Senior Management Understanding and Commitment

Top management commitment to e-business transformation is critical to the strategic plan. To measure accurately the degree of enthusiasm and commitment that can be expected from top management, it is advantageous for the e-business planning team to identify their motivational issues. Motivational issues essentially provide a snapshot of top management's view of how they see e-business.

For example, top management may be reacting to pressure from one or more important trading partners. If so, their enthusiasm may be superficially high to satisfy the demands of a customer as quickly as possible. However, their commitment to e-commerce as a business methodology and an integral part of their business plan is most likely low. Consequently, e-commerce is considered as just another cost of doing business. The investment, as well as benefits, is going to be minimal.

If top management is motivated toward e-commerce as leverage to counteract the edge of a competitor that is using e-commerce, both enthusiasm and commitment is probably going to be moderate.

However, if top management is searching to improve the quality of customer service, investigating areas to reduce internal costs or looking to increase market share or revenues, enthusiasm and commitment to e-business will most likely be high.

One initial task of the planning team is to assure that top management has a clear understanding of e-business principles and benefits. Only then can the planning team feel secure that their efforts are fully supported, and the e-business transformation project has definite direction. Top management must appreciate the scope of digital technologies and their potential as a business methodology to improve the bottom line. While short-term benefits such as reducing clerical staff, minimizing processing delays, eliminating rekeying errors, and improving inventory control are attractive cost-saving considerations, top management must be aware of the more significant long-term benefits of e-business.

Organization

Organizing a planning team to explore e-business transformation is primary to any investigation. The right person or people must be selected from the organization to manage the e-business strategic planning and implementation process. The exact number of people depends on the size and complexity of the organization, but typically there will be five to ten team members. The team should include key individuals who represent a cross-section of business processes plus information technology management. One important idea to remember is that the people who have plenty of time to work on e-business are not the ones who need to be on the team. The right people are usually too busy. It's the responsibility of senior management to free them up to focus on the future of the business.

Too often, the steering committee assigns the IT manager as the e-business manager, which can cause difficulties. The project often will suffer for two reasons

(1) The e-business transformation investigation and subsequent implementation can lose strategic focus and become a technical initiative instead of a strategic business initiative, and
(2) The MIS manager generally has an overwhelming schedule of backlogged projects and daily fire fighting. For the investigation to proceed on a timely basis, e-business has to be a top priority.

Project Team Education

In a small business, the project team may be a single person. In a large corporation, it may be an interdisciplinary group of as many as a twelve people. No matter the size of a company, the team members must all understand the technologies available and their impact on business processes before they can digitally redesign those processes. They must also understand an effective e-business transformation methodology. If the project team is large enough, it may be split into task groups, which will need to be carefully coordinated.

Strategic Plan Development

Organizations have limited resources and can absorb only so much change at a time. Realistically, most companies can only redesign one major business process at a time. Organizations must develop a strategic plan for the next two to seven years that answers the questions, “How are we going to put the platform in place?” and “What is the priority sequence of business processes that we are going change?” This involves reviewing business processes and IT capabilities as well as surveying customers and employees to determine their needs.

There are twelve steps that companies should undertake in developing their strategic plan for corporate e-business transformation.

Step 1 — Define Business Processes
The key objective is to identify the major business processes that make up your organization. In identifying these business processes, it's important to note the flows of information between business processes and, as clearly as possible, to identify the boundaries between the business processes.

Step 2 — Survey Trading Partners
An attempt to digitally transform business processes without the direct input of customers and other key trading partners, preferably with their active involvement at key points, is doomed to failure. Without this input, companies risk an ivory tower solution that may sound valid in a planning session, but doesn't address the realities of the business world.

Step 3 — Survey Employees
Active employee understanding of the transformation process is necessary for the process to succeed. The team doing the actual work must have valid input from employees if they are to truly understand which business processes need the most attention and what employees' greatest concerns are.

Step 4 — Select Top Priority Business Processes No organization has the financial or human resources to perform a strategic e-business transformation analysis for every business process, including associated documents/data flows, or the means to determine the feasibility of transforming each process. Companies should trim their eight to fifteen business processes to three to five top priority processes

Step 5 — Conduct Pro Forma Design of Top Processes
Having chosen the top priorities for eBusiness transformation, the team can focus on conducting a high-level design of those top three to five business processes.

