“e-engineering” re-engineering and transforming business processes to embrace e-commerce 28...

“e-engineering”

Re-engineering and transforming business processes to embrace e-Commerce

28 August 2000

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“e-Engineering”Re-engineering and transforming business processes to embrace e-Commerce

This guide was prepared by:

Michael HillerPartner

KPMG Consulting345 Queen StGPO Box 223 Brisbane Qld 4001Phone: (07) 3233 9443email: [email protected]

This document is protected under the copyright laws of Australia and other countries as an unpublished work. This document contains information that is proprietary and confidential to KPMG Consulting or its technical alliance partners, which shall not be disclosed outside or duplicated, used or disclosed in whole or in part for any purpose other than to evaluate KPMG Consulting. Any use or disclosure in whole or in part of this information without the express written permission of KPMG Consulting is prohibited.

© 2000 KPMG Consulting. All rights reserved.

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Today’s discussion

1. Introduction

2. E-Commerce readiness

3. E-Commerce project approach

4. Key messages

Section 1

Introduction

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The objectives of today’s session include:

Consider what the concept “e-engineering” could mean

Inform you about how KPMG Consulting clients are approaching e-Commerce projects (or “e-engineering”)

Compare “e-engineering” with traditional process re-engineering

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e-engineering is about completely rethinking the way a business could operate ...

…in the context of the opportunities and threats arising through the internet’s impact on business, government and the community

Technology is the enabler

Business strategy is the driver of e-engineering

Businesses need to answer questions like:

What products or services will we provide?

How will we communicate with other businesses in our supply chain?

How will we communicate with consumers and customers?

How will we communicate with staff?

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E-commerce is fast becoming part of business strategy

New business opportunities arise through internet enabling new communications

New business threats arise from new competitors or new ways of doing business facilitated by the internet

Customers’ needs and demands for services or modes of product or service delivery may change

The cost of delivering products and services can be reduced by using internet communications

Ad-hoc process improvements may not be in-line with an overall strategy

It is now critical to consider the impact of the internet when developing or revising business strategy.

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E-commerce projects - barriers to success

“Field of dreams approach” - letting capabilities of new technologies dictate moves

Inadequate application/network architecture - lack of scalable systems and solutions needed for growth

Legacy business models - “webifying” old business practices (bulldog with lipstick)

Islands of webification - creation of discontinuous and non-synergistic applications

“Me Too” strategies - copying or following the moves of others

Old world development approach - “one time” development effort

e-Commerce projects must be strategically driven

Section 2

E-Commerce readiness

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The possibilities are endless, so it is important to get some direction and priority into e-engineering

The first step is to determine if the company is ready to “e” anything

Then analyse the opportunities and prioritise them

From this, the company will have a strategic plan of what it wants to achieve in e-commerce, what the expected benefits will be, and the areas of the business that will need preparation before any e-engineering can start

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There are 4 dimensions of “net-readiness”:

Leadership

Governance

Technology and

Organisational competencies

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Leadership - do we have top management support?

Is it clear who has decision making authority on initiatives?

Is there an e-business mindset up and down the organisation?

Is senior management actively involved in the company’s e-business efforts?

Is there a team responsible for the strategic intent of initiatives?

Are the Internet initiatives integrated with the business strategy?

Is there a driving vision for the internet initiatives?

Is there an e-business culture within the organisation?

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Governance - who is making the decisions and where do the responsibilities lie?

Are roles, responsibilities and accountability clearly defined?

Is there an administrative process in place for initiatives?

Is there an established method for assessing and selecting internet strategies?

How do e-business initiatives get funded?

What drives the internet initiatives? (IT, marketing, customers, competitors, etc?)

Is there an established method for allocating resources for internet initiatives?

Is there serious and established metrics for measuring the impact of our internet initiatives?

Is the company organised to effectively deliver the internet initiatives?

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Technology - do we have the right infrastructure and support in place?

Will this solution be flexible enough to accommodate change?

Does the company have the technical competencies to support internet initiatives?

Is the solution customisable to the company’s and its customers’ needs?

Does the company have the technological infrastructure (network services, hardware, software) required to develop and scale?

Does the company have sufficient funding for ongoing web site maintenance?

Does the company have operations capabilities required to support the internet strategy?

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Organisational competencies - do we have the capabilities for this?

Does the company have experience managing multiple relationships (both internal and external)

Does the company have critical capabilities around ruthless execution (3 months or less?)

Are they strong in identifying and prioritising initiatives?

How responsive to their customer needs are they?

Is the experience and skill set of their internet team adequate?

Can the organisation and individuals learn quickly from experience?

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A “net-readiness” review will plot the results to visually show where effort is needed before an e-commerce project will be successful

Tech

no

log

yLeadership

Org

aniz

atio

nal

Co

mp

eten

cies

5

55

5Governance / Operating Model

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Efficiency New Value Creation

The “net-readiness” review will identify the separate project opportunities and their characteristics - to help with prioritisation

Project 1

Project 2

Project 3 Project 4

Project 5

• Reengineering• Leveraging Strength• Efficiency focused• Med/High Risk

• New Market Segments• Business Model Shift• New Revenue Source• Low/Moderate Risk

• Cost Savings• Webification• Experience Building• Low Risk

• Market Creation• New Business Model• Shift Industry Dynamics• High Risk

Business Criticality

Low

High

Low HighNewness

Breakthrough Strategies

Rational Experimentation

New Fundamentals

Operational Excellence

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The net-readiness dimensions are very strategic and the majority are not about technology

Before an e-commerce project starts building and implementing solutions, a lot of work around vision and strategy needs to be done.

