eCommerce Lecture Series

Lecture 4
E-Business Strategy and Managing Change
Keeran Jamil

Learning objectives
Follow an appropriate strategy process model for ebusiness; Apply tools to generate and select e-business strategies; Outline alternative strategic approaches to achieve ebusiness. Identify the different types of change that need to be managed for e-commerce; Develop an outline plan for implementing e-commerce change; Describe alternative approaches to organisation structure resulting from organisational change.
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Some Questions
How does e-business strategy differ from traditional business strategy? How should we integrate e-business strategy with existing business and IS strategy? How should we evaluate our investment priorities and returns from e-business?

Michael Porter on the Internet

The key question is not whether to deploy Internet technology companies have no choice if they want to stay competitive but how to deploy it.

Porter, M. (2001) Strategy and the Internet, Harvard Business Review, March 2001, 6278.
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Different forms of Organisational Strategy

Different forms of organizational strategy

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Relationship Between e-Business Strategy and other Strategies

Relationship between e-business strategy and other strategies

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A Generic Strategy Process Model

A generic strategy process model

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Dynamic e-Business Strategy Model

Dynamic e-business strategy model

Source: Adapted from description in Kalakota and Robinson (2000) 8

Elements of Strategic Situation Analysis

Elements of strategic situation analysis for the e-business

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Problems With Having no e-Business Strategy? Missed opportunities for additional sales on the sell-side and more efficient purchasing on the buy-side Fall behind competitors in delivering online services may become difficult to catch up, e.g. Tesco, Dell Poor customer experience from poorly integrated channels
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Adoption Steps of e-Business Services

Adoption steps of e-business services

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Portfolio Analysis

Summary applications portfolio analysis for The B2B Company

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SWOT Analysis for the B2B Company

SWOT analysis for The B2B Company

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Demand Analysis

Customer demand for e-marketing services for The B2B Company

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Porters five forces

Bargaining powers of customers

Power of suppliers

The business

Threat of substitutes subsitutes

Extent of rivalry between competitors

Threat of new entrants

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Assessing Competitive Threats

Competitive threats acting on the e-business

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Elements of strategic objective setting for the e-business

Elements of strategic objective setting for the e-business

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SMART Objectives
Specific Measurable Agreed Realistic Time Specific

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Online Revenue Contributions

Direct and indirect Internet contributions for fast-growth companies in the USA
Source: PricewaterhouseCoopers (2000) 19

Balanced Scorecard Approach

Integrated metrics such as the balanced scorecard approach have become widely used as a means of translating organisational strategies into objectives and then provide the metrics to monitor the execution of the strategy

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Elements of strategy definition for the e-business

Elements of strategy definition for the e-business

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E-Business Priorities
The e-Business strategy can be summarised as: Getting the right mix of bricks and clicks
Gulati & Garino (2000) Strategic options for a company in relation to the importance of the Internet as a channel
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Restructuring
Closely related to determining the business priorities companies must make a decision whether they need to restructure their business in order to achieve their e-business goals.

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Business & Revenue Models

Another important aspect of e-business strategy formulation is to the opportunities from new business and revenue models. A good example of this is how Dell computers reviewed and an renewed their business model.

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Marketplace Restructuring
This is a related issue to new business and revenue model. The task here is to consider the options created through disintermediation and re-intermediaition.

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Market and Product Development Strategies

Market and Product Development Strategies is all about deciding on which market to target for which product

Assessment of risk for market and product development for The B2B Company
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Elements of strategy implementation for the e-business

Elements of strategy implementation for the e-business

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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?
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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.

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Key Factors in Achieving Change

Key factors in achieving change

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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.
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Different Scales of Change

Term Business process reengineering Business process improvement Business process automation Involves Fundamental redesign of all main company processes Targets key processes in sequence for redesign Automating existing process Intention Large gains in performance (>100%?) (<50%) Risk of failure Highest

Medium

(<20%)

Lowest

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Project Management Activities

Estimation identifying the activities involved in the project, sometimes referred to as a work breakdown structure (WBS). Resource allocation after the initial WBS, appropriate resources can be allocated to the tasks. Schedule/plan after resource allocation, the amount of time for each task can be determined according to the availability and skills of the people assigned to the tasks. Monitoring and control monitoring involves ensuring the project is working to plan once it has started. Control is taking corrective action if the project deviates from the plan. In particular the project manager will want to hit milestones
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Stages in Developing an e-Business Solution

Stages in developing an e-business solution

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An example web site development schedule for the B2C Company

An example web site development schedule for The B2C Company

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Automating the employee development process

Automating the employee development process

Source: Confirmit Copyright 2003 FIRM
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Achieving Staff Commitment

Transition curve indicating the reaction of staff through time from when change is first suggested
Source: Bocij et al. (2003) 37

Organisational Culture
Survival (outward-looking, flexible) the external environment plays a significant role (an open system) in governing company strategy. The company will likely be driven by customer demands and will be an innovator. It may have a relatively flat structure. Productivity (outward-looking, ordered) interfaces with the external environment are well structured and the company is typically sales-driven and is likely to have a hierarchical structure.

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Organisational Culture
Human relations (inward-looking, flexible) this is the organization as family, with interpersonal relations more important than reporting channels, a flatter structure and staff development and empowerment is thought of as important by managers. Stability (inward-looking, ordered) the environment is essentially ignored with managers concentrating on internal efficiency and again managed through a hierarchical structure.

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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.

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IDC Objectives of KM
Improving profit/growing revenue (67 per cent) Retaining key talent/expertise (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)
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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.
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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.
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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.
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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
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Risk Management
1. Identify risks including their probabilities and impacts. 2. Identify possible solutions to these risks. 3. Implement the solutions, targeting the highest impact, most likely risks. 4. Monitor the risks to learn for future risk assessment.
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