CM51111 Structured Systems Analysis Techniques

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Organisational Transformation
CSM - Week 5 part 1
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Is it new?

• Late 18th Century division of Labour
• Boultons in Birmingham
• Arkwrights discoveries the spinning jenny
• Mid 19th Century management by numbers
• Westpoint, USA seeds of modern management
  control appear (Hoskin and McVe)
• The Visible Hand of management co-ordination
  appears (Chandler)

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Is it new?

• Early 20th Century Taylorism
• Scientific management
• Ford adopts Taylorism mass production
• Arkwrights discoveries the spinning jenny
• Mid 20th Century
• Gilbraeth and Co
• Work Study Method Study
• Work Measurement

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Mass Customization

• One of the most successful models of e-Commerce
  is mass customization.
• It supplements or even replaces one of the most
  innovative concepts of the Industrial Revolution,
  mass production.

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In this Classroom

• We are interested in how IS/IT/Computing can
  transform Organisations!

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The Enabling Role of IT
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The Enabling Role of IT
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Venkatramans Business Transformation Levels
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Level 1 Localised Exploitation

• Costs and savings are easily identified
• Investment expenditure is easily justified by
  cost savings
• Other obvious benefits service, speed, quality
• Little coordination needed
• Strategic view not necessary
• Confined to narrow areas of organisation

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Level 2 Internal Integration

• Depts implement an integrated IT platform
• Aim is to integrate business processes across the
  organisation
• Costs are obvious Savings not so obvious
• Benefits available only when IT platform widely
  available
• Investment expenditure less easily justified
• Needs a co-coordinating strategic overview
• Management required to overcome resistance and
  inertia within the organisation

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Transition

• We move from the
• To the

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Level 3 Business Process Redesign

• Aim is to rethink core characteristics and change
  businesses processes across the organisation
• Permits the re-engineering of the internal value
  chain
• Substantial loss of jobs and Retraining
• Investment expenditure may be forced by
  competitor/competitive advantage activity
• High Cost - Considerable risk
• Management required to align business strategy
  with IT strategy

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Level 4 Business Network Redesign

• IT used to improve business relationships with
  suppliers and customers
• Wider business relationships can become a virtual
  organisation
• Costs and Benefits?
• Management required to recognise how value chain
  activities can be improved by connectivity

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Level 5 Business Scope Redefinition

• Diversification, Divestment, Consolidation,
  Mergers, Acquisitions
• Enlarging business Scope eg British Telecom
• Using its database as a source of business
• Shifting Business Scope
• Think about banks and financial institutions

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The strategic significance of business networks

• This is not about
• EDI Electronic Data Interchange
• EIOS - Electronic Integration between
  organisations
• This is moving data between organisations
• It is
• Strategically linking the business processes of
  organisations

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The strategic significance of business networks

• This is redefining (usually) enlarging an
  organisations boundaries
• Accessing upstream or downstream capability
  value chains!
• Either across different business units in the
  business or by acquiring similar capabilities
• Think about hotel companies using a common
  booking system

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The strategic options of business networks

• Business Governance business relationships
  between participants
• Loosely Coupled relationships
• Tightly coupled relationships

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The strategic options of business networks

• Loosely Coupled relationships
• No bias between participants
• Dealings are at arms length via market
  transactions
• Involve many players
• Low added value
• Price based
• Can easily switch between suppliers

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The strategic options of business networks

• Tightly Coupled relationships
• Participants have a close and biased relationship
• Involves few players
• High added value
• Insensitive to price
• Switched to other suppliers with difficulty

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The strategic options of business networks

• IT Governance concerns the technological
  approach
• Loosely Coupled with IT common role
• Loosely Coupled with IT unique role
• Tightly coupled with IT common role
• Tightly coupled with IT unique role

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The strategic options of business networks

• Loosely coupled with IT common role
• Organisations trade trough san electronic
  infrastructure
• Do not gain competitive advantage from electronic
  advantage
• Competitive advantage comes from their power
  relative to other players
• Stock market system
• Foreign currency market

