what type of resources do we need, what aretheir responsibilities and where do we obtain them?

•Organizational structures – do we need to revise organizationalstructure?

•Managing the human impact of change – what is the best way tointroduce large-scale e-business change to employees?

•Technologies to support e-business change – the role ofknowledge management, groupware and intranets are explored.

•Risk management approaches to e-business led change.

OHT 10.5

Key factors in achievingchange

Figure 10.1 Key factors in achieving change

$C:\WINDOWS\Desktop\WORK\Chaffey PPT (working)\gif\Fig 10.1.gif$

OHT 10.6

Scale of change

•Hammer and Champy (1993) defined BPR asthe fundamental rethinking and radical redesign of business processes toachieve dramatic improvements in critical, contemporary measures ofperformance, such as cost, quality, service, and speed.

•Fundamental rethinking – re-engineering usually refers to changing ofsignificant business processes such as customer service, sales orderprocessing or manufacturing.

•Radical redesign – re-engineering is not involved with minor, incrementalchange or automation of existing ways of working. It involves a completerethinking about the way business processes operate.

•Dramatic improvements – the aim of BPR is to achieve improvementsmeasured in tens or hundreds of percent. With automation of existingprocesses only single figure improvements may be possible.

•Critical contemporary measures of performance – this point refers to theimportance of measuring how well the processes operate in terms of thefour important measures of cost, quality, service and speed.

OHT 10.7

Different scales of change

Term

Involves

Intention

Risk of failure

Businessprocess re-engineering

Fundamental redesignof all main companyprocesses

Large gains inperformance(>100%?)

Highest

Businessprocessimprovement

Targets key processesin sequence forredesign

(<50%)

Medium

Businessprocessautomation

Automating existingprocess

(<20%)

Lowest

OHT 10.8

Project management activities

•Estimation – identifying the activities involved in theproject, sometimes referred to as a work breakdownstructure (WBS).

•Resource allocation – after the initial WBS,appropriate resources can be allocated to the tasks.

•Schedule/plan – after resource allocation, the amountof time for each task can be determined according tothe availability and skills of the people assigned tothe tasks.

•Monitoring and control – monitoring involves ensuringthe project is working to plan once it has started.Control is taking corrective action if the projectdeviates from the plan. In particular the projectmanager will want to hit milestones

OHT 10.9

Stages in developing ane-business solution

Figure 10.2 Stages in developing an e-business solution

$C:\WINDOWS\Desktop\WORK\Chaffey PPT (working)\gif\Fig 10.2.gif$

OHT 10.10

An example web site developmentschedule for the B2C Company

Figure 10.3 An example web site development schedule for The B2C Company

$C:\WINDOWS\Desktop\WORK\Chaffey PPT (working)\gif\Fig 10.3.gif$

OHT 10.11

Automating the employeedevelopment process

Figure 10.4 Automating the employee development process

$C:\WINDOWS\Desktop\WORK\Chaffey PPT (working)\gif\Fig 10.4.gif$

OHT 10.12

Organisational structures fore-business and e-commerce

Organizational structure

Circumstances

Advantages

Disadvantages

(a) No formal structurefor e-commerce

Initial response to e-commerceor poor leadership with noidentification of need forchange.

Can achieve rapid response toe-commerce serviceresponses (e-mail, phone).Priorities not decided logically.Insufficient resources

Poor quality site in terms ofcontent quality andcustomer

(b) A separatecommittee ordepartment managesand coordinates e-commerce

Identification of problem andresponse in (a)

Coordination and budgetingand resource allocationpossible.

May be difficult to getdifferent departments todeliver their input due toother commitments

Internet contribution (Chapter6) is sizeable (>20%)

As for (b), but can set owntargets and not be constrainedby resources. Lower riskoption than (d)

Has to respond tocorporate strategy. Conflictof interests betweendepartment and traditionalbusiness

(d) A separate operatingcompany

Major revenue potential orflotation. Need to differentiatefrom parent

As for (c), but can set strategyindependently. Can maximizemarket potential

High risk if market potentialis overestimated due tostart-up costs

OHT 10.13

Summary of alternative organizational structuresfor e-commerce suggested in Parsons et al.