Step 6 — Identify and Estimate Benefits of Transformation
Once an organization has resigned its top processes, it compares the redesigned process to the process as it currently functions. A gap analysis then allows the organization to identify the differences between the current and proposed e-business process. The team can then identify the benefits of transforming the process and, where practical, estimate the dollar value of the process.

Step 7 — Identify Constraints and Requirements
In transforming a business process, companies must identify what requirements are needed. Those requirements fall into two categories: technology requirements and employee education. Technology requirements can be found in the design of a process, such as assuming that an electronic forms routing and approval system with digital signature authority capability is fully implemented. The second involves educating the employee who is involved in managing the redesigned business process.

Step 8 — Estimate Process-Specific Costs
Costs related explicitly to the transformation of a business process should be identified. This is as opposed to core technological capability costs that cross process boundaries.

Step 9 — Review Information Technology Strategy
When a company has a well defined written strategy, it can serve as a sound basis for review. If the strategy is not well defined, then it may be necessary to talk with key executives and managers in the IT area to better understand their current plans, directions, and budgets.

Step 10 — Specify Core Technological Requirements
The core technological requirements fall into two categories: improvement to the IT infrastructure and employee education and training. These requirements are not process-specific but instead cross business processes. They can be identified by looking at the summation of requirements that arose from the pro forma redesign of the top priority business processes.

Step 11 — Prioritize Top Business Processes
Although companies have selected the top three to five business processes that need to be redesigned, they must also prioritize them for implementation. This prioritization should include both process-specific cost/benefit analyses and interdependencies among the business processes and between those processes and the company's core technological capabilities.

Step 12 — Perform Cost Benefit Analysis
At this point, the organization can actually perform a thorough overall cost benefit analysis through looking across the company as a whole, identifying the benefits along with the estimated value of those benefits of the entire e-business transformation strategy, and determining the costs — both process-specific and cross-process. The company must achieve two objectives: to verify to senior management that the overall investment in e-business transformation is worthwhile and to specify the priority sequence in which the business plans to redesign its processes.

Once the above 12 steps have taken place, developing a short-term action plan is the key to getting started effectively. The organization must identify which business processes are its top priorities. The company must then begin to put into place people, systems, and other resources needed to start changing the company's core technological capabilities as well as those business processes that can ultimately provide the benefits that are the reason for e-business transformation.

Process Redesign Analysis

This step is the detailed redesign of top priority business processes. The objective is to automate the routine transactions and even common exceptions within limits defined by management. Then companies can use tools such as workflow automation to automate the exception handling that requires human intervention. Finally, companies must build into their new process design the ability to capture performance statistics. This way they can measure performance on an ongoing basis and then apply total quality and continuous improvement principles to that newly redesigned business process.

Employee Education

This step is the key to successful e-business transformation. Employees must understand in advance what changes are going to take place, how those changes affect them, and their role in the change process. However, effective employee education is not a one-shot deal. Successful e-businesses must spend 10 percent of each employee's time on an ongoing basis educating that employee as to how to better do his or her job the other 90 percent of the time.

Most managers view e-business transformation as an MIS task. However, e-business transformation is a complex business methodology. As such, it demands changes to the way a company conducts business. The changes are dramatic, involving internal processing procedures, departmental information exchanges, employee job tasks, marketing strategies, and trading partner relationships. From the mailroom to the shipping/receiving dock, every department that manipulates or has access to the business data is affected by e-business.

Because of its substantial impact to the business environment, everyone must understand the principles and goals of e-business. Formal educational programs repeatedly have been proven to be a vital element of any e-business transformation investigation and implementation. The reasons are numerous. Education provides organization to the investigation process; reduces internal resistance to change; encourages realistic expectations; and promotes a unified effort, employee enthusiasm, and internal departmental cooperation at each stage of the investigation and implementation process.

Ongoing Strategic Review

Changes in a company's internal and external environment impact long-term priorities. A sound e-business strategy looks two to five years down the road. No organization can afford to cast its strategy in concrete for that long. It's critical to have a clearly defined long-term direction. However, it cannot be inflexible. This is why leading organizations review their strategy annually, fine-tuning and, if necessary, redirecting it.

Jack Shaw is recognized worldwide as a leading expert on eCommerce, eBusiness, and the Internet, and he has worked on the cutting edge of business technology for over 25 years. Jack is the author of four books including his latest, Surviving the Digital Jungle. Visit his website at http://www.e-com.com. Copyright 2001, eCommerce Strategies, Inc.
This article may not be modified without the written permission of the author.

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