Tour VII: Change Management E. Widodo

Objectives Identify the type of changes needed Develop an outline plan for implementing e-commerce Describe alternative approaches to organization structure resulting from organizational change Understand to manage human aspect of such change

Contents Perspective of e-business change Change plan Human resource requirements Revising organizational structures Managing human Knowledge management Risk management

What we anticipate seldom occurs; what we least expect generally happens. Benjamin Disraeli

Intro Strategy implementation: execution of strategy through project planning & creation of a system. (Including analysis, design, implementation & maintenance) Change management: managing process, structural, technical, staff and culture changes within an organization. Common examples: Schedule Budget Resources Organization structure Human aspect Technology required

Perspectives of e-business change

Change scale (1/2) Two levels of changes: Large-scale change: e-business or business process engineering change. Small-scale change: ad-hoc (project) change. Business Process Re-engineering (BPR): identifying radical & new ways of carrying out business operations, often enabled by new ICT support. Hammer & Champy (1993) and Davenport (1993) coin the essence of BPR as the recognition that business processes, organizational structures, team structures, employee responsibilities can be fundamentally altered to improve business performance. BPR includes: fundamental rethinking, radical design, dramatic improvements and critical contemporary measures of performance.

Change scale (2/2) Ambitious scale  failure  new concept Business Process Improvement (BPI): optimizing existing processes typically coupled with enhancements in ICT. (less radical approach and pay attention to innovation) Still need less radical approach?  simply by making automation of existing system, called Business Process Automation (BPA)

Change plan CP should be approached using project management, by which including: Estimation Resource allocation Schedule/plan Monitoring & control Project plan of developing e-business system: Initiation  Change management Prototyping  Analysis & design + Implementation Final Implementation Maintenance System Development Lifecycle (SDL): sequence in which a e-business system is created from initiation, analysis, design, implementation and maintenance.

Stages in developing e-business system (1/2) CM A&D I

Stages in developing e-business system (2/2)

Example of B2C development schedule

Prototype & prototyping Prototype: a preliminary version of part of a framework of all of a e-business solution system (the scale depend on its target audience & business project team). Key stages: Analysis Design Development Testing & review Prototyping: an iterative process by which e-business system’s stakeholder suggest modification before further prototypes and live version of the final solution system. Benefits: Prevent major design (functional) errors Involves all the team responsibility to participate proactively Rapid iteration results in shorter development period

Human resource requirements e-Business system development requires specialists as follow: Web designer  web structure & navigation Web developer/programmer  web code writing Web master  content management (up date) Online marketer  online marketing management Project manager  internal & external coordination Staff retention can be achieve by doing: Task combination Work group Customer relation Feedback channel Outsourcing: turn to 3rd party to assist internal e-business effort by using outside-in or inside-out scheme.

Revising organizational structure When e-business system start influencing organization business by providing its revenue contribution, new organizational structure and working practice may be needed. Four stages of growth: Ad-hoc activity: no formal organization for e-business, skill are dispersed throughout organization, poor coordination between online & offline organization. Focusing the effort: introducing control mechanism for e-business (steering group consists of IT & marketing experts) Formalization: separate business unit within company to manage e-business system Institutionalizing capability: creating separate operating company running e-business system

Advantage & disadvantage

Managing human e-Business implementation creates changes that should be managed by: Real support from top management  management commitment Explanation on individual’s main activities  staff commitment General obstacle is unfamiliarity with ICT, or even worse, technophobia. Type of organizational culture: Survival (outward looking, flexible): innovative Productivity (outward looking, ordered): sales-driven Human relation (inward looking, flexible): humane Stability (inward looking, ordered): internal efficiency

Human reaction on change

Knowledge management Knowledge: applying experience to decision making in problem solving Data + meaning  Information Information + (experience & understanding)  knowledge Type: Explicit knowledge: can be readily detailed in procedural manuals Tacit knowledge: less tangible knowledge by which encapsulated within individual. Knowledge management (KM): techniques and tools to disseminate knowledge within organization Reason for implementing KM: improving profit (67%), retaining key expertise (54%), increasing customer retention (52%)

Risk management Risk management (RM): evaluating potential risks, developing strategy to reduce risks and learning about future risks.

7th souvenir Task 1: Select your group e-Business solution topic Arrange its “Initiation Stage” equipped with its feasibility study, project planning, and change management appropriately