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The strategic options of business networks

• Loosely coupled with IT unique role
• Temporary competitive advantage
• Advantage comes from proprietary uniqueness
• Players can exclude others from participating
• May be some technically unique value added
  service
• Competitors react by neutralizing advantage

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The strategic options of business networks

• Tightly coupled with IT common role
• Tight and biased relationships
• Provides advantage from collaboration
• Network improves transfer of information
• Sharing of
• Sales or buying information
• Plans
• Market and business analysis

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The strategic options of business networks

• Tightly coupled with IT unique role
• Tight and biased relationships
• Offers opportunities for business network
  redesign
• Enables shifting of functions between
  participants
• Cuts out duplicated cost
• The aim is to increase the overall effectiveness
  and efficiency of value chain

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Business network roles

• Transaction exchange
• Related to structured and standardised data
  orders, delivery
• Inventory exchange
• Provides buyers with product information related
  to availability options, price
• Process Linkage
• Automated business processes are linked
• Transfer of data and info to be further used
• Expertise Link
• Negotiations of specifications
• Fault diagnosis

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Benefits of business networks

• Operating efficiency
• Improvements in operations service, quality,
  speed resulting in lower costs
• Market position
• May be able to bias the business of another
  organisation because
• Simplicity of relationship
• Speed of transaction

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Mass Customization eCommerce

• EC transforms the supply chain from a traditional
  push model to a pull model.
• Push model - the business process starts with
  manufacturing and ends with consumers buying the
  products or services.
• Pull model - the process starts with the consumer
  ordering the product (or service) and ends with
  the manufacturer making it.
• The pull model enables customization since orders
  are taken first.

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Cycle Time Reduction

• Cycle time refers to the time it takes to
  complete a process from beginning to end.
• Time is recognized as a major element that
  provides competitive advantage.
• IT helps to contribute to cycle time reduction.

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Networked Organizations

• Today some organizations are turning away from
  the hierarchical organization toward the
  networked organization.
• Networked organizations refer to organizational
  structures that resemble computer networks and
  are supported by information systems.
• In the information-based economy, most people do
  knowledge work, and the subordinate often has
  more expertise than the hierarchical
  supervisor.
• A flattened organization has fewer layers of
  management and a broader span of control than the
  hierarchical organization.

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Networked Organizations
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Empowerment Using IT

• Empowerment is the vesting of decision-making or
  approval authority in employees where,
  traditionally, such authority was a managerial
  prerogative.
• Empowerment can be enhanced through IT.
• Empowered employees are expected to perform
  better.
• In addition to empowering employees, companies
  are empowering their customers, suppliers, and
  other business partners.
• E.g. Federal Express uses the Internet to empower
  its customers.

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Virtual Corporations

• A Virtual Corporation (VC) is an organization
  composed of several business partners sharing
  costs and resources for the purpose of producing
  a product or service.
• According to Goldman et al. (1995), permanent
  virtual corporations are designed to do the
  following
• Create or assemble productive resources rapidly.
• Create or assemble productive resources
  frequently and concurrently.
• Create or assemble a broad range of productive
  resources.

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Virtual Corporations

• In a VC, the resources of the business partners
  remain in their original locations but are
  integrated.
• In order to function, VCs rely on the following
  forms of IT
• Communication/ collaboration among dispersed
  business partners
• e.g., e-mail, desktop videoconferencing,
  screen-sharing, etc.
• EDI and EFT
• Intelligent agents
• Modern database technologies and networking
• Intranet/Internet applications

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In Summary

• Think about Organisation Transformation
• Integration. The role of IT (networks) in
  redesign and BPR.
• Dont forget- Very big projects have a tendency
  to fail when expectations exceed real
  capabilities.

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Reading

• Information Technology for Management - Chapter
  8 IT Planning and BPR Collaboration pp 359 to
  384
• Todays handout
• Venkatraman Business Transformation and IT
• Look at references and bibliography for this
  chapter
• Computing Press read it

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• Take a break