OHT 10.2
Learning objectives Identify the different types of change that need to be managed for e-commerce; Develop an outline plan for implementing ecommerce change; Describe alternative approaches to organisation structure resulting from organisational change.
OHT 10.3
Issues for managers 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?
Marketing Insights Limited 2004
OHT 10.4
OHT 10.5
OHT 10.6
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.
Marketing Insights Limited 2004
OHT 10.7
Medium
(<20%)
Lowest
OHT 10.8
OHT 10.9
OHT 10.10
Figure 10.3 An example web site development schedule for The B2C Company
Marketing Insights Limited 2004
OHT 10.11
OHT 10.12
May be difficult to get different departments to deliver their input due to other commitments
As for (b), but can set own targets and not be constrained by resources. Lower risk option than (d) As for (c), but can set strategy independently. Can maximize market potential
Has to respond to corporate strategy. Conflict of interests between department and traditional business High risk if market potential is overestimated due to start-up costs
OHT 10.13
Figure 10.5 Summary of alternative organizational structures for e-commerce suggested in Parsons et al. (1996) Marketing Insights Limited 2004
OHT 10.14
Hallowell on scalability 1
described as virtual (either pure information or automated) and physical (requiring some degree of human intervention). because the nature and quantity of physical service necessary to deliver value to customers influences the quantity of human intervention required, it also influences a firms ratio of variable to fixed costs, which alters its scalability.
The paradox comes in that while reduced scalability is viewed negatively by many venture capitalists and proponents of ecommerce, the cause of that reduction in scalability, human intervention, may help a firm to differentiate its offering to customers, thus providing a source of competitive advantage.
Marketing Insights Limited 2004
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 is relatively insignificant, both from customers perspectives (use of physical service is infrequent,if at all) and from the firms perspective (it represents a very small portion of total costs). Thus, these firms do not rely on physical service (and the employees it requires) to differentiate their offering; their differentiation tends to come from the 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.
Marketing Insights Limited 2004
OHT 10.16
Outsourcing example Amazon: manages customer relationships through its website while relying on publishers for product development, Visa and Mastercard for revenue collection and UPS, the parcel service, for logistics. It also outsources much of its call-centre management to specialist suppliers.
Marketing Insights Limited 2004
OHT 10.17
OHT 10.18
BUT The snag, as many failed internet ventures discovered, is that it is hard to co-ordinate the activities of business partners without a large supporting bureaucracy. Poor customer service and higher-than-anticipated costs often resulted. Amazon is one of the few companies of its generation that made the idea work.
OHT 10.19
OHT 10.20
Outsourcing - Hagels view Companies try to excel at three different types of activity: managing customer relationships, routine processing of information and development of new products. He believes that companies will in future tend to concentrate on just one, while buying in the others as required.
Examples?
Marketing Insights Limited 2004
OHT 10.21
Oticon
OHT 10.22
Transition curve indicating the reaction of staff through time from when change is first suggested
Figure 10.7 Transition curve indicating the reaction of staff through time from when change is first suggested
Source: Bocij et al. (2003)
Marketing Insights Limited 2004
OHT 10.23
OHT 10.24
OHT 10.25
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.
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 (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)
Marketing Insights Limited 2004
OHT 10.27
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.
Marketing Insights Limited 2004
OHT 10.28
OHT 10.29
OHT 10.30
2 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
Marketing Insights Limited 2004
OHT 10.31
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 expertise locator; a type of phone directory with people in different expertise 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.
Marketing Insights Limited 2004
OHT 10.32
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.
OHT 10.33
OHT 10.34
6 8
5 6
Problems with new technology delaying implementation (bugs, speed, compatibility) Staff resistance to change
Education, training identification of change facilitators amongst staff Tackle these issues early on, identify one contact point/manager for each of partnerships See solution to delayed implementation
Problem with integrating with partners systems (e.g. customers or suppliers) New system fails after changeover (too slow or too many crashes)
OHT 10.35