It is critical to know what the company is trying to achieve from the project, to be able to deliver on those expectations.

Section 3

E-Commerce project approach

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E-commerce projects are broken down into small stages that can be implemented quickly

Successful e-commerce projects feature:

Well defined strategy

Results for each stage in 90 days

“Ruthless execution” of stages

Partnering of many specialist organisations and teams

Flexible project plans

Strong senior leadership and sponsorship

Commitment to ongoing investment

Things will not go exactly to plan and the boundaries will change throughout an e-commerce project

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Initial project planning and assessment of the organisation’s readiness for e-Commerce is critical

The first stage of an e-Commerce project involves:

Assessing the company’s readiness for e-commerce

Compiling an overall e-Commerce strategy

Defining priorities

Defining, resourcing and setting up the project

Defining the stages or sub-projects and the scope of each

Identifying key stakeholders and

Compiling a communication plan

Change management is a critical element of all major projects

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Overview of an approach to e-business implementation

After compiling the overall strategy, setting up the project, defining priorities and defining the scope of each stage (est max 90 days per stage), the approach would be similar to the diagram below. This would involve repeating the project steps for each stage of the project, and undertaking several activities concurrently.

Strategy: 2 -4 weeks

Strategy: 2 -4 weeks

Process & architecture: 4 -12 weeks

Process & architecture: 4 -12 weeks

Implementation: 4 - 12 weeks


Ongoing supportOngoing support

Strategy: 1-3 weeks

Strategy: 1-3 weeks

Process & architecture: 2-8 weeks




Project stage 1 Project stage 2 Project stage 3 etc(activities per project stage 2)

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E-engineering involves the same key activities and phases as traditional process re-engineering

e-eng re-eng

Project set-up

Change management & communication

Assess the current situation- business vision - review current processes

Identify key issues/opportunities for improvement

Business case

Redesign existing processes and/or design newprocesses

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E-engineering involves the same key activities and phases as traditional process re-engineering (continued)

e-eng re-eng

Identify business impact- people, roles, organisation structure - technology - policies, procedures, processes, legislative

/ regulatory requirements - physical infrastructure

Implementation planning (including training plan)

Testing / piloting / “sandpit” environment

Implementation (usually in phases)

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The key difference between process re-engineering and e-engineering is

SPEED

90 day stages

small achievements often - quick wins, tangible signs of success

SCALE

bit sized chunks

think big, start small, scale fast

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Strategy would be defined for each stage or priority

This involves defining what the business is trying to achieve in the particular phase, including the objectives and the detailed scope. These would be defined in terms of the overall business strategy and the overall e-commerce strategy.

Strategy definition would involve significant business input, particularly from senior management. As part of the project set-up, a stakeholder analysis would have been completed defining who should be involved in the strategy consultation.

It is important to communicate the strategy to all affected people.

Strategy: 2 - 12 weeks

Strategy: 2 - 12 weeks

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The detailed process for that stage is then designed in line with the strategy

The process design involves analysing the current business processes and identifying the best opportunities for improvement through e-commerce.

The new process is then designed, incorporating business processes and detailed system requirement definitions.

These system requirement documents are used by the system analysts and programmers to design the system architecture including integration with existing systems and the site navigation.

This phase would involve significant input from staff involved in the current processes and likely to be impacted by the new processes. This involvement is critical to change management and business acceptance.



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The e-engineered processes are then implemented

This phase involves setting up the new web-site and/or rolling out the new functionality. Depending on the project, this could involve significant communication and marketing to customers or business partners and assisting them to play their part in the e-commerce systems and transactions.

Business process changes will be implemented. This could involve redefining staff job roles, organisation structure, re-writing policies and procedures, compiling and delivering training, and deploying or making redundant technology and infrastructure. All these activities would have been identified and planned in the previous stage.



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Effect = Quality of solution X Acceptance of change

People must be willing to accept the proposed change

A well accepted, but less perfect solution will deliver more benefits to an organisation than the “perfect solution” that is not accepted by staff

Successful e-engineering projects require more than just designing a high quality technological solution

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= Successful Change

= Confusion

= Inertia

= Diffusion

= Frustration

= Fatigue

= Crawl

= Doubt

X

X

X

X

X

X

X

Two WayCommunicatn

Sufficient Motivation

Organisat’lCapability

Adequate Resources

DefinedStrategy

ClearVision

Compelling Case

X

..the logical and quantifiable nature of this framework has proven invaluable to dozens of large-scale IT projects

The“7 Critical Elements of Change”

Section 4

Key messages

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E-engineering is about re-inventing a business in the e-commerce environment

goes through the same process as traditional process re-engineering

– but FASTER

and the project is broken down into small manageable phases

– to get results QUICKLY

– and REGULARLY

if a task cannot be ruthlessly executed in approximately 90 days it should be or broken down further

technology is the enabling tool business strategy is the driver

acceptance and commitment by the affected people is the key to success

“e-engineering” re-engineering and transforming business processes to embrace e-commerce 28...

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