Chapter 10 Change management

Learning outcomes Identify the different types of change that need to managed for e-commerce Develop an outline plan for implementing e-commerce change Describe alternative approaches to organizational structure resulting from organizational change.

Management issues What are the success factors in managing change? Should we change organizational structure in response to e-business? If so, what are the options? How do we manage the human aspects of the implementation of organizational change? How do we share knowledge between staff in the light of high staff turnover and rapid changes in market conditions?

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 are their responsibilities and where do we obtain them? Organizational structures – do we need to revise organizational structure? Managing the human impact of change – what is the best way to introduce large-scale e-business change to employees? Technologies to support e-business change – the role of knowledge management, groupware and intranets are explored. Risk management approaches to e-business led change.

Figure 10.1 Key factors in achieving change

Scale of change Hammer and Champy (1993) defined BPR as: the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. Fundamental rethinking – re-engineering usually refers to changing of significant business processes such as customer service, sales order processing or manufacturing. radical redesign – re-engineering is not involved with minor, incremental change or automation of existing ways of working. It involves a complete rethinking about the way business processes operate. dramatic improvements – the aim of BPR is to achieve improvements measured in tens or hundreds of percent. With automation of existing processes only single-figure improvements may be possible. critical contemporary measures of performance – this point refers to the importance of measuring how well the processes operate in terms of the four important measures of cost, quality, service and speed.

Figure 10.2 Digital marketing activities that require management as sell-side e commerce Source: E-consultancy (2005)

Figure 10.3 The main challenges of managing sell-side e-commerce (n = 84) Source: E-consultancy (2005)

Figure 10.4 Stages in developing an e-business solution

Figure 10.5 An example web site development schedule for The B2C Company

Figure 10.6 Typical structure and responsibilities for a large e-commerce team Source: E-consultancy (2005)

Table 10.4 Advantages and disadvantages of the organizational structures shown in Figure 10.7

Figure 10.7 Summary of alternative organizational structures for e-commerce suggested in Parsons et al. (1996)

Figure 10.8 Options for location of control of e-commerce Source: E-consultancy (2005)

Knowledge management – Saunders (2000) Every day, knowledge essential to your business walks out of your door, and much of it never comes back. Employees leave, customers come and go and their knowledge leaves with them. This information drain costs you time, money and customers.

IDC – objectives of KM Improving profit/growing revenue (67 per cent) Retaining key talent/expertize (54 per cent) Increasing customer retention and/or satisfaction (52 per cent) Defending market share against new entrants (44 per cent) Gaining faster time to market with products (39 per cent) Penetrating new market segments (39 per cent) Reducing costs (38 per cent) Developing new products/services (35 per cent).

Differences between knowledge management, data processing and information management Consider a retail manager analysing their sales figures. Raw data on sales figures consist of figures in each individual store for a given month. IS can present this data within the context of sales compared to previous months as information. This information is of little value if the manager does not know how to act in response to it. Managers apply their knowledge to decide how to respond if the sales in one region are much lower than others, or if one store is underperforming against budget. Thus knowledge is the processing of information and is a skill based on previous understanding, procedures and experience.

Explicit and tacit knowledge Knowledge Management - Techniques and tools for capturing and disseminating knowledge within an organization. Explicit – details of processes and procedures. Explicit knowledge can be readily detailed in procedural manuals and databases. Examples include records of meetings between sales representatives and key customers, procedures for dealing with customer service queries and management reporting processes. Tacit – less tangible than explicit knowledge, this is experience on how to react to a situation when many different variables are involved. It is more difficult to encapsulate this knowledge, which often resides in the heads of employees.

Binney – classes of KM applications 1. Transactional. Help desk and customer service applications. 2. Analytical. Data warehousing and data mining for CRM applications. 3. Asset management. Document and content management. 4. Process support. TQM, benchmarketing, BPR, Six Sigma. 5. Developmental. Enhancing staff skills, competencies – training and e-learning. 6. Innovation and creation. Communities, collaboration and virtual teamwork.

perspectives on KM It is impossible to achieve full benefits from knowledge management unless individuals are willing and motivated to share their knowledge or unless organizations lose their structural rigidity to permit information and knowledge flow – IDC 2000. Knowledge can only be volunteered – it cannot be conscripted – Snowden 2002.

Chevron example – connections in $2 billion saving 1. Connection to the explicit knowledge via an intranet with a portal with search tools and a directory of information. 2. Connection of people to people with specialized knowledge through an expertize locator; a type of phone directory with people in different expertize categories, again also accessed via search tools. 3. Connection to communities of practice which can help sharing and learning between people. 4. Connection of knowledge and people with processes, products and services.

Risk management Identify risks, including their probabilities and impacts. Identify possible solutions to these risks. Implement the solutions targeting the highest impact, most likely risks. Monitor the risks to learn for future risk assessment.

Figure 10.9 Knowledge management framework

Activity – identify risks for e-business project Probability Impact Solution Insufficient senior management commitment 5 7 Education/training/lobbying by e-business manager to achieve buy-in High staff turnover/key staff leave 6 Use monetary incentives and improve working environment Project milestones not met, overrun budget 8 Appoint experienced project manager and provide support and resources needed. Manager will perform risk management such as this Problems with new technology delaying implementation (bugs, speed, compatibility) Allow sufficient time for volume, performance testing Staff resistance to change 4 Education, training identification of change facilitators amongst staff Problem with integrating with partner’s systems (e.g. customers or suppliers) Tackle these issues early on, identify one contact point/manager for each of partnerships New system fails after changeover (too slow or too many crashes) 9 See solution to delayed implementation