Figure 10.5 Summary of alternative organizational structures for e-commercesuggested in Parsons et al. (1996)

$C:\WINDOWS\Desktop\WORK\Chaffey PPT (working)\gif\Fig 10.5.gif$

OHT 10.14

Hallowell on scalability 1

‘described as “virtual’’ (either pure information orautomated) and “physical’’ (requiring some degree ofhuman intervention).

… because the nature and quantity of physical servicenecessary to deliver value to customers influences thequantity of human intervention required, it also influencesa firm’s ratio of variable to fixed costs, which alters its“scalability’’.

The paradox comes in that while reduced scalability isviewed negatively by many venture capitalists andproponents of ecommerce, the cause of that reduction inscalability, human intervention, may help a firm todifferentiate its offering to customers, thus providing asource of competitive advantage.’

OHT 10.15

Hallowell on scalability 2

‘For firms that are very high on the scalability continuum, the need for physical

service does not present a “scalability” problem.

At these firms, information is the core service offering. Physical service isrelatively insignificant, both from customers’ perspectives (use of physicalservice is infrequent,if at all) and from the firm’s perspective (it represents avery small portion of total costs).

Thus, these firms do not rely on physical service (and the employees itrequires) to differentiate their offering; their differentiation tends to come fromthe quality of their content and the ease with which users can access it.

In contrast, firms that sell non-information services such as travel, or goods

such as books, toys, or antiques require significantly more complex physical

service operations. The degree to which they need more physical service is

inversely proportional to the degree to which they are “scalable”.’

OHT 10.16

Outsourcing example

Amazon:

‘manages customer relationships through itswebsite while relying on publishers for productdevelopment, Visa and Mastercard forrevenue collection and UPS, the parcelservice, for logistics. It also outsources muchof its call-centre management to specialistsuppliers’.

OHT 10.17

Outsourcing benefits – activity

•

OHT 10.18

BUT…

•‘The snag, as many failed internet venturesdiscovered, is that it is hard to co-ordinate theactivities of business partners without a largesupporting bureaucracy. Poor customerservice and higher-than-anticipated costsoften resulted. Amazon is one of the fewcompanies of its generation that made theidea work.’

OHT 10.19

Outsourcing risks - activity

•

OHT 10.20

Outsourcing - Hagel’s view

Companies try to excel at three different typesof activity:

managing customer relationships,

routine processing of information anddevelopment of new products.

He believes that companies will in future tendto concentrate on just one, while buying in theothers as required.

Examples?

OHT 10.21

Oticon

OHT 10.22

Transition curve indicating thereaction of staff through time fromwhen change is first suggested

Figure 10.7 Transition curve indicating the reaction of staff through time fromwhen change is first suggested

Source: Bocij et al. (2003)

$C:\WINDOWS\Desktop\WORK\Chaffey PPT (working)\gif\Fig 10.7.gif$

OHT 10.23

Key staff in systems acceptance

•System sponsors

–

•System owners

–

•System users

–

•Stakeholders

–

•Legitimizer

–

•Opinion leaders

–

OHT 10.24

The role of organisational culture

•Survival (outward-looking, flexible) – the external environmentplays a significant role (an open system) in governing companystrategy. The company will likely be driven by customerdemands and will be an innovator. It may have a relatively flatstructure.

•Productivity (outward-looking, ordered) – interfaces with theexternal environment are well structured and the company istypically sales-driven and is likely to have a hierarchicalstructure.

•Human relations (inward-looking, flexible) – this is theorganization as family, with interpersonal relations moreimportant than reporting channels, a flatter structure and staffdevelopment and empowerment is thought of as important bymanagers.

•Stability (inward-looking, ordered) – the environment isessentially ignored with managers concentrating on internalefficiency and again managed through a hierarchical structure.

OHT 10.25

Knowledge Management – Saunders (2000)

‘Every day, knowledge essential to yourbusiness walks out of your door, and much ofit never comes back. Employees leave,customers come and go and their knowledgeleaves with them. This information drain costsyou time, money and customers.’

OHT 10.26

IDC – objectives of KM

•Improving profit/growing revenue (67 per cent)

•Retaining key talent/expertise (54 per cent)

•Increasing customer retention and/or satisfaction (52per cent)

•Defending market share against new entrants (44 percent)

•Gaining faster time to market with products (39 percent)

•Penetrating new market segments (39 per cent)

•Reducing costs (38 per cent)

•Developing new products/services (35 per cent)

OHT 10.27

Differences between knowledge management, dataprocessing and information management

•Consider a retail manager analysing their sales figures.

•Raw data on sales figures consist of figures in eachindividual store for a given month. IS can present thisdata within the context of sales compared to previousmonths as information.

•This information is of little value if the manager does notknow how to act in response to it. Managers apply theirknowledge to decide how to respond if the sales in oneregion are much lower than others, or if one store isunderperforming against budget.

•Thus knowledge is the processing of information and isa skill based on previous understanding, proceduresand experience.

OHT 10.28

Explicit and tacit knowledge

•Knowledge Management - Techniques and tools forcapturing and disseminating knowledge within anorganization.

•Explicit – details of processes and procedures.Explicit knowledge can be readily detailed inprocedural manuals and databases. Examples includerecords of meetings between sales representativesand key customers, procedures for dealing withcustomer service queries and management reportingprocesses.

•Tacit – less tangible than explicit knowledge, this isexperience on how to react to a situation when manydifferent variables are involved. It is more difficult toencapsulate this knowledge, which often resides inthe heads of employees.

OHT 10.29

Binney – classes of KM applications

1. Transactional. Help desk and customer serviceapplications.

2. Analytical. Data warehousing and data mining forCRM applications.

3. Asset management. Document and contentmanagement.

4. Process support. TQM, benchmarketing, BPR, SixSigma.

5. Developmental. Enhancing staff skills, competencies– training and e-learning.

6. Innovation and creation. Communities, collaborationand virtual teamwork.

OHT 10.30

2 perspectives on KM

•It is impossible to achieve full benefits fromknowledge management unless individualsare willing and motivated to share theirknowledge or unless organizations lose theirstructural rigidity to permit information andknowledge flow - IDC 2000

•Knowledge can only be volunteered – itcannot be conscripted Snowden 2002

OHT 10.31

Chevron example – connections in $2 billion saving

1.Connection to the explicit knowledge via an intranetwith a portal with search tools and a directory ofinformation.

2.Connection of people to people with specializedknowledge through an expertise locator; a type ofphone directory with people in different expertisecategories, again also accessed via search tools.

3.Connection to communities of practice which canhelp sharing and learning between people.

4.Connection of knowledge and people with processes,products and services.

OHT 10.32

Risk Management

1.Identify risks including their probabilities andimpacts.

2.Identify possible solutions to these risks.

3.Implement the solutions, targeting thehighest impact, most likely risks.

4.Monitor the risks to learn for future riskassessment.

OHT 10.33

OpenText Livelink(www.opentext.com)

OHT 10.34

Activity – identify risks for e-business project

Risk

Probability

Impact

Solution

Insufficient senior managementcommitment

Education/training/lobbying by e-business manager toachieve buy-in

High staff turnover/key staffleave

Use monetary incentives and improve workingenvironment

Project milestones not met,overrun budget

Appoint experienced project manager and providesupport and resources needed. Manager will performrisk management such as this

Problems with new technologydelaying implementation (bugs,speed, compatibility)

Allow sufficient time for volume, performance testing

Staff resistance to change

Education, training identification of change facilitatorsamongst staff

Problem with integrating withpartner’s systems (e.g.customers or suppliers)

Tackle these issues early on, identify one contactpoint/manager for each of partnerships

New system fails afterchangeover (too slow or toomany crashes)

See solution to delayed implementation

OHT 10.35

Barriers to KM – IDC survey

•Lack of understanding of KM and its benefits (55 percent)

•Lack of employee time for KM (45 per cent)

•Lack of skill in KM techniques (40 per cent)

•Lack of encouragement in the current culture forsharing (35 per cent)

•Lack of incentives/rewards to share (30 per cent)

•Lack of funding for KM initiatives (24 per cent)

•Lack of appropriate technology (18 per cent)

•Lack of commitment from senior management (15per cent)